Guidelines for Effective Goal Setting in Organizations

Published: Oct 11, 2021



Life is a goal-directed process. Organisms that fail to pursue and attain goals that satisfy their needs ultimately perish.

In the case of humans, goal setting above the level of the automatically goal-directed functions of the body is a volitional process. Individuals need to make choices constantly, as do organizations. An organization with no overarching goal or purpose would achieve nothing. For an organization to succeed, each member needs to engage in goal-directed action that directly or indirectly furthers the organization’s core purpose or vision. What then is required to make goal setting work?


Most people think of goals at work as being only for performance, such as sales and profits. But goals can exist for other actions that help foster good performance. Learning goals are one example. The aim of these goals is to improve one’s skills or expertise by seeking information, experience, coaching and/or training. There also can be goals for behaviors such as giving others information, warning others of a problem, giving others credit or thanks, and treating others with respect. And there can be goals for process, such as going through six steps when meeting a prospective new customer or a complaining customer. The different types of goals can sometimes be combined. It has been found that a person can work to perform well while at the same time learning new skills that will make the outcomes even better.

Goals focus attention and action on certain tasks or outcomes at the expense of others. This is pejoratively called “tunnel vision,” but tunnel vision is actually necessary to prevent people from going in ten or a hundred directions at once. Goals need to be specific. Telling people to “work on” customer service or sales is better than nothing, but it is still somewhat vague. One way to make goals specific is to use numbers. For example, make sure customer service ratings are at least X on a 10-point scale, make XX deliveries per day, increase annual sales by XXX%. Tunnel vision only backfires when goals for important outcomes are not set (such as focusing on quantity while ignoring quality).


It may be asked, how many different goals can one person pursue successfully? This depends on the individual’s ability, how much help and how much time they have, and the degree to which the goals are logically connected, as when one goal facilitates the achievement of another. Managers can delegate some goals to subordinates, keeping the more important or complex ones for themselves. When there are multiple goals, they need to be prioritized based on importance and urgency. Priorities may change over time based on circumstances such as opportunities, emergencies, threats, and organizational changes, so employees need to be updated constantly.

The level of difficulty of the goal affects effort. For a given task, the higher the goal level, the harder people will try (commitment is discussed later). Easy goals lead to low effort. People adjust to what is asked for. If you want the best performance, it is advisable not to tell people to “do their best.” When told that, they usually don’t. The term “do your best” is very general and thus interpreted subjectively, and the personal interpretations can vary from easy to hard. A quantitative measure eliminates the ambiguity.

But the question remains: How high or hard should the ideal goal be? If the goal is set at an impossibly high level, most people will fail, and employees do not like to be considered inadequate and to have to worry routinely about being fired. Furthermore, setting virtually impossible goals will undermine trust and morale. A safer guideline is to assign goals that are challenging yet reachable, such as average previous performance for that job. (Note: In laboratory studies of goal setting, which typically last about an hour, impossible goals may be assigned to some subjects to maximize short-term effort.)


There are two special circumstances in which setting seemingly impossible goals can be beneficial and not demoralizing. The first would be during an emergency, such as an order that is behind schedule due to unforeseen circumstances—an equipment failure, a supplier failure, employee illnesses or turnover, and so forth. Employees usually are willing to pitch in and work extra time to get the job done, especially if they know they will receive a suitable reward such as extra time off. Coping with an emergency can also give people a sense of pride. However, such emergency efforts could wear thin if they become routine and lead to fatigue and burnout.

The second exception would be when the organization wants to motivate a major creative breakthrough. Let’s say you make MRI machines for hospitals. These machines are expensive to buy, are very noisy, and require many minutes for each test. Goals could be set to think outside the square in order to decrease costs, noise level, or testing time by, say, 50%. The goals might be totally unreachable, but the purpose would be to motivate breakthrough thinking. In the MRI case, an improvement of even 10% might be beneficial. The key principle here is that there should be no penalty for not reaching a stretch goal. Suitable rewards for progress can be decided after the fact.


