After reading a number of papers I found a great paper that summarized lots of historical goal research in the area as well as offering something new. Here’s a summary from “The Impact of Goal Setting on Employee Effectiveness to Improve Organisation Effectiveness.”
Why employees don’t perform as expected. According to Gilda (1991, p. 4), “the first reason may be that the employee doesn’t know what is wanted”. This argument supports observations that employees without set goals may find themselves working ineffectively without direction and knowledge as to how they are performing or what value they are adding to the organisation.
Communicating to employees on what is expected in terms of performance and results through goal setting is important. According to Landgon (1999, p. 54), “objectives are still useful for the communication of performance intent”.
This argument is reinforced by Xavier,(2002, p. 33), who posits that clarifying expectations and the roles and responsibilities of employees through “clear communications and feedback can improve manager and employee effectiveness”.
Additionally, Mills, (2002, p. 41) pointed out that “people who see the connection between their personal goals and the larger goals of the organisation will have a greater impact on the achievement of those goals than people who see no such connection” Luthans (1995, p.186-187) in describing the theoretical background of goal setting highlighted that there was also an awareness that goal setting will not work if there was no commitment to the goals, and that “commitment is a moderator of the goal-performance relationship and a meta-analysis found that goal commitment significantly affects goal achievement.”
According to Latham (2004, p. 126), “goal is the object or aim of an action”. The author contented that people’s performances can be improved through specific hard goals or “stretched” goals. He further states, “A goal is a standard for assessing one’s satisfaction. In short, employees who are committed to attaining high goals are high performers”. (Carson & Carson, 1993, p. 80).
The essence of this argument is also highlighted by the findings of Dobbins, Cardy and Platz-Vieno, 1990 (cited in Roberts, 2003, p. 90) that “goal setting within performance appraisal has been associated with greater appraisal satisfaction, higher job satisfaction, and increased performance”.
Further research findings by Arvey, Dewhirst and Brown (1978, p. 595), also supported the argument that employee effectiveness, manifested in increased “productivity” is a consequence of “goal setting procedures”.
Empirical studies also showed that performance does improve with goal setting as attested by true experiments conducted by Bassett, 1979; Latham and Kinne, 1974; Latham and Locke, 1976, 1978; Latham, Mitchell, and Dossett, 1978; Latham and Sarri, 1979; Nemeroff and Cosentino, 1979; Terborg and Miller, 1978; Umstot, Bell and Mitchell, 1976 (cited in Kondrasuk, 1981, p. 424). These arguments and research findings provide underpinning for the following hypothesis (H1):
The research works of Chidester and Grigsby, 1984; Guzzo, Jette, and Katzell, 1985; Latham and Lee, 1986; Mento, Steeland Karen, 1987; Tubbs, 1986 (cited in Rodgers & Hunter, 1991, p. 323) revealed, “goal setting consistently was found to increase productivity.” It is interesting to note that Steers (1976, p.55) conceptualized increased productivity as ‘organisation effectiveness.’
The positive relationship between goal setting and organisation effectiveness can be explained as employees being “more aware of higher level objectives and priorities” through goal setting and “that they must help to carry out” (Simpson, 1993, p. 380). This view is also concurred by William (1990, p.10) in his article “Build organisational success around individual success” that succinctly states that “you get results from individuals”. This contention is also supported by an explanation from Atkinson (2005, p 32) that departmental goals should be cascaded down to each employee thus “linking what everyone does on a day-to-day basis with the overall organizational strategy”.
A notable finding by Locke and Henne (cited in Margaret, 1993, p. 51) “found that 90% of studies supported Locke’s earlier studies showing that goal setting led to increase performance” while Smith et al (cited in Margaret, 1993, p.51) indicated “specific and difficult” goals are “positively related to both the macro and micro levels”. Both the arguments would also appear to support the positive relationship between goal setting and organisation effectiveness. Indeed, studies conducted by Terpstra and Rozell (1994, p. 285-293) found that organisations that “used goal setting were more profitable than those who did not” resulting in a “positive relationship between goal setting and profitability” and that “Goal setting constitutes a simple, but potentially powerful means of increasing organisational effectiveness”.
Studies conducted by Terpstra and Rozell (1994, p. 291-292) found that ample empirical research has shown that individual performance level increased with the use of goal setting. The authors posit that it’s “probable that goal setting applications may also positively influence organisational-level outcomes”. The statement, “people and their performance are keys to an organisation’s effectiveness” (Michie and West, 2004, p. 91) further supports this research finding.
Interestingly, an investigation conducted by Coote, Price and Ackfeldt, (2004, p. 547), argued, “Goal congruence is related to employees’ perception of morale, leadership support, fairness in reward allocation, and empowerment.”
According to Hart, 1994; Vancouver and Smith, 1991 (cited in Coote, Price & Ackfeldt, 2004, p.548), goal congruence “exists when employees perceive that their goals and values are a good fit with, and they are committed to, an organisation goals and values”.
O’Reilly et al., 1991; Vancouver and Schmitt, 1991 (cited in Coote, Price & Ackfeldt, 2004, p. 548) also supported this argument by stating that “goal congruence is associated with behavioral and affective outcomes, such as longer tenure, greater organisational commitment and better job
A survey summary from Terpstra and Rozell, (1994, p.293) contents that goal setting is a powerful means of increasing organisational effectiveness and that “previous research has found that goal setting enhances employee performance and productivity.” Thus a high level of employee performance through appropriate goal setting would lead to improved organisational performance.
Arvey and Murphy, 1998 reinforced this argument. Mohrman and Albers-Mormon, 1995 (cited in Green Jr, Medlin &Whitten, 2004, p. 108) indicated “effective performance management system link employee performance measures to desired organisational outcomes”.
In the Journal of Business & Economic Policy Vol. 3, No. 1; March 2016 86 the
Hypothesis: “Employee effectiveness would lead to improved organisation effectiveness” was tested. Here are some of the comments made by people interviewed that reflected my own experiences and beliefs:
“We need to set some goals otherwise we will never know what we achieve, or where we are or where we want to go”.
“Goal setting provides direction and purpose. Essentially, an organisation has a common goal in mind, a purpose to exist, thus a goal. So if we take away goal setting, it becomes a disorganise organisation. It will be aimless”.
“If we do not have goal setting, what other alternatives do we have in driving a company towards the future”.
“If we did not communicate our goals clearly to the people, then how can our people do exactly what we want them to achieve? Clear communication means simply telling them and let them understand what our goals are and in measurable terms about what and how you want to measure”.
“If you don’t set goals, how will the employee knows whether he/she is doing the right things and working in the right direction. With goal setting, you can measure and get the results you want”.
“At least with goals, employees are more aware of what is expected of them”
“If there is no goal setting, there is no focus on the objectives”
“Goal setting for employee is to maximise the employee’s potential and capabilities and load the employee with a specific target to achieve. It does lead to employee effectiveness in performing their job”.
“Goal setting and clear communication must be embraced or be synergized as there must be goal alignment of all departments to organisation goals” for organisation effectiveness. If departments pursue their own goals without integration with other departments’ goals and without aligning with organisation goals, then organisation effectiveness will be adversely affected.”
“Goal setting and clear communication would mean that employees will understand the goals set and know the direction to work towards to achieve organisation effectiveness”.
“If employee is effective, it will be reflected in the organisation in terms of productivity level, quality, level of satisfaction customers and market share”
“If employees are able to achieve their goals, if goals are towards and aligned with organisation goals, it will contribute and impact organisation effectiveness”
Goals are good for business and good for employees careers.
Good systems and processes are needed to help with management and alignment.
The day-to-day needs to align with goals.
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