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Goal-Setting Theory: Introduction

Goal-setting theory states that the desire and intention to reach a goal is the source of motivation.  The main focus of goal-setting theory is motivation in an organizational setting, and as a result, organizations have adopted setting goals, or "determining specific levels of performance for individuals to achieve," as a crucial motivational force (Redmond, 2010).

Case Study Details

At a retail clothing store, management has noticed a worrying trend: a specific department is consistently under-performing. Their sales numbers are appreciably lower than those of other departments, and also compare poorly to those reported by the corporation’s other retail locations. At first, management has difficulty explaining this outlier---what is it about this department that prevents them from achieving the sales numbers one would typically expect? They decide to surreptitiously observe the work behavior of this department’s employees for a period of two weeks.

All of these employees are part-time; they are almost exclusively high school and college students. As per usual in such a situation, they are paid an hourly wage, one not significantly higher than the government-mandated minimum. After the two-week observation period, management has isolated a number of behaviors consistently exhibited by this department’s employees; ones they believe may be contributing to its lackluster productivity. The employees spend inordinate amounts of time chatting with each other or text messaging with their phones; their interactions with customers can often be more accurately characterized as flirting than as assistance or pushing for a sale; when customers do seem to need help, the employees are often nowhere to be found. Overall, this department’s employees seem, to management, to be completely uninterested in performing well in their positions---they put in their required hours, always watching the clock, anxious to be done, but much of their time is spent idle or engaged in activities that are less important than assisting customers and securing sales.

This apathetic atmosphere has to be remedied, but firing the entire department is unrealistic, and management does still believe that these specific employees are capable of performing better but that they are simply not interested in doing so given their current situation. In other words, management believes that they themselves might be just as responsible for this department’s performance as are the employees. With that in mind, they decide to explore their options, researching ways in which they might be able to better motivate this department and boost their sales numbers.

After much research and discussion, management has set two goals:

  • Management has set an obtainable, believable and achievable goal for their employees to increase store sales by offering a 10% commission on each sale they obtain on their shift.  The goal is obtainable because it was presented to everyone in a very clear and straightforward fashion.  It is believable and conceivable because it is something all of the staff already fulfills by having daily sales; this plan would increase their motivation to sell more as they will receive a commission check in addition to the standard paycheck.
  • Management has also set a long-term goal for the employees: the top two salespeople at the end of each quarter will be permitted to choose their shifts for the next quarter.  This goal was presented to the employees in the same meeting as the short-term goal of receiving a commission for sales. This goal is attainable, believable and conceivable in the same way that the commission goal is, and for the same reasons.

Application of Goal-Setting Theory

Goal Mechanisms

Management must consider the mechanisms of the goals they have set.  Goals should "allow individuals to direct attention, exert more effort, persist longer, and devise effective strategies toward goal attainment"  (Locke, 1968; Locke & Henne, 1986; Locke & Latham, 2002).

Goal-setting theory is applied in this case by setting a goal of increased sales.  Incentives are also provided to add extra motivation.  This goal is not difficult to attain; therefore, the employees should be motivated to reach it.  This theory predicts that the employees will put forth effort toward reaching their goals, which will in turn positively affect performance by motivating them to work harder (Redmond, 2010).

The goal will help the employees focus on their effort appropriately and move them toward their goal attainment and away from current negative behaviors like flirting, text messaging, and chatting (Redmond, 2010).  The theory is applied to the case in that the goal is for the employees specifically and not for the whole company. 

Goal Conditions

Management must also consider the conditions necessary for the goals they have set to positively affect employee performance and overall store sales (Locke & Henne, 1986; Locke, 2000).  These goal conditions include "commitment, specificity, difficulty, and feedback" (Redmond, 2010).

For commitment, or goal acceptance to occur, it is vital that the employees believe the goal is attainable, and that the likelihood of goal achievement is reasonable (Redmond, 2010).  As stated previously, the employees are likely to view increased sales as obtainable, believable and achievable because they already make sales as part of their job; the goal only asks them to make more sales.  This along with the potential to earn a commission, and the privilege of selecting their shifts, it is likely that employees will view increasing their sales as reasonable and possible.

The goal-setting theory could be used even more effectively if a clear, specific goal was set.  The goal set in the case is somewhat vague.  For example, management could set a goal of increased sales of 25% for the department over the next month.  This way the employees have a concrete figure, and know exactly what they are working toward.  Additionally, the commission incentive could be more specific; for example, a 10% commission is earned on all sales above $500 each month.

Another improvement in this case would be to provide clear-cut guidelines for how to go about attaining higher sales goals.  This way, more effort would be put forth by the employees because they know exactly what needs to be done. They would also know what they were doing wrong previously. 