Goals themselves can involve meeting deadlines. But goals for results need to involve a time perspective. Long-term goals can be hard to hold in mind, so it is beneficial to combine proximal (shorter-term) with distal (long-term) goals. The former goals are a means to the latter, and they allow one to track progress.

Proximal goals provide information about the degree to which the long-term strategy is working and can thereby increase confidence. They also help prevent procrastination (waiting until the last minute). Obviously, goal revisions may be necessary as business circumstances change, especially for longer-term goals.


Successful goal-directed action requires not just desire but also knowledge and skill. Motivation without knowledge will produce effort, but effort has to be guided. Knowledge and skill come from experience, training, and coaching. It must be stressed that experience alone is not automatically beneficial; people can remain inept and make the same mistakes over and over. The key is what is actually learned from experience.

A key type of knowledge needed for goals to work is feedback about progress. Without it, people will not know if they are getting anywhere or whether they are on track to meet a deadline. Feedback may come from many sources, including self-tracking, organizational records and monitoring systems, team members, managers, customers, graphic displays, and the Internet. Useful feedback information must be objective (see the section on cheating below).


Goal setting does not work unless people are committed to their goals. Four factors play a role. First, it is useful to begin by giving people the organization’s reason(s) for the goal, so they do not think it is arbitrary.

A second factor is value importance. Many value elements can come into play here. For example, people are paid to work, so doing what one is asked to do is considered normal and legitimate. Raises and promotions are based on goal success, and repeated failure can lead to dismissal. Further, conscientious employees will take personal pride in their achievements, including expanding their capabilities. Achieving excellence may open up enhanced career opportunities. Leaders and peers may serve as inspiring role models. Team members may encourage success and even demand support. The job may (ideally) engage deeply held personal values—for example, producing life-protecting vaccines. Much depends on selecting employees who show evidence of holding values that fit the organization’s vision.

A third factor that enhances goal commitment is healthy, reality-based (unpretentious) self-confidence, which is known as self-efficacy in psychology. People will not be motivated to commit to goals they do not think they can attain or work for rewards they do not think they can earn. Selecting and training capable people is important.

A fourth factor in commitment is organizational support. We all know that organizations have limited resources, but employees need to know that their efforts are supported. This can include time, money, equipment, space, freedom from arbitrary rules, and help from colleagues or assistants. Sincere, verbal expressions of commitment to your projects from higher-ups—managers, executives, and the CEO—can be inspiring.


There are three broad possibilities: participatively set, assigned, and self-set. Contrary to common belief, there is no one method that is always superior to the others. In all cases, the effects depend on the challenge level of the goals and the degree of commitment. No one method guarantees the setting of specific, challenging goals.

Participatively set goals are set jointly with one’s boss. The main benefit of participation is information exchange. Communication is critical in organizations, but this can work in more than one way. For example, subordinates may convince their bosses to agree to easy goals by saying that the easy goals they favor are actually hard. This would lead to good rewards but poor performance. (This problem undermined many old-time MBO programs.) In the case of self-set goals, people can set them at whatever level they want, high to low, without anyone’s approval. Assigned goals may be the best method of aligning organizational goals with individual goals, but the core requirements for goal effectiveness are the same for all three methods.

Virtually everyone wants to succeed in their work and get valued rewards. To many, success is a self-esteem issue. (Studies show that most people view themselves as above average, which is obviously not the case.) Thus, it is not surprising that some people may cheat by claiming or reporting achievements that are not theirs or that were faked. For this reason, all organizations need a value system that stresses, for example, honesty, integrity, and justice.

The value system is not just an online list; it is a way of acting. This system has to be driven from the top or top management team, else the organization will descend into anarchy with each group or unit having its own value system. Enforcement requires a series of steps:

  • Formulating the value system
  • Ensuring that the higher-level managers and CEO are ethical role models in their own behavior
  • Selecting employees for moral character as well as competence
  • Communicating the value system to all employees
  • Creating internal control systems (e.g., the accounting department, customer feedback, and tracking internal complaints to prevent or at least detect dishonesty)
  • Incorporating character assessment, including assessments by trustworthy peers, as part of the performance appraisal system
  • Dismissing employees who violate the ethics code (Note: ethics violations may be very costly to an organization, not only with respect to reputation but in terms of financial penalties)


There is no validated theory within the goal literature regarding the best way to tie goals and pay together. Obviously, people want to be treated justly. But this requires many judgment calls. For example, some people may fail more because they have harder goals than others. Some may have to overcome more obstacles not of their own making than others, and some may get more help than others. Some people get great results by abusing subordinates who later burn out or resign.

