Goal-Setting Theory: Why It’s Important, and How to Use It at Work (2024)

If you want to inspire higher performance in your employees, you need to keep team members motivated and moving towards their goals. And if you want to keep team members motivated and moving forward, it’s important to understand goal setting theory.

Goal-setting theory is a well-researched theory that connects goal setting and task performance. And if you want to improve everything from employee engagement, performance, and motivation, understanding this concept is a must.

But what, exactly, is goal-setting theory? How does it work? And how can you use goal-setting theory to keep your team motivated and engaged — and inspire high performance in the process?

What is goal-setting theory?

First things first—what is goal-setting theory?

Goal-setting theory was developed by Edwin A. Locke. The American psychologist was a pioneer in goal-setting research. Locke originated the theory in 1968 with the publication of the article Toward a Theory of Task Motivation and Incentives.

Originally published in Organizational Behavior and Human Performance, Edwin Locke’s article explored the relationship between goals and task performance. And, more specifically, that hard, specific goals inspire a higher level of performance than easy goals with a “do your best” approach.

In the years following the release of Toward a Theory of Task Motivation and Incentives, Locke would go on to partner with Dr. Gary Latham. Together, the pair further explored and researched the effects of goal setting. In 1990, Locke and Latham published A Theory of Goal Setting and Task Performance. This book expanded on goal setting theory and created a framework for a more effective goal-setting process.

Goal-setting theory is generally considered the foundation for SMART goals, a popular goal setting framework. This acronym suggests goals should be Specific, Measurable, Attainable, Relevant, and Time-bound for best results.

The purpose of goal-setting theory

The main purpose of goal-setting theory is to better understand the connection between how the goal-setting process influences work motivation and performance. From there, people and teams can use that understanding to help employees become more successful in hitting their goals.

How goal-setting theory works

So now that you know what goal setting is, let’s quickly go into how it works.

Goal-setting theory works by defining what types of goals drive motivation performance. And when employers understand that? They can ensure their goal-setting process sets their employees up for success.

It’s simple, but it can also be extremely effective.

The 5 principles of goal-setting theory

As mentioned, according to goal-setting theory, goals need to be both hard and specific in order to be effective. But Locke & Latham further expanded on that concept, defining five key principles for effective goals. Those five determinants include:

1. Clarity

According to this theory, clarity around goal orientation is a must. The more clarity there is when setting a goal with/for an employee, the less of a chance there is for a miscommunication or misunderstanding. This then leads to higher levels of success. To put it another way: effective goals are both clear goals and specific goals.

2. Challenge

Goal difficulty also ties to the effectiveness of goal setting. When goal attainment presents a challenge, it leads to a higher level of motivation—which, in turn, leads to a higher chance of success. Or, in other words, challenging goals (or difficult goals) are more effective.

3. Commitment

Employees need to have a certain level of buy-in and goal commitment. If they’re not committed, they’re not going to have the follow-through necessary to succeed — and as a result, they won’t hit their goal.

4. Feedback

In order for employees to successfully hit their goals, they need regular feedback. That includes feedback on their progress, what they’re doing well, and where they can improve.

5. Task complexity

If a goal feels too complex or overwhelming, it can negatively impact motivation. Instead, leaders should break down large goals into smaller, more manageable tasks. As employees complete each small task, it will deliver a boost of motivation. And that will ultimately help them progress towards the larger goal.

Examples of goal-setting theory

Understanding goal-setting theory is one thing. But what does this theory look like in practice?

1. Successful and smooth onboarding

Let’s say you just hired a new marketing analyst who has a ton of potential to succeed at your company. A vague, easy goal — like “get settled into your new role” — isn’t going to motivate them to do their best. Instead, under goal-setting theory, you’d want to clearly lay out a challenging goal to help them reach their full potential.

For example, you might set a goal of “learn the marketing analytics software within the first 90 days.” Then, you can help them break that goal down into smaller tasks (like “complete onboarding” or “learn how to create an analytics report”). You can also let them know you’ll be available to provide feedback along the way — and help them to understand why learning the software is so important.

This goal will give your new high performer something to work towards that’s challenging, but achievable. And because you’re breaking down why the software is so important, it will help them commit to the goal. Those elements will keep them motivated as they learn the ropes of their new role.

3. Finishing a project with a team

Or let’s say you want to motivate your team to wrap up a project. Instead of setting a goal of “get this project finished ASAP,” you’d want to get more clear. For example, you might set a goal of “finish the project by the end of the month.” Then, break that down into tasks for each team member and make yourself available to work on the project with them and provide feedback along the way.

