What is Goal Setting Theory?

Goal-setting theory was proposed by Edwin Locke in the 1960s. It states that goal setting has an effect on task performance. Goals provide direction to employees about what needs to be accomplished. 

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Premises of Goal-Setting Theory

Below are the premises of goal-setting theory:

• Clear and Challenging - Goals should be specific and challenging. Such goals relate to higher performance in completion. Clear, unambiguous goals avoid misunderstanding.
• Realistic - Goals should realistic and capable of being achieved.
• Feedback - Employees should receive feedback that directs their behavior.
• Participation - Employee participation in goal setting facilitates accepts and increased involvement.

Result of Goal-Setting Theory

The anticipated result of goal setting is:

• Self-Efficacy - This concern employee self-confidence in a performance task. Generally, self-efficacy leads to higher performance through increased effort.
• Goal Commitment - This assumes that individuals will become committed to the goal and be reluctant to leave it. This is true for goals that are openly communicated, self-set by the employee, and consistent with organizational goals.

Goal-setting theory is linked to improved performance, increased output, increased commitment, feelings of self-efficacy, and organizational culture. 

It has limitations when the managers goals differ from the organizations goals. 

Difficult goals tend to cause riskier decisions by employees. 

Over-assessing an employees ability can make the goal too daunting and discourage completion.