Goal difficulty is the basic idea that "the more challenging the goal, the more committed and motivated the person must be, and thus the better the performance" (Redmond, 2010).  In this case, the difficulty is actually quite simple to obtain as it is the employees' job to sell store products; management is simply "upping the game" by raising employee motivation through offering incentives for improved performance of the same work they already do.

In regard to feedback, employees get paid bi-weekly, so there will be a meeting at the end of each week individually with each employee to state the amount of sales they have had for that week.  The employees will have the opportunity to offer their feedback as to how they feel they are doing, if they are happy with the amount of commission they have received from those sales, and what they can do to increase their sales even further.  There will also be a meeting at the end of the quarter to announce the top two sales people who will be able to pick their own shifts.

SMART

An acronym to help management to check that the goals they have set include the necessary components for successful achievement is SMART.  Using this acronym as a standard, goals must be "specific, measurable, assignable, realistic, and time-related" (Redmond, 2010).  In this case, the goal is somewhat vague, but is measurable by reviewing a monthly or quarterly sales report.  The goal is assignable and realistic, as management is asking its existing employees to increase the number of sales they make.  The goal is time-related, because management will provide feedback with the employees' bi-weekly paycheck and commission check, and each quarter, the two employees with the highest sales will earn the privilege of selecting their preferred shifts.

Management by Objectives (MBO)

Two common features of successful management by objectives initiatives include "joint goal setting between employees and their supervisors as well as a procedure for assessing performance in relation to those goals"  (Redmond, 2010).  If management allows the employees to help set specific goals with regard to increased sales and performance, it is more likely that both parties will agree that the goal is attainable and reasonable in the time frame given.  Additionally, management should put into place a clear procedure for tracking performance toward achievement of the set sales goals, which will allow for them to more easily identify problems and provide feedback to the employees.

Analysis

It can be expected that the decision to offer employees both a short-term goal (commission) and a long-term goal (choice of shift) in pursuit of management's overall goal of increased sales will cause a change to work habits and increase productivity, sales, and profits. 

One expected change in behavior is that employees will feel more invested in store product sales because of the potential to earn additional pay through commission.  Individuals with goals are more likely to direct attention to behaviors that will lead to goal achievement instead of behaviors that will not aid in achieving the goal (Redmond, 2010).  For this reason, employees will spend more time and make more of an effort to convince customers to purchase store merchandise, and will spend less time demonstrating behaviors that would detract from increasing sales (e.g. text messaging, flirting, etc.).  Employees will also make a larger effort to find effective selling strategies to increase their chances of meeting their sales goals; this will most likely have the effect of improving customer service while increasing sales (Redmond, 2010). 

Another expected change in employee behavior is that in addition to a more concentrated effort, employees are likely to make a more consistent, long-term effort to increase sales in pursuit of both the short-term goal of commission, as well as the long-term goal of shift choices.  Goals foster persistence, increasing the amount of time spent on achievement-directed behaviors (Redmond, 2010).

Overall, the expectation is that by setting short-term and long-term goals for the employees, negative behaviors like flirting and text messaging will decrease, and positive behaviors will increase, with the end result of boosting sales and productivity.

In this case, management should be aware and alert for two issues that can arise following the implementation of a new goal or MBO:

  • Tunnel vision: "Goals can sometimes lead to tunnel vision in that employees can focus so intently on the goals that they ignore other important aspects of the job" (Redmond, 2010).  Employees could become so focused on increasing sales that they begin to compete with one another; for example, "stealing" customers from one another or jeopardizing the sales of a competitor.  They could also begin to perform less effectively in other job duties such as stocking products.
  • Conflicting goals: "Goals can conflict with one another so that working on one prevents attaining another" (Redmond, 2010).  Employees may be so intent on their attempts to make sales that they being to overlook the quality of their customer service, or become frustrated by "window shoppers" who will waste the time they could spend with a customer who they are sure will make a purchase.

Conclusion

With the management goal of increasing sales and the employee goals of commission and top quarterly sales, the retail store is likely to see a higher sales figure each month and quarter.  A more specific goal with regard to the sales figure may become necessary, as well as a more specific sales goal for earning commission.

Goal-setting theory has been deemed valuable and is one of the most popular theories of motivation, thanks to strong research support, the simplicity of the theory, and its successful applications in organizational settings(Redmond, 2010).

References

Redmond, B. F. (2010). Goal-Setting theory: What am I trying to achieve in my work? Work Attitudes and Motivation. The Pennsylvania State University World Campus.

Locke, E. A. (1968). Toward a theory of task motivation and incentive. Organizational Behavior and Human Performance, 3, 157-189.

Locke, E. A., & Henne, D. (1986). Work motivation theories. In C. L. Cooper & I. T. Robertson (Eds.), International review of industrial and organizational psychology (pp. 1-35). Chichester, UK: John Wiley.

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717.

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