How Does Goal Setting Motivate Employees?

Goal setting and its influence on employee behavior and performance has been widely researched and discussed. Successful implementation of goal-setting strategies will result in employees being more motivated to complete specific tasks as well as higher morale and a more effective workplace.

The theory of goal setting and its motivational impact has been studied extensively. As early as 1968, Edwin A. Locke published a research paper on this topic, “Toward a Theory of Task Motivation and Incentives.” Locke was the leading researcher in this field for decades, rivaled only by Kathleen M. Eisenhardt, who developed the Agency Theory, dealing with the influence of target setting on human behavior. Most modern research on goal-setting is based on the earlier works of Locke and Eisenhardt.

Essentially, the theory of goal setting is based on the concept that whenever people work toward a predetermined goal, combined with a fixed deadline, they will be more motivated to complete the task at hand. People facing an open-ended task will be less inclined to work toward the end result in a structured and effective manner. Goal setting gives employees a larger sense of responsibility and accomplishment once the acquired goals are reached.

The research concerning the field of goal setting shows five important conclusions: 1) Setting goals leads to an improvement in performance. More than 80 percent of all studies by Locke and Eisenhardt show a direct relationship between the setting of targets and an increase in performance. 2) Setting difficult goals results in a higher level of performance than setting easier goals. 3) The method of goal setting --participative or assigned -- has no influence on performance.Participative goal setting means that employees have a say in the goal, whereas assigned goal setting is based on the employer's decision. 4) Educational level does not influence the effect of goal setting on performance. 5) Finally, these studies have shown that positive feedback from the employer has a beneficial influence on performance.

Taking the theories of Locke and Eisenhardt into account, while dealing with goal setting, managers also must take into account the behavioral impact of goal setting on an individual level. Four basic elements have to be kept in mind, along with the above mentioned theory and considerations. 1) Most importantly, the system of goal setting has to be open and transparent. Employees should know the goals of their co-workers to avoid having other employees feeling left out or being treated unfairly. 2) Goal setting should be objective. Employees must be able to trust their supervisors to objectively judge the goals that are set. 3) Goals should be open to adjustment. Employees and supervisors always should have the option to adjust goals whenever the goal becomes unrealistic due to circumstances. 4) The reward system underlying the goal-setting system should be characterized by the same openness as the goal-setting system itself.

The rewards for both the organization and the employees make it worthwhile for managers to implement a goal-setting structure. While dealing with goal-setting, managers must carefully review their approach to the topic. Goal-setting structures that do not follow the basic guidelines will result in dysfunctional behavior. Employees will feel like they have no real influence on the process or they will feel that their supervisors are not being objective. If managers succeed in following the basic guidelines and keep all communication open and transparent, only then will goal-setting will be a benefit to the employees and organization.