Goal-Setting Theory

The Basic Idea

Have you ever been asked: “Where do you see yourself five years from now?” This question is so commonplace that it has become somewhat of a cliché in our society. The notion that each of us ought to have some vision for the future is deeply ingrained in our collective psyche. Why is this the case?

The “where do you see yourself” question is closely linked with the idea of goal setting. A goal can be thought of as a future state so appealing that it motivates actions today. Goals are widely accepted as powerful tools to help us get what we want out of life. This belief is so powerful that we often assume everyone has, or should have, goals. Workplaces enforce goal-setting in employees’ performance reviews, coaches encourage their athletes to set goals, and guidance counsellors help students set goals for educational attainment.

Although goals are encountered everywhere, not all goals are created equal. Some people seem capable of achieving their goals with ease, while others may struggle and even fail to achieve their goals. To better understand both why goal setting is important and how it can work to improve our lives, we are going to turn our attention to Goal-Setting Theory.

Goal-setting theory states that goals are strongly associated with human performance. Goal-setting provides both a ‘target’ to work towards as well as a standard by which to evaluate performance.

The theory identifies the attributes of effective goals as well as the specific ‘mechanisms’ through which goals help enhance performance. Goals can improve performance by focusing our attention (direction) and regulating the amount of time (duration) and effort (intensity) spent working towards an outcome. When paired with goal-setting, feedback and training in self-regulation can further enhance performance.

Research has consistently shown that specific and difficult (but not too difficult) goals are more helpful than vague ‘Do your best!’ goals. An individual must be committed to achieving a goal in order for the goal to be an effective tool.

The theory explains how factors known as ‘moderators’ can interact with goal-setting to impact performance. Moderators include an individual’s skill or ability; her belief in her ability to achieve the goal (self-efficacy); the anticipated level of satisfaction associated with achieving the goal (valence); and the degree to which a goal is seen as an effective means to an end (instrumentality).

Goal-setting theory might bring to mind the popular S.M.A.R.T acronym – Specific, Measurable, Attainable, Relevant, and Time-Bound. In fact, the S.M.A.R.T model predates Goal-setting theory, having been introduced by Doran, Miller, and Cunninghan in a 1981 article titled “There’s a S.M.A.R.T. way to write management goals and objectives.”

Goal-setting theory was first formally introduced in 1990 by Gary Latham of the University of Toronto and Edwin Locke of the University of Maryland. In their book A Theory of Goal Setting & Task Performance, Latham and Locke integrated decades worth of research into a single coherent theory explaining how goal-setting works to motivate human performance.

If a man knows not to which port he sails, no wind is favorable.

– Seneca, Roman Stoic philosopher

Key Terms

  • Goal: the object or outcome one is aiming for as well as the standard by which one evaluates one’s performance.
    • Assigned goal: a goal that an individual defines and sets for someone else.
    • Personal goal: a goal that an individual sets for herself.
  • Feedback: information describing the degree to which a performance standard is being met.
  • Self-efficacy: an individual’s belief in her ability to successfully complete a task.
  • Self-regulation: the process by which an individual manages her actions to complete a task.
  • Goal attributes: the qualities of a goal that influence the goal’s ability to improve performance.
    • Content: the information contained in the goal statement.
      • Specificity: the degree to which the content is open to interpretation.
      • Difficulty: the degree to which a goal will be challenging to achieve.
    • Intensity: the scope, clarity, and effort involved in the mental process of defining the goal.
      • Commitment: the degree to which the goal inspires dedication to its fulfillment.
    • Goal mechanisms: the characteristics of action that a goal can influence.
      • Direction: a goal helps focus attention and effort toward actions that are relevant to the goal.
      • Intensity: a goal helps regulate the level of effort spent on actions that are relevant to the goal.
      • Duration: a goal helps regulate the amount of time spent on actions that are relevant to the goal.
    • Valence: level of satisfaction associated with a particular level of performance.
    • Instrumentality: the degree to which a goal is seen as an effective means to an end.

History

Throughout the mid-1900s, there were various competing theories trying to explain the motivators of human activity and performance. One such theory was John B. Watson’s behaviorism, a theory developed in 1924 that asserts humans do not exercise free will, but are entirely products of their environment. Another theory presented by Frederick Herzberg and colleagues in 1959 was the ‘motivator-hygiene’ theory which explores the role that different intrinsic and extrinsic properties of a job have on job satisfaction. Yet another theory, Expectancy Theory, hypothesized that employees make decisions based on the result of a formula that calculates the expected performance outcome of a particular course of action.

