The Importance of Goal Setting

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As a project manager, do you know how to set goals? You're probably saying, "Well, is the Pope Catholic? Of course I do!”

In actuality, the truth is that most people often misjudge two things when it comes to goal setting:

  1. They underestimate the importance of goal setting
  2. They overestimate their knowledge of goal setting

Goal setting is an important part of the project management process. We'll take a look at why goals are important, the theory behind goal setting, and how we can use this theory successfully in the workplace.

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Why Are Goals Important?

Besides being a handy-yet-cliché discussion topic during interviews, goals have other important functions, including increases in productivity and revenue.

Take the Harvard Business School, for example. In his book, What They Don’t Teach You at Harvard Business School, Mark McCormack unveiled an interesting pattern in regards to goal setting. Apparently, in 1979, the average starting salary for graduates of Harvard Business School was 115k with a 20k signing bonus. (Source: Harvard MBA Statistics page) Not to shabby. In 1979, researchers asked Harvard MBA graduates the following question:

“Have you set clear, written goals for your future, and made plans to accomplish them?”

A decade later in 1989, the same researchers located these graduates and discovered that 3% of them were making 10 times more than the remaining 97% of their class combined.

What set this elite 3% echelon apart from the other 97% of their classmates? They were the only ones to answer “Yes" to the question above.

How can goals be so powerful?

Jay B. Barney & Rick W. Griffin outline why goals are of utmost power in their book The Management of Organizations. According to them, goals serve 4 basic functions that move businesses forward:

  1. Provide guidance and direction
  2. Facilitate planning
  3. Motivate and inspire employees
  4. Help organizations evaluate and control performance

Goal Setting: How Much Do You Know?

But how do project managers know how to set goals, and who to set them for? Experts turn to psychology to answer this question.

Goal Setting Theory, developed by Edwin Locke and Gary Latham, is one of the most frequently cited (but not-so-cleverly named) goal theories in social psychology. If you see a book about goals, you can bet your britches that Locke and Latham are included in the reference section.

Goal Setting Theory: A Theory for Strategic Success

Goal Setting Theory explains the importance of the clarity, challenge, and attainability of goals, emphasizing the importance of proper feedback, and differentiates between varying types of goals.

The Goal Setting Theory approach has been shown to increase organizational profits and growth. Consumer Psychology Researchers sent a survey to various firms, asking about their use of the Goal Setting Theory approach. Approximately 60% of the survey respondents indicated that they used this particular approach when setting goals. The results of the survey analysis indicated significant relationships between the utilization of Goal Setting Theory and organizational profit and growth. The firms staffed with employees who used the Goal Setting Theory approach showed the most growth and increases in profit.

Many think that the process of setting goals is simple – you set a goal and you try to reach it. Its actually much more complex than it seems. The Goal Setting Theory can be used to understand how to set goals that will yield a successful outcome, and how and when to provide proper feedback.

How To Set Successful Goals

Make Them Important: The first thing to consider is whether the goal is important. While this may seem trite, important goals are more likely to be accepted, garner commitment, and result in persistent striving.

  • Create Value-Driven Goals: Job satisfaction is based upon the relationship between what one wants out of their job, and what they perceive their job is actually providing. We determine what we want based upon our values, thus we also determine what we want to achieve based upon our values (i.e. financial security, promotion, status, responsibility). Therefore, setting goals that include one’s values will ensure more dedication and higher levels of effort, and will yield higher levels of satisfaction once they are achieved. If there are no values are attached to a prescribed goal, they won’t care about the goal, and will be less likely to strive to achieve the goal.
  • Be Specific: Specific and challenging goals are the most effective types of goals for numerous reasons. The definition of high performance is clearly defined as opposed to ambiguous. Associated with higher levels of self-efficacy and value-based outcomes Stimulate persistence, as they require perseverance. Individuals are more motivated to expend higher amounts of effort because they entail higher amounts of effort Provide direct attention to what is relevant Motivate the individual to discover the task strategies they need to implement in order to achieve the goal. They also motivate planning and utilization of the tasks coupled with the tasks and skills they have already acquired.
  • Cut Goals Into Bite-Sized Portions: Milestones direct efforts and raise levels of persistence above standard levels of operation. Milestones foster conscious problem solving and creative innovation and they are the critical link between goals and performance. They can be likened to ‘mini-goals’ or ‘goal facets’
  • Be Sure Goals Are Attainable: Goals must be set within the individual’s ability level, or else they will fail and suffer damage to their self-confidence. Subsequently, job performance of the individual will decline. Therefore, is important to ensure that there are no situational or personality constraints that will serve as barriers to goal-attainment.

 Feedback, Feedback, And More Feedback

Feedback, and lots of it, is crucial. If feedback is related to the specific goal or milestone, it serves as a catalyst for action. If non-specific feedback is given, it will have no effect on the level of work output. Basically, feedback is worthless unless it pertains to the specific goal. Because feedback increases the degree to which goals regulate performance, it can be used to control employee performance, dedication, and persistence.

When there is no feedback, goal setting will fail. Conversely when there is no goal setting, feedback will fall upon deaf ears.

Also, feedback must be specific and related to clear standards of performance. Saying, “do your best” is probably the worst thing to say to someone trying to achieve a goal. Instead say: “Do your best at (particular facet of the goal)”, and offer a clear standard of measurement for the term “best.”

Applying Goal Setting Theory In The Workplace

Goal setting theory can be used in the following areas:

  • Developing interview formats, especially those of situational interviews
  • Employee training in self-management
  • Relationship objectives programs – establishing mutual goals between management and employees
  • Performance appraisal – feedback can be used to set specific improvement goals

Edwin Locke and Gary Latham outline the specific steps to applying Goal Setting Theory to your organization.

  1. Write a job description outlining the nature of tasks to be completed
  2. Specify how you will measure performance
  3. Make challenging goals (i.e. difficult but attainable) with directly measured output
  4. Create a timeline specifying the timespan(s) involved
  5. Prioritize the goal according to importance and difficulty
  6. Determine coordination requirements – lay out the specific details of the goal, and every individual’s expected contribution.

Goal setting can have two outcomes: favorable and unfavorable. With favorable outcomes come feelings of satisfaction, while unfavorable outcomes are associated with dissatisfaction and anxiety. Research indicates that engagement of values, cognitive focus, and role clarity all contribute to favorable outcomes. On the other hand, unfavorable outcomes are preceded by feelings of pressure, role conflict and feelings of inequity.

Therefore, it is wise to keep in mind the importance of value-driven goals, know your employees’ values, and make sure their roles are clearly defined.

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