Goal Setting Theory for Organisations

The Goal Setting Theory

Goals setting theory was first evoked by Aristotle’s theory of final casualty and then researched by Locke in 1960s to get a closer look on how goal settings influence individuals at work. The basic concept behind this theory implies how human behavior is governed and motivated by goals and ambitions. Research suggests that working smarter is more beneficial than working harder, and produce more effective results. While considering how the instrument of goal setting could be used in a workplace, we find out that if employees feel that however well they work, valued rewards such as job security or promotion are highly unlikely, then their morale is likely to be low and there is little incentive for good work and high effort (Doyle, 2002, p. 80). However, if employees think that they can’t achieve good results however hard they work, they feel demoralised and the factor of motivation gets lower in this case. The impact of the goal setting theory is determined through various factors like to what extent employees are motivated to achieve their goals, performance measurement and productivity and self-assessment measures.


Managers today realise that employees possess a particular behavior towards a goal with a purpose or pattern. By analysing such patterns of behavior, managers get to know that employees are influenced by motives that stem from psychological and physiological needs. Managers consider employees as individual by nature, therefore they have distinct conceptions of motivation, which often seems complicated to managers. Theorists believe that motivation is the process that works internally and exhibits satisfying psychological or physical needs through actions and behaviors (Sims, 2002, p. 55). Concerned with a composite of mental and physical drives, motivation when combines with the employee satisfaction, it drives and make employees work with their internal and external energies. Goal setting, whether short term or long term, acts as a catalyst to provoke motivation and if organisations wish to be successful in getting employees to achieve organisational objectives, their supervisors and managers must understand the implications of motivation, that is implemented in terms of employee rewards and benefits.

As a managerial tool, goal setting theory is used as a motivational technique extensively used in organisation settings helpful for leaders while psychologically, it refers to a cognitive theory of motivation which is based on the premise that since human behavior is purposeful, therefore it is necessary to influence individuals towards goal oriented behavior by sustaining individual’s energies towards performing a particular action (Yearta et al, 1995).

Retaining employees Integrity

With work comes integrity, which is about the way employees organise their dealings with self-chosen and self-designed environment. Integrity is not only about individuals but is about the workplace and helps employees to accomplish task performance, well-being and motivation as well as personal grooming in the organisational setting (Schabracq et al, 2003, p. 14). These factors also ease to acquire targeted goals for both, the employee and the organisation.

The organisational impact of goal setting theory is effective to produce aimed or targeted results. It would be better to say that goal setting does produce better results than not setting goals, but under certain reasons where challenging goals and a number of moderators and mediators must be in place before effective performance takes place. Goal setting environment is judged through measuring performance, which is not an absolute concept because it ranges from poor to effective. Moreover, performance is not an end in itself, there are other indicators of assessing goal setting, for example, in the long term, employees must be rewarded for effective performance if they are expected to remain committed to an organisation. We can say that goal setting impact upon employees results in certain steps towards individual satisfaction which is related to commitment. The three factors that interrelatedly works to analyse the organisational impact of goal setting is performance, rewards, and satisfaction (Curtis, 1994, p. 49).


Productivity is affected by employee’s abilities, their motivation level and the environment in which they are expected to perform (Smither, 1998, p. 6). Therefore goal setting theory helps the leaders and managers to determine how to best evaluate, utilise and even improve employees performance (ibid). Osland et al (1999) points out that “High company expectations about what employees should contribute to the company produces increased individual performance” (Osland et al, 1999, p. 5).

Goal setting procedure helps to avoid compromising standards that is to use challenging goals to manage performance. It diffuses a clear understanding that judgments are not based on success or failure but rather on performance levels, which suggests to keep the goals challenging, but manage performance relative to the goals rather than the goals’ attainment. A performance management approach means that management must make difficult judgment calls when evaluating people. Performance is judged on objective measures of relative improvement, level of effort, and progress towards the goal. Therefore employees are well aware of the fact that it is not necessary to succeed every time on every task. This thinking helps the employees to confront organisation challenges without demotivation, as a result they stick to their goals.