When Locke began studying Industrial-Organizational (I-O) psychology at Cornell University in 1960, he was inspired by a lesson on industrial motivation to study the relationship between goal setting and performance. Locke and his supervisors were critical of existing theories of motivation and recognized a promising opportunity to present data-based (empirical) evidence of a goal-performance relationship. Indeed, Locke’s dissertation successfully demonstrated the goal-performance relationship. It wasn’t long after his research was published that Locke was hired by the University of Maryland to continue his research on goal setting.

Latham began his research several years later in 1967 as a Master’s student in I-O psychology at the Georgia Institute of Technology. During his studies, Latham was hired as a research assistant on a study looking for ways to increase the productivity of workers in a pulpwood company. Latham and his supervisor were able to demonstrate the goal-performance relationship using two different methods. Pleased with the results, the pulpwood company hired Latham as a staff psychologist so that he could continue to research ways to increase employee productivity.

It was while he was working for the pulpwood company that Latham first encountered Locke’s research. Recognizing the relevance of the findings to his own work, Latham applied Locke’s method in a field experiment of the goal-performance relationship. The experiment showed that setting a specific, high-difficulty goal resulted in better crew performance than setting a vague ‘do your best’ goal. Latham’s application of Locke’s method was very timely, because it provided evidence that the method could generate valid results outside of a laboratory environment.

By this point in time, Locke and Latham were corresponding with one another, and they met in person at a conference in 1974. They soon joined together as research partners and proceeded to publish many studies on various aspects of the goal-performance relationship. They were initially hesitant to try to formalize the goal-performance relationship as a theory, because they didn’t believe they had enough data to strongly support such a theory. It wasn’t until 1990 that they published A Theory of Goal Setting & Task Performance, formally introducing Goal-Setting Theory based on the findings of over 400 different studies.

People

   

Edwin Locke

An American psychologist who has spent the majority of his career researching the goal-performance relationship. He is one of the two co-developers of Goal-Setting Theory.

Gary Latham

a Canadian psychologist who has spent the majority of his career researching the goal-performance relationship. He is the second of the two co-developers of Goal-Setting Theory.

Consequences

Goal-setting theory has yielded many influential empirical observations about the goal-performance relationship. Fred Lunenberg3 provides a useful overview of some of the most important findings of goal-setting theory and their implications for performance in management settings as shown in the table below.

Insight Implication
Goals need to be specific – for example, “Read 10 pages of Chapter 9 of the textbook tomorrow morning between 8 and 9 AM” is a better goal than “Read the textbook tomorrow.” If organizations want to motivate their employees, they shouldn’t simply encourage them to ‘do their best.’ Rather, they should work with their employees to set specific goals.
Goals must be difficult but attainable – there is a spectrum of goal difficulty that runs from easy (which sets the bar too low to yield high performance) to difficult (which can, in the right conditions, yield high performance) to impossible (which sets the bar too high to yield high performance). Goals should be set somewhere in the ‘difficult but attainable’ sweet spot. Whether or not a goal is seen as ‘attainable’ largely depends on a person’s self-efficacy (i.e. their belief that they can achieve the goal). Therefore, boosting workers’ self-efficacy can help them believe in their ability to complete difficult goals, thereby increasing performance.
Goals must be accepted – if a goal is assigned to you but you don’t feel committed to completing it, then the goal likely won’t influence your performance. Rather than unilaterally assigning goals to employees, organizations can engage employees in the goal-setting process to increase employees’ commitment to the organization’s goals.
Feedback must be provided on goal attainment – having a goal without feedback is like marking out a route on a paper map. Receiving feedback without having a goal is like being provided with the GPS coordinates of your current location. Having a goal and receiving feedback on that goal is like setting your route in a GPS device. Goal-based performance management systems should incorporate a feedback system.
Goals are more effective when they are used to evaluate performance – goals are more likely to improve performance if they are instrumental to a desired outcome, such as a pay raise or promotion. A common example is a commission-based salary structure often employed by sales companies. Organizations can link employees’ performance on goals with desired outcomes to improve performance.
Deadlines improve the effectiveness of goals – similar to the requirement for specificity, deadlines reduce the level of ambiguity associated with a goal. Deadlines provide a form of feedback on the rate of progress that should be made to complete a goal. Deadlines can improve performance, but the deadline must be reasonable so as not to negatively impact the perceived attainability of a goal.
Goals based on an intention to learn lead to higher performance than goals based on an intention to demonstrate high performance – in other words, goals geared towards ‘learning how to do something’ are more effective than goals geared towards ‘proving you can do something.’ Goals can be defined in terms of a desired improvement in performance rather than a desired level of performance.
Group goal-setting is as important as individual goal-setting – alignment between a team’s goal and the goals of each individual team member can increase performance. Team members can co-create shared goals for the team to improve the team’s performance.

