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A Guide to the Goal-Setting Theory of Employee Motivation

Jul 19, 2022
A Guide to the Goal-Setting Theory of Employee Motivation
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Goal setting is among the best ways to help poor-performing employees improve their performance. When done right, it can have a positive impact on any employee's performance. You can encourage development by creating quantifiable and attainable goals and also actively help grow the firm and improve its reputation in the industry.

What is the Goal-setting Theory?

Goal-setting theory in its modern form comes from studies by American psychologists Locke and Latham that detail how setting goals in the workplace can boost employee performance.

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Goal setting involves the proactive process of identifying your business goals or objectives and creating a plan of action to achieve them. Despite being first developed by Locke in the 1960s, goal setting theory remains relevant in modern workplaces, helping both individuals and businesses improve productivity.

Why is Goal Setting for Employees Important?

Goal setting enables individuals and organizations to achieve higher productivity levels with minimal effort. Goals can be a useful tool in refining your business processes for maximum efficiency. Here are some benefits of setting goals for employees:

Work/personal goal alignment

Goals give employees and leadership a common purpose. Employees that understand and recognize the organization’s goals find it easier to align their work and personal goals to meet business targets.

Better guidance

Goals give employees guidance on how to spend their time, which tasks to prioritize, and the effort required. It encourages employees to make informed decisions and devote less time to irrelevant tasks.

Smart planning

Goals encourage employees to develop actionable plans. With a clear goal in mind, employees can create proactive plans to achieve set goals.


Goals inspire and motivate employees to work on their performance. Employees engage their creativity and strive to find resourceful approaches to tackling tasks.

Better evaluation

Goals are an important metric in measuring success. All forward-thinking businesses strive to improve and flourish as they expand. By comparing real and desired performance expectations, goals provide a clear roadmap and technique for evaluating organizational success.

How Can You Set Employee Goals That Boost Productivity?

By now, you have an idea of the role of goal setting in employee performance. To develop best practices in your business, it is critical to set goals for your employees. Consider the following tips to successfully implement a goal-setting culture in your organization:

Encourage employee contribution in goal setting

Avoid imposing employee goals in a top-down manner. Goal setting should be a team effort, so make sure to not introduce goals as sanctions and isolate the employees.

Leadership will usually have an overview of business and team priorities, which they use to identify team performance benchmarks. However, employees must be brought into the conversation and included in the goal-setting process.

Setting goals with your staff helps to build a culture of continuous feedback and open dialogue. Employees who have clearly defined goals are more likely to push themselves, take on new challenges, and feel connected to larger initiatives.

Employees who participate in goal setting are more invested in their productivity from the start and hold themselves accountable for the outcome.

Goals must align with organizational aims

Employee goals should complement your business’ growth strategy. Employees are more focused and driven to achieve goals that benefit both the company and themselves when they understand how their specific roles and responsibilities fit into the wider picture.

Employees are kept motivated in their job when you share strategic business goals, frequently  highlighting the corporate mission. You can link your business performance goals to important strategic objectives, which can then be converted into team performance goals.

As a result, employees can embrace accountability because they understand how their individual performance affects the organization.

Offer encouragement and support

Encouragement and support go a long way in keeping employees motivated and committed. People feel more empowered when they are encouraged to achieve their goals.


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Providing encouragement and support at work has an impact on people's impressions of the organization’s openness and inclusion. Many employees do not get advice or reassurance from their superiors, despite the positive effects it can have on overall performance.

Simple reminders to keep pushing and that they are on the right track even when things aren't perfect can be very encouraging to employees. Support can also be even more direct, assisting employees in understanding the actions or techniques that would lead them to their desired outcome. 

Reward exemplary performance

It's vital to reward employees who meet or surpass their targets. Rewards could be a salary bonus, certificate of achievement, or even an announcement at staff meetings.  Rewards recognize the employee's achievements and show that the organization values this kind of dedication and hard work. 

These rewards could even motivate the rest of the employees to strive hard toward their goals. When their efforts go unappreciated, employees may reasonably believe there is no value in continuing to work so hard, and they may cut their productivity or even begin searching for a new job where they might feel more appreciated.

Refine your goals regularly

It’s normal for a business’ priorities to change over time. Goals that feel relevant today are subject to unexpected influences and might lose relevance in the future. In business, change is both natural and unavoidable. To stay relevant and effective, you must adapt to such changes.

Set achievable goals

Achievability is an important element of the SMART goal framework.


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When the goal is too ambitious or feels unachievable, goal-setting is likely to fail regardless of the employee's skill set and available resources. Saddling an employee with an unattainable goal might result in frustration with the system and a lack of enthusiasm to grow further. They may lose interest in expending effort on what feels like an impossible goal.

When engaging with employees on their goals, make sure to take previous performance standards into account. Consider whether someone else with similar experience and training has accomplished a similar target in the past when determining how achievable a goal is.

Work closely with stragglers

Regardless of how hard they work, not every employee will achieve the targets you set for them. You should evaluate progress regularly and intervene as necessary. If an employee fails to meet their goals by the agreed-upon time, there should be an open conversation about what went wrong. You should also offer encouragement and adjust the stated goals if required. 

Be consistent in assigning responsibility

It is your responsibility as an employer to create a healthy working environment that promotes employee development. When goal-setting is portrayed as a contest or rivalry between employees, it can create conflict and cause a backlash. It can also swiftly sabotage a positive work environment. Ensure that you take steps to cut off internal rivalries as it can damage morale, leading to dissatisfaction and resentment.

Consider uncontrollable external limitations

Your workforce’s ability to reach its targets may be affected by issues outside their control. Assess whether any obstacles would make it much more difficult for your team to succeed before assigning goals.

If there are any, you must address these obstacles so that your team does not feel set up to fail due to factors beyond their control.


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In such cases, you can adjust the objectives to make them more achievable. It’s worth doing this if the goals aren't critical to your organization's performance and you don't intend to get a direct return on your investment.

Another option is to offer more resources to your employees to help them manage these limitations. Even though there are obstacles, they shouldn't damage your ambition. You should invest in your employees to help them succeed.

Instill a sense of purpose in your employees

One of the most effective ways to keep employees motivated and engaged is to help them find a sense of purpose in their work. Your staff is more likely to stay loyal to your organization if you keep emphasizing the underlying purpose of the goals you set. A sense of purpose has a direct influence on the quantity and quality of work that your employees put in. 

A sense of purpose will help employees find deeper meaning in ostensibly mundane and repetitive tasks, which can work wonders for their productivity levels.

To create a sense of purpose, try sharing how the goals you set for them will help the business create a positive societal impact. This gives employees a direct line of responsibility and encourages them to commit more time and effort to achieve their goals.

Use Goal Setting to Boost Employee Performance

Goal setting is beneficial to individuals and businesses in several ways. An informed and clearly defined strategy for employee goals keeps the workforce focused and can motivate them far more than even financial incentives can.

When properly implemented, goal setting can significantly influence overall productivity and profitability in your business. Drafting a clear framework and considering the tips put forward above can change the performance management narrative in your workplace.




About Author: Jenna Bunnell is the Senior Manager for Content Marketing at Dialpad, an AI-incorporated cloud-hosted unified communications system that provides valuable call details for business owners and sales representatives. She is driven and passionate about communicating a brand’s design sensibility and visualizing how content can be presented in creative and comprehensive ways. Jenna Bunnell also published articles for domains such as Freelance Writing Gigs and Codemotion. Check out her LinkedIn profile.

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