What Is Goal-Setting Theory? Principles, Pros and Cons

By Indeed Editorial Team

November 8, 2021

Goal-setting theory is an employee-engagement tactic that involves setting specific and measurable goals to improve productivity. By incorporating the goal-setting theory into the workplace, you can both improve employee performance as well as bolster employee engagement. Here, we discuss the definition of goal-setting theory, its principles and how to use them, and the advantages and disadvantages of the goal-setting theory.

What is goal-setting theory?

Goal-setting theory is a theory based on the idea that setting specific and measurable goals is more effective than setting unclear goals. Edwin A. Locke developed this theory in 1968 in his article, "Toward a Theory of Task Motivation and Incentive.” In this article, Locke showed how employees are more motivated by well-defined goals and constructive feedback and are more likely to accomplish these goals when they are specific and measurable.

In addition to setting clear goals, Locke emphasized the fact that employees work well when they are faced with challenging goals. Tackling these more difficult goals forces employees to work hard and develop their skills, and, as a result, receive positive feedback and an overall sense of achievement. This, in turn, may result in improved employee engagement, productivity and satisfaction in the workplace.

Related: Setting Goals at Work: Benefits and Tips

Principles of the goal-setting theory

According to Locke's goal-setting theory, there are five main principles of setting effective goals:

  1. Clarity: Goals must be clear and specific. When employees understand project objectives and deadlines, there is much less risk for misunderstandings.

  2. Challenge: Goals should be sufficiently challenging to keep employees engaged and focused while performing the tasks needed to reach each goal. Goals that are too tedious or easy have a demotivating effect and will, therefore, result in less achievement satisfaction.

  3. Commitment: Employees need to understand and support the goal they are being assigned from the beginning. If employees don't feel committed to the goal, they are less likely to enjoy the process and ultimately achieve the goal.

  4. Feedback: Feedback is an important component of the goal-setting theory. Regular feedback should be provided throughout the goal-achieving process to ensure tasks stay on track to reach the goal.

  5. Task complexity: Goals should be broken down into smaller goals. Once each smaller goal is reached, a review should be performed to update the employee on the overall progress towards the larger goal.

Related: How To Set and Achieve Goals

How to use goal-setting theory in the workplace

There are several steps you can take to incorporate the goal-setting theory into the workplace. These steps include:

1. Identify the purpose of the goal

There are several reasons why a goal should be set. For example, maybe an employee needs to learn a new computer program to continue doing their job. Maybe your company has just integrated a new system that will be used by all employees, so determining the best way to ensure each employee learns the system would require the implementation of goal-setting. Whatever the reason for the goal, it should be clear to both management and the employee or employees who will be accomplishing the goal.

2. Meet with the employee

If a goal is being set for a single employee, schedule a meeting with this employee to go over the needs for goal-setting. Get the employee's opinion on the need for the goal and ensure the employee understands their responsibilities in terms of accomplishing the goal. You can also use this time to inform the employee of future check-ins on their progress.

3. Develop a plan using the SMART model

The SMART model is an effective way to set and accomplish goals. SMART is an acronym that stands for Specific, Measurable, Aggressive, Realistic and Time-bound.

Specific

Specific means that the goal should be as specific as possible. Rather than saying you want an employee to increase their customer satisfaction ratings, communicate you want the employee to improve their customer satisfaction ratings by 10% over the next month.

Measurable

The goal should be measurable. So, instead of saying the goal is to increase sales, you would set a measurable sales goal, such as to increase sales by 12% over the next six months.

Achievable

Goals should be fairly challenging to keep employees engaged and to provide a better reward upon accomplishing them but the goals should also be achievable. Ensure the goal being set is slightly higher than an employee's skill set, to keep the employee engaged, but still within reach of the employee’s capabilities.

Realistic

Setting a goal that seems impossible or out of reach will not offer motivational value to employees and therefore result in loss of interest and perseverance for those working to reach the goal. Set a goal that can realistically be met.

Time-bound

Goals should have a clear timeframe in which they need to be reached. For example, instead of saying that the goal is to increase sales by 10%, a time-bound goal would be to increase sales by 10% over the next 90 days.

Read more: SMART Goals: Definition and Examples

4. Make sure the employee has what they need to accomplish the goal

Before the employee starts working toward a particular goal, you should first ensure they have the equipment, time and resources needed to accomplish the goal. Meet with the employee and ask if they have access to what they need, and if not, provide this to them before they begin working towards the goal.

5. Provide regular feedback

Meet with the employee on a regular basis to assess their progress, review their action plan and discuss the results achieved. When an employee reaches a goal, provide positive and supportive feedback. If an employee was unable to meet the goal by the set timeframe, discuss any modifications that need to be made and provide constructive feedback as to how the employee can improve.

Advantages of goal-setting theory

There are several advantages of incorporating the goal-setting theory in the workplace. These advantages include:

  • Goal-setting can increase employee engagement within the workplace.

  • This theory provides a clear guideline as to how to set and achieve goals in an effective way.

  • Goal-setting improves employee performance by increasing efforts and overall motivation.

  • Goal-setting allows for constructive feedback on a regular basis so employees are constantly improving.

  • Goal-setting and accomplishing goals provide employees with an overall sense of accomplishment which can boost morale and workplace satisfaction.

Disadvantages of goal-setting theory

There are also a few potential disadvantages to be aware of in terms of using goal-setting theory in the workplace. These potential disadvantages include:

  • If there are difficult goals that management and the company are trying to accomplish, performance may fall due to incompatible actions.

  • Goals that are too far above an employee's skills and competencies can have a negative effect on the employee's performance and motivation to complete the goal.

  • More complex and difficult goals may lead to risky behavior in an attempt to accomplish the goals in a timely manner.

Browse more articles