The goal-setting theory

Introduction

This paper discusses the goal-setting theory. The first part gives a short overview of the predominant approaches explaining motivation. Part two mainly discusses the core findings related to the goal-setting theory and in more detail the main factors influencing the goal-performance relationship. The third part gives both examples of its practical application and its limitations. Finally, a short conclusion is given. A short catalogue of the chronological sequence of theories positioning goal-like constructs can be found in the appendix.

Overview of Motivation Theories

Motivation is one of the most frequent researched fields in ‘Organizational Behavior’ (Ambrose & Kulik, 1999). There are numerous approaches that try to give explanations of motivation. On the one hand there are the “Need Theories” like the most well-known theory of motivation the “Hierarchy of Needs Theory”, the “Two-Factor Theory” , “Theory X and Theory Y”, the “ERG Theory” and “Theory of Needs” . On the other hand there are the cognitive evaluation theories like the “Reinforcement Theory” which can be divided into ‘classical conditioning’ and ‘operant conditioning’, the “Job-Design Theory”, the “Equity Theory”, the “Expectancy Theory”, and finally the “Goal-setting Theory” proposed by E. A. Locke in the late 1960s (Robbins, 2005).

Locke & Latham presented their first comprehensive statement of goal setting as a theory in 1990, in contrast to goal setting as a technique in 1984 (Latham & Pinder, 2005). The “Goal-setting Theory” (Locke, 1968) is one of the most efficacious and sound in organizational sciences (Miner, 1984), one of the few interventions in the behavioral sciences that has received almost unanimous support (Russel & Curtis, 2000), and one that provides one of the more powerful explanations of the dependent variable “motivation” (Robbins, 2005).

Core Findings

Numerous meta-analyses have been conducted on goal setting research: Results indicate that especially specific and difficult challenging goals improve a variety of performances (Locke, Shaw, Saari, & Latham, 1981; Mento, Steel, & Karren, 1987). Goal setting is considered important in improving employee productivity (Katzell & Guzzo, 1983), in improving academics results (Schunk, 1991), in rehabilitating injured athletes (Gould & Udry, 1994), in reducing burnouts (Savicki & Cooley, 1982), and in improving task performances of groups (Whitney, 1994). But what other factors besides specificity and difficulty affect the goal-performance relationship?

The following important moderators have been found to influence this relationship: Feedback, goal commitment (with its two main categories importance and self-efficacy), task complexity (Locke & Lathman, 2002), and additionally national culture (Robbins, 2005). But before we discuss each of these factors in greater detail, one further important core finding made by goal-setting research must be mentioned: the high- performance cycle.

This cycle explains the lack of a direct connection between job satisfaction and subsequent productivity, a question that has long puzzled psychologists. (Latham, Locke, & Fassina, 2002). The high-performance cycle gives an explanation how high goals lead to high performance, which in turn leads to rewards, such as recognition and promotion. These rewards result finally in high satisfaction as well as high self-efficacy. Thus, in the high-performance cycle high job satisfaction is the result - and not the cause, of high-performance when performance and rewards are equally valued by the employee.

Factor Feedback

For goals to be effective, people need feedback that reveals progress in relation to their goals (Locke & Latham, 2002). Therefore, when people notice that they are below their planned goals, they normally increase their effort (Matsui, Okada & Inoshita, 1983). Thus, if they do not know how they are doing, it is difficult or impossible for them to adjust the level or direction of their effort or to adjust their performance strategies to match what the goal requires (Mento, Steel & Karren, 1987).

Further research revealed that self-generated feedback has greater impact on motivation than externally generated feedback (Locke, 1996) and that especially positive feedback leads to improved self-efficacy and performance (Robin & Thorn 2001). To conclude, feedback is important for goal attainment, perhaps more for the informational aspects than the motivational ones (Austin & Bobko, 1985).

Factor Goal Commitment:

Goal commitment refers to the determination to try to attain a goal and persist in the face of difficulties and is considered a pre-condition for goal-setting to impact performance (Diefendorff & Lord, 2003). Hollenbeck, Williams, and Klein stated that when the entire range of goals was present, commitment would moderate the relationship of difficulty and performance, but when only difficult goals were used, commitment would show a main effect (Hollenbeck, Williams & Klein, 1989).

