Performance of employees and whole organizations is affected by the goals they set themselves. although the goal setting process is a tedious and complex one, the effort is not only worthwhile, but becoming essential in todays organizations.
Organizations introducing a goal-based management – also known as “Management by Objectives” – report performance increases of 25% or more. But there are bad examples as well.
The most important reasons for having goals are:
* Goals guide and direct behavior of individuals and groups
* Goals provide challenges and indicators for assessing the individual and whole groups
* Goals define the basis for the organizational design
* Goals serve an organizing functions.
* Goals reflect what management and employees find important
Goal setting is the process of developing, negotiating and establishing targets that challenge the individual.
Individuals and Organizations strive to achieve their goals, thereby if goals are set up correct, their performance should increase.
Ed Locke and Gary Graham developed a sophisticated model in their “theory of goal setting and task performance”, also known as “Goal Setting Theory” – developed / published in 1968 and 1990.
The basic idea ts that a goal serves as a motivator because it allows people to compare their current performance with that required to achieve the goal. To the extend they believe they will miss the goal, they feel dissatisfied and strive to improve their performance to meet it.
They describe different components and aspects in their motivation model
is defined through goal difficulty, goal clarity and self-efficacy
More difficult goals – as long as they are reachable – motivate more and avoid that one gets too lazy because the goal seems too easy to achieve. Unrealistically high goals are not accepted and have no effect on the performance of the individual.
Goals enhance performance by clarifying what type and level of performance is expected or required.
Self-Efficacy (Confidence) refers to the level of confidence that one feels about their ability to achieve their goal.
The moderators Ability, Goal Commitment, Feedback and Task Complexity represent the factors that moderate the strength of the relationship between the goals and the performance.
Ability describes the orientation of the individual towards the goals – either it’s a learning goal where he wants to acquire new competencies and learn from it or it’s performance oriented where he avoids placing himself in situations that could lead to a negative evaluation.
Goal commitment is enhanced when goals are public and when goals are self-set.
Feedback makes the goal setting and evaluation process dynamic as it must provide timely response to the individual. It enables him to evaluate himself in respect to his goals.
Task Complexity finally effects the direct relation most. Goals for more trivial tasks lead to a more effective performance, whereas for more complex tasks goals do not lead to direct performance increases – at least we cannot measure it that way.
The factors called “mediators” support the achievment of the individuals goals.
“Direction of attention” focusses on keeping the individual away (for the goal) irrelevant activities.
“Persistence” describes the duration the person is willing for work for the goal – the sustainability in reaching it’s goals.
The moderator “Effort” is the greater the more complex and the more difficult the goal ( in realistic boundaries) is.
Task Strategy is the way in which the individual approaches it’s tasks to approach the goal.
Performance is likely to be high when the challenging goals have been set, the moderators are present and the mediators are operating.
Rewards are important to keep an employee at the high performance level he reached. Theory says that the rewards can be external (money etc.) or internal (like feelings of success) – which more accurately referes to the resulting extrinsic or intrinsic motivation. The latter cannot be influenced by an employer directly.
The Locke-Latham model primary focusses on the employees satisfaction with his own performance.
Employees with too high goals may experience less satisfaction than others, that lower their goal. That does not mean a better performance at all.
Other factors like satisfaction with good working conditions, interesting colleagues etc are not discusses in detail, altough they seem to be the major component for many satisfactory situations for employees nowadays.
Sub-Summary for goal-setting
Goals affect people’s motivation because they have to develop plans to reach these goals and focus on goal-relevant actions mainly. It also spurts people to persist in their way, even when facing obstacles.
Goal setting has shown to improve performance, but can fail if
a) the employee lacks the skills to perform the actions necessary to achieve the goals
b) these actions need a considerable amount of learning, which increases the time and resources considerably needed to achieve the goals
c) the goal setting system is just misused (as every system can be misused) or leads to appraising the wrong behavior (like mis-use)
Team vs. Individual Goals
Setting goals and measuring performance against individuals is an expensive method which costs often outweighed the potential gain in productivity. Some cases even report of individuals of a company fighting private wars to reach their goals – with a totally negative effect on the overall company performance. A typical system misuse.
In such cases the development of team goals should be selected with rewards for achievement allocated among the team members on a predetermined-share basis. In general this utilizes what I call “team-dynamics” for the goals’ effect. Something that’s missed for individual goals.