In some cases, employees make themselves look like heroes by getting out of difficult situations time and time again when their difficulties were actually caused by their own lack of planning. At the same time, the employee who smoothly gains success after success with no drama may be overlooked, even though he or she is better than the alleged hero. People may look good because they take ideas from others with no credit. The bottom line is that managers have to hold a number of context factors in mind. Look not just at who seems to be best, but also how they got their results.

Employees are happy when they attain their goals or make progress toward them. Earned success is a source of pride and an incentive to keep striving. Job satisfaction comes from other sources as well, such as fair pay, recognition, work that ties into one’s personal interests, mental challenge, variety, competent and honest leadership, supportive co-workers, competitive benefits, suitable (and safe) working conditions, and more. It is a great challenge to keep people satisfied over time because the world is always changing. A key objective should be to retain as many as you can of your best people, because they are the most critical to organizational success and are also the people that other organizations will most want to poach.


The same principles apply here as with individuals, but some new elements are added. Team members can and need to exchange information, thus (if knowledge is distributed) providing a larger pool of information. Members can also encourage and help one another practically and psychologically when there are obstacles. But they can undermine one another too, so there need to be rules for team conduct.

There is an important caveat: Team goals will not work unless all members are committed to those goals. If there is a conflict, rather than a harmony, between individual and team goals, the process can be undermined. People need to be given credit for contributions to the team. I will not go into organization-level goals here, because that is a huge topic in itself—except to say that they need to be driven from the top to start with and require enormous feats of coordination.


What does “bullying” mean? Using goals as threats, insulting or berating people who have failed though no fault of their own, routinely giving impossible goals that are not used as stretch goals (as noted above), raising goals arbitrarily but not rewards, and so forth. Bullying will be perceived as unjust, and employees will resent it and may quietly resist or quit. When word gets around the whole company, the culture can be undermined.

Failure needs to be treated as a problem to be solved. There can be many causes: not understanding the goal, not having the needed skills, lack of organizational support, lack of commitment, unwillingness to put forth effort, personal problems. Some failures are outside an employee’s control. Termination may be needed (such as in the case of a clear lack of competence or an ethics violation), but it should be preceded by an objective causal analysis. Sometimes employees are assigned to the wrong job and could succeed if placed elsewhere.


Recent studies have found that the very process of writing about goals or values leads to more motivation to take goaldirected action. Private goal or value writing sessions can take various amounts of time, and sessions can be repeated over time. Longer sessions (for example, two hours) seem to have more of an effect than shorter ones. Making the written goals specific, including a description of goal strategies, seems to facilitate action. The writing is done privately. It is not fully known why writing works.

Goal setting research has usually focused on conscious goals. However, recent research by Gary Latham, PhD, at the University of Toronto and his colleagues has found that goal-directed action can be subconsciously primed. For example, the person may be shown a picture of a runner winning a race and then given a job to perform. The people primed with a picture of a racer (in track) perform better than those shown no picture or a picture of a tree. No deception was involved. It was found that the people shown the racer picture also set themselves higher conscious goals than those shown the tree picture. Much more needs to be learned about how this all works.

Goal setting is a critically important motivational technique, but like all management principles, its benefits depend on how skillfully it is used.


Edwin A. Locke is a professor emeritus from the R.H. Smith School of Business at the University of Maryland at College Park. With Gary Latham, PhD, of the University of Toronto, he has spent some 50 years developing goal setting theory. He has written two books with Latham: A Theory of Goal Setting and Task Performance (Prentice Hall, 1990), and New Developments in Goal Setting and Task Performance (Routledge, 2013).