Two key categories of factors facilitating goal commitment are the importance of goals to people (e.g. outcomes that they expect as a result of achieving the goal), and self- efficacy - the individual’s conviction that he or she is able to complete a specific task or goal (Locke, 1968). Both are positively related to goal performance (Locke & Latham, 2002). The importance can be increased when goals are made public, the individual has an internal locus of control, and when the goals are self-set rather then assigned (Robbins, 2005). Research clearly demonstrated that efficacy beliefs influence the level of motivation and performance. At the group level, group efficacy is consistently related to group performance (Erez, 2005). The level of motivation of individuals with high self- efficacy can be enhanced for example by both difficult tasks and even negative feedback. However, individuals with low self-efficacy are more likely to lessen their efforts regarding similar circumstances (Robbins, 2005).

Factor Complexity:

Research has shown that the motivational effects of goals are stronger when task complexity is low rather than high (Wood, Bandura, & Bailey, 1990). This is because performance of highly complex tasks depends not only on effort or persistence, but also on the cognitive understanding of the task and the strategy or plan necessary for completing it (Erez, 2005). Therefore goals seem to have more substantial effect on the performance when tasks are simple rather than complex, well-learned rather than novel, and dependent rather than interdependent (Robbins, 2005).

Factor National Culture:

The last key factor influencing the level of motivation is national culture, because “the goal-setting theory is culture-bound” (Robbins, 2005). Mainly in countries like the USA and Canada where certain cultural prerequisites prevail is this theory well-adapted. These prerequisites are summarized as follows: managers and employees seek challenging goals (low in uncertainty avoidance), employees are reasonable independent (not too high a score on power distance), and finally that performance is considered important by both the employee and the manager.

Practical Application to Job Attendance - The Individual

Goal setting is a key variable in self-regulation at work and job attendance is a prerequisite of job performance. Frayne and Latham (1987) developed a training program to explain unionized state government employees strategies to overcome obstacles they perceived to coming to work. The self-regulation training taught those employees to set specific and high goals for attendance, to monitor ways in which their environment supports or hindered achievement of their goal, and to identify and administer rewards for making goal progress, as well as punishments for failing to make progress toward goal attainment. This way the employees increased their self-efficacy because they could exercise influence over their behavior. Increases in self-efficacy correlated significantly with subsequent increases in job attendance. Moreover, the job attendance of the people who were taught these goal-setting skills was significantly higher than that of the control group.

Practical Application to Team Behavior - The Group

Brown and Latham (2000b) studied the team-playing behaviour of master’s-level business students in their respective study groups. Those students who set specific high goals regarding their evaluation by peers and who received training in verbal self- guidance regarding goal attainment had higher team-playing skills than those who did not set goals.

Practical Application to Productivity and Cost Improvement - The Corporation

According to studies made by Latham & Baldes, Latham & Yukl, Latham & Saari, Terpstra and Rozell, and others specific difficult goals leads to significant increases in employee productivity. This paragraph sums up the results of several research studies to provide evidence for this hypothesis. For instance, unionized truck drivers increased the logs loaded on their trucks from sixty percent to ninety percent of the legal allowable weight as a result of assigned goals. Within nine months, the drivers saved the company $250,000 (Latham & Baldes, 1975). A subsequent study saved $2.7 million dollars in eighteen weeks by assigning unionized drivers the goal of increasing their number of daily trips to the mill (Latham & Saari, 1982).

Specific high goals increased the performance of word-processing operators regardless of whether the goal was assigned by a manager or set participatively (Latham & Yukl, 1976). In a survey of companies from Dun’s Business Rankings, Terpstra and Rozell (1994) found a significant correlation between goal setting and organizational profitability. All these previous examples show impressively how the application of the goal-setting theory can improve the work performance of individuals, teams, and even corporations.

Limitations of the Goal-setting theory

The most common limitation considering the goal-setting theory is the so-called goal conflict. The organization’s goal and the goal of an individual manager are sometimes conflictive. For example, working to attain the organization’s goals could be unfavourable to the compensation of a manager if the manager is rewarded more for the performance of the people they lead than for the performance of the overall organization.

Thus, goal conflict undermines performance if it motivates incompatible action tendencies (Locke, Smith, Erez, & Schaffer, 1994). To solve this problem, difficult goals of the person must be brought into line with the corporation’s goal. Without such alignment, personal goals have a detrimental effect on a corporation’s performance (Seijts and Latham, 2000).

Conclusion

The focus of goal-setting theory is on the core properties of an effective goal. An effective goal should be at least specific and difficult. Furthermore, goal-setting theory is not limited to but focuses primarily on motivation in work settings. With goal-setting theory, specific difficult goals have been shown to increase performance.

The dependent variables have included quantity, quality, time spent, costs, job behavior measures, and more. In short, goal-setting theory is among one of the most valid and practical theories of employee motivation in organizational psychology (Lee & Earley, 1992).

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