Goal Setting Theory: Understanding How Goal Setting Works

goalsettingtheoryNearly 2300 years ago, the great Greek philosopher Aristotle wrote about the causes of any change or event. One of the causes he identified was the final cause. The final cause was defined as the purpose or ultimate goal of any change. This was to say that change can be willed, or rather, that it can be caused through conscientious action.

Mundane as it may be in our goal-centric modern world, this was a revolutionary idea for centuries. It also served as the basis of Edwin A. Locke’s goal setting theory, which we’ll learn about in this tutorial.

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Goal Setting: A Background

As mentioned above, the idea of self-willed change was first proposed by Aristotle. In listing the causes, or rather, the why of things, Aristotle debated that identifying an end-goal or purpose can be a catalyst for action. This to say that there is a two-way relationship between goals and effort – goals encourage effort; effort causes goals to be met.

The effect an end-goal and fixed purpose can have on productivity and effectiveness was long known to the world, albeit only casually. It wasn’t until 1935 that the first empirical study on goal-setting was conducted by British philosopher, Cecil Alec Mace. Mace concluded that workers are motivated by monetary rewards as well as the accomplishment of goals – a groundbreaking idea at a time when management sciences were still mired in anecdotal knowledge and hearsay.

Edwin A. Locke expanded greatly on Mace’s work and is generally considered the father of modern-day goal-setting theory. Locke, who is currently a Professor Emeritus at University of Maryland, detailed this theory in 1968 in a revolutionary paper titled, “Towards a theory of task motivation and incentives”. This widely cited paper laid the groundwork for a number of management practices such as Management by Objectives.

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Principles of Goal-Setting

The principle of goal-setting is to continuously improve and spur the person (or the organization) towards greater productivity and efficacy. Consequently, the chief principles of goal-setting are:

  1. Clarity: A goal that cannot be easily understood is a goal that doesn’t really fulfill its purpose. Goals must be easily graspable and must have a clear purpose or vision.

  2. Dedication: Merely creating a goal isn’t enough; the goal-setting exercise must be followed by dedicated action to meet the goal.

  3. Challenge: Goals that don’t challenge the goal setter enough will ultimately fail. Goals must be difficult to achieve – but not too difficult – if they are to encourage action.

  4. Constant Feedback: Gathering feedback after setting a goal is important for success and future improvement. Understanding how and why certain goals were met, while others were not helps you to spot weaknesses and streamline the goal-setting process for future success

How to Set Goals

Based on the above principles, the goal-setting theory requires that all goals be specific, measurable, achievable, realistic, and time-targeted, commonly known by the popular S.M.A.R.T. acronym.

Let us examine these characteristics in detail:

  • Goals must be specific. Instead of vague targets such as “earn more money”, individuals and organizations must have highly detailed targets, like “earn extra $1,000 each month”.

  • Goals must be measurable. If what is being targeted cannot be measured or quantified, it cannot possibly be tracked, which undermines the entire purpose of goal-setting.

  • Goals must be achievable. Setting targets that are impossible to achieve within the time-frame can actually have the opposite effect of reducing productivity and discouraging initiative. There is, of course, a thin line between what is achievable (but difficult) and what is completely beyond possibility. A goal of “land a man on the moon” in the 1960s was difficult, but not unachievable with contemporary technology. A goal of “landing a man on the sun”, however, falls in the latter category.

  • Goals must be realistic. This is an off-shoot of the above point and underlines the need for goals to be rooted in the real world, not fantasy. Asking a company that produces athletic shoes to branch out into dairy products within a month, for instance, is not a realistic goal. Asking the same company to branch out into formal shoes, on the other hand, is a difficult, but realistic goal.

  • Finally, goals must be time-targeted. This means each goal must be completed within a specific time period. A goal with an endless or unspecified time period loses any of its motivational qualities. For example, “make $1,000 more each month within 3 months” is a targeted goal; “make $1,000 more each month within 100 years”, on the other hand, is mostly useless because it gives too much room for inaction.

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Applications of Goal-Setting Theory

The goal-setting theory is equally applicable in business and personal life. People have used it to transform entire organizations, increase worker productivity, and create more efficient businesses. It has also been equally effective in personal development and has been a fundamental part of most self-improvement techniques.

Depending on the complexity of the intended target, it isn’t uncommon for businesses and individuals to break down tasks into sub-goals. For example, a business that sets a goal of increasing revenues by 20% might break down this task into the following sub-goals:

  • Increase productivity at local factory by 20%

    • Implement automation solutions across 40% of organization.

    • Invest 10% of production budget into robotics.

  • Reduce transportation costs by 10%

    • Install GPS tracking systems across entire fleet to gather data on driver behavior.

    • Invest 20% of transportation budget into buying faster, more fuel-efficient fleet.

  • Increase demand by 40%

    • Increase marketing budget by 20%.

    • Create new social media marketing campaign to increase influence among 18-25 year olds.

    • Improve search engine rankings to rank on the first page for primary keyword on Google.

How detailed you want each goal to be is up to you. Many businesses often create very broad yearly/quarterly targets (“increase sales by 20 %”) each of which are subsequently divided into smaller goals for every division. These goals may be further broken down into daily, weekly, monthly, quarterly goals, and so on.

The principles of goal-setting theory are the foundation of modern management techniques. Setting goals gives us a concrete target to work towards, helps increase productivity, and gives us a quantifiable measure of success (or failure). Implementing the goal-setting theory in your personal and business life can give you the edge you need to succeed against immense competition.

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