Since goal setting environment motivates employees to keep a room for learning and improvement without compromising the ultimate goal. The target remains the same, but people are rewarded based on progression, not whether they succeed or fail (Curtis, 1994, p. 50). Thus it is the impact of goal setting that agrees to the possibility of rewarding partial success for which the advantage is that employees are rewarded for undertaking very challenging goals even if they are unable to completely reach them. Therefore performance is managed effectively by goal setting, by not considering the success or failure as the issue, nor by compromising standards, but through the focus on learning, continuous improvement, and progress toward effective performance.

Performance and Job Satisfaction

Performance analysis have consistently found that job satisfaction and productivity holds a very weak relationship. Organisations that focuses on goals finds no surprise to know that the association between satisfaction and task or job performance is quite modest, because of the indirect relationship of satisfaction to performance. It is the satisfaction factor that keeps employees motivated to perform well and attached to the organisation, improves commitment and creates the willingness to accept new challenges. The relationship between individual goal setting and efficacy beliefs typically deploy short term or long term goals that in the form of some expected performance, such as number of problems to be solved or employee productivity standards, occurs (Garavalia & Gredler, 2002).

Goal setting promotes the Self-assessment Rationale

Self-assessment is adopted for three reasons i.e, to help accelerate process improvement, to ensure that systems are actually processing results and to ensure that every employee is performing as a source of rapid incremental learning, and experiencing that lead to internal action (Milgate, 2004, p. 50). The self-assessment rationale is usually undertaken annually by dedicated teams who appoint criteria owners, internal trained assessors and self assessment programs, so as to analyse the clarity of the goals and measures with a detailed scoring matrix as recent innovations (ibid). Self-assessment framework does not necessarily require effective leadership, since strategic planning assesses employee results individually and are the measures of progress toward the goals of customer focus and satisfaction. In fact it would be better to say that goal setting for organisations revolve around business results and strategic planning so as to measure customer focus and satisfaction. Many organisations feel vital to measure competitors performances that include analysis of product quality, productivity efficiency, supplier performance and financial results. Thus, organisational goal setting starts from analysis and ends up in productive financial results.

The success of any organisation is possible through goal setting longer term effects, that impacts on work motivation, which is elicited by goal-setting facilities which may include short-term and long term retention of information mainly for subgoals. Goal setting tasks that facilitates short term improvements retain information that seem to be restricted to conditions in which the use of a rehearsal strategy is impeded. Erez et al (2001) points out that goal setting results demonstrate a clear performance enhancing effects, that on individual’s performance are probably not caused by different encoding strategies, but research suggests that leads to a temporary increase in cognitive arousal in which an individual’s working memory capacity is increased, when it comes to motivation (Erez et al, 2001, p. 49). Theorists believe that goal-setting theory being the best theories of human motivation and task performance, which effects smaller subgoals that performance tasks claim to be the most powerful determinants of employee behavior.


Curtis Keith, (1994) From Management Goal Setting to Organisational Results: Transforming Strategies into Action: Quorum Books: Westport, CT.

Doyle E. Christine, (2002) Work and Organisational Psychology: An Introduction with Attitude: Psychology Press: London.

Erez Miriam, Kleinbeck Uwe & Thierry Henk, (2001) Work Motivation in the Context of a Globalising Economy: Lawrence Erlbaum Associates: Mahwah, NJ.

Garavalia S. Linda & Gredler E. Margaret, (2002) An Exploratory Study of Academic Goal Setting, Achievement Calibration and Self-Regulated Learning, Journal of Instructional Psychology. Vol. 29. No. 4, pp. 221.

Milgate A. Michael, (2004) Transforming Corporate Performance: Measuring and Managing the Drivers of Business Success: Praeger: Westport, CT.

Osland, Joyce S., Kolb, A. David & Rubin, M Irvin, (1999) Organisational Behaviour: An Experiential Approach. Sixth edition.

Schabracq J. Marc, Winnubst Jacques, A. M. & Cooper L. cary, (2003) The Handbook of Work and Health Psychology: John Wiley & Sons: Chichester, England.

Sims R. Ronald, (2002) Managing Organisational Behavior: Quorum Books: Westport, CT.

Smither D. Robert, (1998) The Psychology of Work and Human Performance, third edition. London: Prentice Hall.

Yearta K. Shawn, Maitlis Sally & Briner, B. Rob, (1995) An exploratory study of Goal setting in theory and practice: A motivational technique that works, Journal or occupational and organisational psychology, 68, pp. 237-252.

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