Controversies

One of the more prominent critiques of goal-setting theory was published in 2009.4 In their critique, the authors argue that “the beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored.” The sources of systematic harm identified by the authors include:

  • “tunnel vision” resulting in neglect of non-priority tasks
  • distorted risk preferences
  • increased incentives to engage in unethical behavior
  • reduced learning
  • weakened group culture
  • lower intrinsic motivation

Many studies have demonstrated that such side-effects can occur as a result of goal-setting. A real-life example is the case of the Wells Fargo account fraud scandal, which in large part resulted from a company-wide goal that incentivized employees to engage in unethical behaviour to achieve performance targets.5

Locke and Latham argue that these problems are not an indictment of Goal-Setting Theory, but rather are a result of poorly implemented goal-setting programs. Indeed, some of Locke and Latham’s own research has explored the negative outcomes that can arise from misguided goal-setting initiatives.

Case Study

Latham’s original study of the impact of goal-setting on employee performance in the timber industry remains an excellent example of goal-setting theory.7 Management at a timber company noticed that crews were consistently failing to load trucks to full capacity.

Latham and his research partner J.J. Baldes applied Locke’s methods to test whether setting a hard, specific goal for the timber crews would increase the net weight of timber trucks. The results showed an ‘immediate’ improvement in performance among the timber crews who had been assigned hard, specific goals relative to the performance of the control group. The study helped the timber company dramatically reduce its trucking costs, and the results helped Locke and Latham’s ideas about goal-setting gain momentum in the I-O research community.

Related TDL Content

Strategies to Motivate for the Collective Good

One criticism of Goal-Setting theory was the concern that goals can incentivize engagement in unethical behaviors. Although Locke and Latham argue this consequence is just an example of poorly implemented goal setting, the question of how to motivate prosocial behavior rather than selfish behavior remains a highly pressing topic. In this episode of The Decision Corner, Erez Yoeli joins Brooke Struck to discuss what motivates people to do the right thing and the unique role of community in mediating motivation.

New Year’s Resolutions: Why We Make Them and How to Keep Them

Many of us are probably guilty of setting a number of goals as the New Year rolls around just to swiftly forget all about them in mid-January. But, what is so special about the New Year that makes us want to better ourselves and why does this feeling tend to fade so quickly? Read this TDL perspective if you want to say “this year will be different” and mean it.

Sources

  1. Latham, G., Locke, E. (1991). Self-Regulation Through Goal Setting. Organizational Behavior and Human Decision Processes 50, 212-247.
  2. Latham, G., Locke, E. (2019). The Development of Goal Setting Theory: A Half Century Retrospective. Motivation Science Vol. 5, No. 2, 93-105. https://www.decisionskills.com/uploads/5/1/6/0/5160560/locke_latham_2019_the_development_of_goal_setting_theory_50_years.pdf
  3. Lunenburg, F. (2011). Goal-Setting Theory of Motivation. International Journal of Management, Business, and Administration Vol. 15 No. 1. http://nationalforum.com/Electronic%20Journal%20Volumes/Lunenburg,%20Fred%20C.%20Goal-Setting%20Theoryof%20Motivation%20IJMBA%20V15%20N1%202011.pdf
  4. Ordóñez, L., Schweitzer, M., Galinsky, A., & Bazerman, M. (2009). Goals gone wild: The systematic side effects of over-prescribing goal setting. HBS Working Paper, 09-083.  https://www.researchgate.net/publication/228138437_Goals_Gone_Wild_The_Systematic_Side_Effects_of_Over-Prescribing_Goal_Setting
  5. Baker, T. H. (2016). Wells Is Exhibit A of Employee Incentive Failures. http://www.americanbanker.com/bankthink/wells-is-exhibit-a-of-employee-incentive-failures-1091227-1.html
  6. Bennett, D. (2009). Ready, aim… fail. Why setting goals can backfire. The Boston Globe.
  7. http://archive.boston.com/bostonglobe/ideas/articles/2009/03/15/ready_aim____fail/
  8. Latham, G. P., & Baldes, J. J. (1975). The “practical significance” of Locke’s theory of goal setting. Journal of Applied Psychology, 60(1), 122–124. https://doi.org/10.1037/h0076354

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