Goal Setting

History of Goal Setting Theory

American psychologist Edwin Locke from the University of Maryland at College Park has studied the power of goal setting since the late 1960s. He first posited that employees were motivated by goals and feedback in his 1968 article “Toward a Theory of Task Motivation and Incentives.” He later fine-tuned his perspective to include that the difficulty and specificity of the task also was a good predictor of performance. In other words, if the goal was too easy, the motivation wasn’t as compelling. Along with Dr. Gary Latham, Dr. Locke published his groundbreaking work in 1990 in a book called “A Theory of Goal Setting and Task Performance,” which frequently is cited by business administrators, Ph.D. students, lecturers and associate professors around the globe.

Basic Principles

The key points that Locke and Latham made were that motivational goals needed to have the following dimensions: clarity, challenge, commitment, feedback and complexity. Goals need to be clear and measurable such as: My goal is to reduce maintenance downtime by 15 percent. Secondly, goals must be challenging, with achievement as the final payoff. Thirdly, employees must feel like part of the goal-setting process to be committed to a clearly relevant goal. Next, there must be a program that involves feedback, recognition and progress reports. Lastly, the task must be complex but not overwhelming, with sufficient time and resources available.

Practical Application

Theories are nice, but what does all this mean to you, small business owner or manager? Consider how a company such as Moog, a manufacturer of precision air control components, has built its corporate culture around motivation and goal-setting theory. Moog credits its success with a “culture that unites and motivates” its workers. During their first days with the company, new interns sit down with management to discuss job expectations, skills and aspirations. All employees receive one-on-one time with managers for regular progress reports. Their performance is assessed and they are asked for suggestions regarding process improvement. They go over upcoming job openings that might suit the company and the individual’s agenda. Employees are frequently trained in other divisions and offered different positions or promotions. In other words, employees are always being challenged with complex tasks and encouraged with clear feedback.


Locke, Latham and associates conducted numerous studies over the years to build a case for their motivation and goal-setting theory hypothesis. In a 1974-75 study, Latham found that unionized truck drivers increased the number of logs loaded onto their trucks from 60 percent to 90 percent of the legal allowable weight as a result of setting goals. They saved the company $250,000 in nine months. In 1982, another group of unionized drivers saved $2.7 million in 18 weeks by adhering to assigned goals of increasing their daily trips to the mill. These are just a few of the examples discussed in Locke and Latham’s report, “Building A Practically Useful Theory of Goal Setting and Task Motivation: A 35-Year Odyssey.”


There are still some limitations to motivation and goal-setting theory, Latham and Locke admit. For example, they say that the goals of the organization are not always the same as the goals of the individual. Perhaps the company’s goal is to get workers trained in new safety protocols. However, the manager’s bonus depends upon the company’s financial performance, not the employee’s grasping of the safety procedures. Therefore, the manager may not be motivated to take employees away from their tasks to complete the training. Another limitation is that learning goals do not always foster interest, and interest goals do not always facilitate learning. There also is the problem that individuals are more tempted to take risky actions in pursuit of their goals, which could potentially lead to failure rather than success.

originally posted in San Francisco Chronicle