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  • Summer 2013 Case Study
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Introduction:

 

Goal setting theory has been one of the most highly researched and validated studies of motivation.  This theory focuses on directing motivation by setting goals and working to achieve them.  Goals serve to, “direct attention to behaviors that will achieve the goal and away from behaviors that are not relevant to the goal, provide an energizing function and mobilize effort so that an individual tries harder, and maintain task persistence, leading to a greater amount of time spent on behaviors directed toward goal attainment” (PSU WC, L.6). 

 

The Case:

 

            Terri works in retail management.  Terri, along with her company, is extremely focused on setting and achieving goals so as to increase motivation, productivity, and profitability.  Terri’s company uses a retail model to assist in a uniform method of goal setting and evaluation.  The model, referred to as the SMART model consists of:

 

Specific (S):  Each bookseller is required to sell club membership cards (discount card) and meet a goal of 5% of their total sales for the day

 

Measurable (M) - Measured against the sales each bookseller rings on their till number

 

Assignable (A) - Assigned to every person that rings on a till (or cash register)

 

Realistic (R) - For every $360 rang through the register they must sell one card (or membership, $20/yr)

 

Time related (T) - Goals must be met by the end of every week (5%)

 

Feedback is given on a daily basis so that employees, and administration alike, are able to track progress, gauge successes, and provide immediate corrective guidance.  At the end of each day, there is a discussion pertaining to what each employee did well and/or what may have prevented them from achieving their goals.  If goals are not met by the end of the week, the employee is given a warning.  Every four weeks they are evaluated on whether they've maintained 5% or better within that month and if not they are given a warning.  Three written warnings is the maximum and on the fourth time they fail to meet the requirements they are terminated.  Ultimately, if every person in the store achieves 5% and the store meets its goals, then everyone receives Spiff (commission and bonuses).  Each employee that meets or exceeds the 5% goal, and the store meets the overall goal of 5%, they will be paid out for every membership sold.  Each cashier or bookseller can increase their hourly wage if they choose by simply understanding the sales concept and striving to meet their own personal goals. 
           
Analysis and Application of Theory:

Terri’s company clearly has a strategy in place to increase the probability of success.  The company uses monetary compensation and warning as methods to increase goal commitment, which is the degree to which employees accept and strive to achieve goals.  Goal specificity is utilized by providing employees a concrete number (5% in this case) that must be achieved, a timeline to achieve this number, and consequences if this number is or is not achieved in the allotted time.  If Terri’s company were simply to direct its employees to work harder, this would be too vague and little success would prevail.  The question is, is the 5% goal a reasonably challenging number to reach?  If this goal is significantly less than what could reasonably be achieved, then this method may actually be harming the company because they will not be inducing maximal efforts from their employees.

There are many advantages to using goal-setting theory.  The first involves directing attention.  Having the goal of selling more membership cards lets the employees know exactly what they are expected to do.  The second is an energizing effect.  Having the goal of selling a certain number of cards will increase the amount of effort that employees put into their task.  The third advantage is maintaining task persistence.  If the goal is to sell memberships, then employees will spend more time on this.  The final advantage is finding effective strategies.  Employees who have the goal of selling memberships will learn the best sales pitch to sell the most cards.             
            One fundamental that Terri’s company has an excellent grasp on is feedback.  According to the lesson, “because achieving a goal is often a long-term process, it is important for individuals to receive feedback regarding how well or poorly they are doing” (PSU WC L.6).  Feedback needs to be specific, and the company does an excellent job of providing the specificity needed by having daily meetings to encourage proper behavior and discourage improper behavior. 
            Research has shown that participation in goal setting has increased its likelihood of success.  Terri’s company has participation through feedback and rewards, but perhaps employees may gain motivation by participating in the goal setting process.  This would empower employees to feel that they have a voice in strategy planning and implementation process.  For example, if management unilaterally made the decision to implement the warning/reprimand directives, this could be reacted to unfavorably by employees and cause unintended negative consequences on morale.  Another benefit of goal setting is response generalization.  A study by Ludwig and Geller has shown that when goals are set with participation, employees are likely to improve in other related areas (1997).  In other words, setting the goal to sell more club membership cards will lead to an improvement in other sales behaviors.  
            Terri’s company has taken significant strides toward incorporating a Management by Objectives (MBO) strategy.  They have mastered two of the three elements of this management style.  They implement the plan with carefully monitored progress and feedback and results are evaluated.  The only aspect missing from the MBO strategy is the joint cooperation in developing goals.  With overwhelming evidence supporting MBO as a successful strategy, it is no wonder that Terri’s company is heading in that direction. 

Limitations:

 

Goal-setting theory does not account for the subconscious.  Employees may not know what is motivating them.  This theory may also limit the ability of employees to focus on anything other than the target goal.  In Terri’s case, the goal of 5% may cause employees to focus too much on achieving that goal and not enough on customer service or stocking and inventory needs.  Another possible limitation is that the company’s strategy of warning and reprimanding employees for not achieving 5% does not account for external variables.  Is it fair to give an employee a warning when this number is not reached?  Perhaps the current economic situation is such that reaching this goal is extremely difficult and rare despite the best efforts of the employee.  Even with these limitations, goal-setting theory remains a highly successful form of motivation and achievement.

 

References:

 

Ludwig, T. D., & Geller, E. S. (1997). Assigned versus participative goal setting and

response generalization: Managing injury control among professional pizza deliverers. Journal of Applied Psychology, 82, 253-261.

 

The Pennsylvania State University World Campus. (2011). PSYCH 484 Lesson 6: Goal

setting theory: What am I trying to achieve in my work? Retrieved from https://courses.worldcampus.psu.edu/su13/psych484/001/content/lesson06/lesson06_01.html

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