You should also make sure to generate buy-in on why finishing by end of month is important (for example, to deliver the product to customers on time).

The clarity of the goal and the goal’s importance — along with the challenge of wrapping things up before end of month — can help motivate your team to get things done.

The bottom line? When using goal-setting theory, you want to make sure you’re setting goals that hit all five of Locke and Latham’s principles. This includes making sure goals are clear and challenging (but achievable), that you’re creating a sense of commitment to the goal, and that you’re providing regular feedback.

Benefits of goal-setting theory

Using goal-setting theory to motivate employees offers a host of benefits, including:

• Higher levels of engagement. This framework can help employees hit their goals. That success can lead to higher levels of employee engagement and job satisfaction.
• Higher levels of performance. When employees regularly hit their goals, their performance and productivity improves. Employees may also become more effective at hitting goals within their assigned timeframe.
• Better adherence to deadlines and metrics. Goal-setting theory encourages measurable goals. This can help employees improve at getting things done within specified timeframes. It can also help employees better adhere to defined metrics.
• Wide application. Goal-setting theory can be used for a variety of goal types. For example, you can apply it successfully to personal goals, individual goals, team goals, learning goals, or an achievement goal.
• Supports a feedback culture. Goal-setting theory supports a culture of feedback. This gives employees the insights they need to continually improve.
• Leads to self-efficacy. When employees regularly hit their goals, they gain confidence. This confidence leads to self-efficacy and better self-regulation.

Limitations of goal-setting theory

Clearly, Locke’s goal-setting theory offers some serious benefits. But it’s not without its drawbacks. There are a number of potential downsides to goal-setting theory, including:

• Negative impact on performance relationship. According to goal setting theory, difficult goals inspire higher performance. But there’s a limit to that. If a goal or complex task is outside of an employee’s skill set, that goal could prove too difficult. This can negatively impact task motivation—and ultimately, cause performance to drop.
• Misalignment. If there is a misalignment between the employee’s goals and the organization’s goals, goal-setting theory may not be as effective.
• Unethical behavior. If goals are too difficult or complex, it can have a negative impact on employees’ decision making. In an effort to hit their goal, they may engage in unethical, risky, or questionable behavior.

How to use goal-setting theory in the workplace

Want to use goal-setting theory to motivate your employees and drive organizational performance? Here’s how to make goal-setting theory work in the workplace.

1. Define what you’re trying to achieve

Before you set goals with your employees, it’s important to define, and communicate, what exactly you’re trying to achieve.

For example, do you want your employee to learn a new skill or software? If so, you need to define why you want them to learn a new skill. You might communicate that learning this new skill or software will help them improve their sales numbers.

Understanding the purpose of your goals will help you generate buy-in with your employees. And this buy-in is a critical part of goal-setting theory.

2. Loop in the employee or team

Once you know what you’re trying to achieve, it’s time to schedule a time to meet with your employee or team. During the meeting, you can share your vision for the goal and ask for their feedback. You can also ask them what they need to succeed in hitting their goals — and from there, take steps to set them up for success.

Again, you need your employees to be committed to hitting the goal — and meeting with them and asking for their input is a must to create that commitment.

3. Set SMART goals

The next step is to actually set the goal. And the best way to do that? Using the SMART goal framework.

Again, SMART goals should be:

• Specific
• Measurable
• Achievable
• Realistic
• Time-bound

By using the SMART framework, you can ensure that the goals you’re setting follow goal-setting theory — and lay the foundation for success.

4. Provide regular feedback

Feedback is a key principle of goal-setting theory. So, if you’re implementing goal-setting theory in your workplace, it’s critical that you provide regular feedback.

Make sure to deliver both positive and constructive feedback as your employees work towards their goals. And remember, feedback goes both ways — so invite your employees to do the same.

5. Adjust as necessary

Sometimes, as employees progress toward their work goals, you (or they) may realize that something just isn’t working. For example, maybe the goal was too ambitious or maybe the timeline was unrealistic. In those situations, you need to be willing to be flexible — and adjust the goal as necessary.

Use goal-setting theory to motivate and inspire your team

If you want your employees to succeed, you need to empower them to hit their goals. And using goal-setting theory is a great way to motivate them and help them move towards their goals—and reach their full potential in the process.

Need help inspiring and motivating your employees to hit their goals? BetterUp can help.

Published June 22, 2022