The Importance Of Goal Setting In Business

Michael Dean
The Importance Of Goal Setting In Business

Since a young age, most of us have been taught that we can be better organised, accomplish more, and increase motivation and performance if we take a little time to set goals for ourselves.

Goals give us something to work towards, helps us to organise our thoughts, allows us to consciously engage in the most productive behaviours at the right times, and remain motivated as we accomplish things that will that final goal to fruition.

This might seem like an obvious view, but throughout the evolution of psychology, conscious human activity such as goal setting was often downplayed. Psychoanalysis put precedence on the unconscious parts of the mind, while cognitive behaviourists argued that external factors affecting human behaviour were of central importance.

In 1968, Edwin A. Locke formally developed goal setting theory as an alternative. This theory holds that setting conscious goals is one of the most efficient means of increasing productivity and motivation while avoiding procrastination within any part of our lives, including the workplace.

What is goal setting theory?

Former President of the Canadian Psychological Association, Gary P. Latham tells us in The Motivational Benefits of Goal-Setting that goal setting theory’s “underlying premise is that one’s conscious goals affect what one achieves … because a goal is the object or aim of an action.”

While still a theory in the behavioural science, this view went against traditional cognitive behaviourism which views human behaviour as being conditioned by external stimuli. In this view, just as a mechanic works on a car, other people often work on our brains even without us realising it – and this is what determines how we behave.

Goal setting theory, while not denying this, goes farther and holds that conscious internal cognitive functions are just as important, if not more important, in determining human behaviour than external stimuli. Of course, in order for conscious cognition to be effective, it must be directed and oriented towards the world. This is the purpose of goals.

Locke and Latham have spent many years explicating the exact nature of how goals function and the ways in which they can increase motivation. Fred C. Lunenburg, professor at Sam Houston State University, summarises these points succinctly in Goal-Setting Theory of Motivation:

Specificity: In order for a goal to be successful, it must be specific. Goals such as “Do better next time” are too vague and general to motivate action. A more specific goal, however, such as “Spend 2 hours of time on the report per day in order to complete it within the time given” will better motivate action.

Difficult but attainable: Goals must, of course, be attainable otherwise they would simply be counterproductive. At the same time, goals that lack difficulty can lead to boredom and cause us to give up. We must make sure that our goals are challenging enough to motivate us without stressing us out.

Acceptance: Many times, we are given goals by people other than ourselves, but if we do not accept those goals as our own they will likely not lead to a positive outcome. In order that the goals motivate behaviour, they must be accepted by the one who is expected to behave in a certain and prescribed manner.

Enabling team members to come together and discuss goals can be a way of both building community and further ensuring that the goals are accepted by all in order that they motivate as they should.

The need for feedback and evaluation: When a goal is accomplished, it will likely lead to a sense of satisfaction, pleasure, and even temporary meaning. If there is no feedback, however, the pleasure will quickly subside and the accomplishment will become meaningless.

In the workplace, feedback builds community and gives workers a feeling that their contributions matter. As well, feedback can become a means of evaluating overall performance beyond the single goal itself. When goals are used for performance evaluation, they often are much more effective than otherwise.

Learning beyond performance: While goals can be used as a means by which to give feedback and evaluate performance, goals that are oriented toward allowing an individual to learn something new often are more effective than goals which merely ask an employee to perform some task.

When an employee must learn something, he develops new skills and comes to better discover his place within the workforce. Learning-oriented goals can be very helpful in assisting the employee to discover life-meaning which can increase productivity.

Performance-oriented goals, however, force the employee to prove to the employer that he can do what he has been asked. These types of goals are less likely to produce a sense of meaning, pleasure, or satisfaction than those which enable an employee to grow, learn, and explore. In the performance-evaluation, the employer can examine not just how the employee has proven himself but what he has learned in the process of accomplishing his goals and how he can apply that elsewhere.

Group goals: Just as individuals have goals, so too must certain groups, teams, and committees. By bringing people together and allowing them to develop and work on the same goals is a means of creating community, a deeper sense of meaning, and a greater feeling of belonging and satisfaction. Isolation can lead to existential frustration while engaging in community can create a sense of belonging and comfort.

What about Deadlines?

Lunenburg also tells us that goals with deadlines are more likely to produce desired outcomes than goals without deadlines. Piers Steel of the University of Calgary helps to elucidate why in The Nature of Procrastination.

Here, he bridges a number of psychological theories in order to define the nature of motivation itself. Where goal setting theory tells us that goals can lead to increased motivation, nowhere does the theory explain what exactly motivation is. As part of his temporal motivation theory, Steel gives us this equation:

Utility measures how much one desires a certain task or choice. In other words, it is how motivated one is to choose or do something. To determine how motivated one is to complete a choice or task, we must multiply what we expect from the task (E) by the value given to it (V). That value must then be divided by the amount of time given to accomplish a task or make a choice (D) multiplied by how sensitive one is to the delay of time (T). Factors that affect sensitivity include distractibility, impulsivity, and level of self-control.

The greater the time and the greater the sensitivity to the delay, the less motivated one will be to complete a task. Thus, setting goals with reasonable deadline can increase motivation.

Let us conclude with this example: An employee is assigned to complete a quarterly document due in three months. His or her motivation will be low because the amount of time is high and this is likely to increase sensitivity to the delay. However, if the document were broken into three sections each to be completed at the end of each month, or if the document were broken down into weekly targets, motivation could be increased.

While the long-term goal remains, there now exist short-term goals that help bring it to fruition. By creating both short-term and long-term goals, one is more likely to remain motivated to accomplish what has been set before them.

This is why goals are so important in the workplace and must be discussed communally and given with appropriate deadlines based on both desired short-term and long-terms outcomes.

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