Business & Economic Paper

Goal setting involves establishing specific, measurable and time-targeted. Goal setting features as a major component of personal development literature. Goals perceived as realistic are more effective in changing behavior.

Work on the theory of goal-setting suggests that it's an effective tool for making progress by ensuring that participants in a group with a common goal are clearly aware of what is expected from them if an objective is to be achieved. On a personal level, setting goals is a process that allows people to specify then work towards their own objectives - most commonly with financial or career-based goals.

"Goals provide a sense of direction and purpose" (Goldstein, 1994, p. 96). "Goal setting capitalize on the human brain's amazing powers: Our brains are problem-solving, goal-achieving machines."

Contents

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* 1 Concept

* 2 Goal setting in business

* 3 Goal-performance relationship

o 3.1 Moderators

o 3.2 Feedback

* 4 Limitations

* 5 History

* 6 See also

* 7 References

* 8 Further reading

Concept

Goals that are difficult to achieve and specific tend to increase performance more than goals that are not. A goal can become more specific through quantification or enumeration (should be measurable), such as by demanding "increasing productivity by 50%"; or by defining certain tasks that need completing. Setting goals affects outcomes in four ways.

1. Choice: goals narrow attention and direct efforts to goal-relevant activities, and away from perceived undesirable and goal-irrelevant actions.

2. Effort: goals can lead to more effort; for example, if one typically produces 4 widgets an hour, and has the goal of producing 6, one may work more intensely than one would otherwise in order to reach the goal.

3. Persistence: An individual becomes more prone to work through setbacks if pursuing a goal.

4. Cognition: goals can lead an individual to develop cognitive strategies to change their behavior.

Goal setting in business

In business, goal setting has the advantages of encouraging participants to put in substantial effort; and, because every member has defined expectations set upon him or her (high role perception), little room is left for inadequate effort going unnoticed.

Managers cannot be constantly able to drive motivation and keep track of an employee's work on a continuous basis. Goals are therefore an important tool for managers since goals have the ability to function as a self-regulatory mechanism that acquires an employee a certain amount of guidance Shalley, 1995 and Locke and Latham (2002) have distilled four mechanisms through which goal setting is able to affect individual performance:

1. Goals focus attention towards goal-relevant activities and away from goal-irrelevant activities.

2. Goals serve as an energizer; higher goals will induce greater effort while low goals induce lesser effort.

3. Goals affect persistence; constraints with regard to resources will affect work pace.

4. Goals activate cognitive knowledge and strategies which allows employees to cope with the situation at hand.

Goal-performance relationship

Locke et al. (1981) examined the behavioral effects of goal-setting, concluding that 90% of laboratory and field studies involving specific and challenging goals led to higher performance than did easy or no goals.[5]

While some managers would believe it is sufficient to urge employees to 'do their best', Locke and Latham have a clear contradicting view on this. The authors state that people who are told to 'do their best' will not do so. 'Doing your best' has no external referent which implies that it is useless in eliciting specific behavior. To elicit some specific form of behavior from others, it is important that this person has a clear view of what is expected from him/her. A goal is thereby of vital importance because it facilitates an individual in focusing their efforts in a specified direction. In other words; goals canalize behavior (Cummings & Worley p. 368)[vague]. However when goals are established at a management level and thereafter solely laid down, employee motivation with regard to achieving these goals is rather suppressed (Locke & Latham, 2002 p. 705)[vague]. In order to increase motivation the employees not only need to be allowed to participate in the goal setting process but the goals have to be challenging as well (Cummings & Worley p. 369)[vague].

Moderators

Through an understanding of the effect of goal setting on individual performance organizations are able to use goal setting to benefit organizational performance. Locke and Latham have therefore indicated three

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