Performance of employees and whole organziations is affected by the goals they set themselves. Altough the goal setting process is a tedious and complex one, the effort is not only worthwhile, but becoming essential in todays organizations.

Organizations introducing a goal-based management – also known as – Management by Objectives report performance increases of 25% or more.

But there are bad examples as well…

Goal setting is the process of developing, negotiating and establishing targets that challenge the individual.

Inviduals and Organizations strive to achieve their goals, thereby if goals are set up correct, their performance should increase.

Ed Locke and Gary Graham developed a sophisticated model in their "theory of goal setting and task performance" also known as "Goal Setting Theory" developed / published in 1968 and 1990.

The basic idea is that a goal serves as a motivator because it allows people to compare their current performance with that required to achieve the goal. To the extend they believe they will miss the goal, they feel dissatisfied and strive to improve their performance to meet it.

They describe different components and aspects in their motivation model

• Challenge
• Moderators
• Mediators
• Performance
• Satisfaction

The Locke-Latham model primary focusses on the employees satisfaction with his own performance.

Employees with too high goals may experience less satisfaction than others, that lower their goal. That does not mean a better performance at all.

Other factors like satisfaction with good working conditions, interesting colleagues etc are not discusses in detail, altough they seem to be the major component for many satisfactory situations for employees nowadays.

More details on Locke and Latham's Goal Setting and Task Performance model