What is the key idea behind Goal Setting Theory How does management by objectives help implement this idea?

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Advantages of Goal Setting Theory
Limitations of Goal Setting Theory
Authorship/Referencing - About the Author(s)
Steps in Management by Objectives Process
Benefits of Management by Objectives
Limitations of Management by Objectives
Key Takeaways
Additional Resources

In 1960’s, Edwin Locke put forward the Goal-setting theory of motivation.

This theory states that goal setting is essentially linked to task performance.

It states that specific and challenging goals along with appropriate feedback contribute to higher and better task performance.

In simple words, goals indicate and give direction to an employee about what needs to be done and how much efforts are required to be put in.

The important features of goal-setting theory are as follows:

The willingness to work towards attainment of goal is main source of job motivation. Clear, particular and difficult goals are greater motivating factors than easy, general and vague goals.

Specific and clear goals lead to greater output and better performance. Unambiguous, measurable and clear goals accompanied by a deadline for completion avoids misunderstanding.

Goals should be realistic and challenging. This gives an individual a feeling of pride and triumph when he attains them, and sets him up for attainment of next goal. The more challenging the goal, the greater is the reward generally and the more is the passion for achieving it.

Better and appropriate feedback of results directs the employee behaviour and contributes to higher performance than absence of feedback. Feedback is a means of gaining reputation, making clarifications and regulating goal difficulties. It helps employees to work with more involvement and leads to greater job satisfaction.

Employees’ participation in goal is not always desirable.

Participation of setting goal, however, makes goal more acceptable and leads to more involvement.

Goal setting theory has certain eventualities such as:

Self-efficiency- Self-efficiency is the individual’s self-confidence and faith that he has potential of performing the task. Higher the level of self-efficiency, greater will be the efforts put in by the individual when they face challenging tasks. While, lower the level of self-efficiency, less will be the efforts put in by the individual or he might even quit while meeting challenges.

Goal commitment- Goal setting theory assumes that the individual is committed to the goal and will not leave the goal. The goal commitment is dependent on the following factors:

Goals are made open, known and broadcasted.

Goals should be set-self by individual rather than designated.

Individual’s set goals should be consistent with the organizational goals and vision.

Advantages of Goal Setting Theory

Goal setting theory is a technique used to raise incentives for employees to complete work quickly and effectively.

Goal setting leads to better performance by increasing motivation and efforts, but also through increasing and improving the feedback quality.

Limitations of Goal Setting Theory

At times, the organizational goals are in conflict with the managerial goals. Goal conflict has a detrimental effect on the performance if it motivates incompatible action drift.

Very difficult and complex goals stimulate riskier behaviour.

If the employee lacks skills and competencies to perform actions essential for goal, then the goal-setting can fail and lead to undermining of performance.

There is no evidence to prove that goal-setting improves job satisfaction.

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Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

A strategic approach to enhance the performance of an organization

Management by Objectives (MBO) is a strategic approach to enhance the performance of an organization. It is a process where the goals of the organization are defined and conveyed by the management to the members of the organization with the intention to achieve each objective.

An important step in the MBO approach is the monitoring and evaluation of the performance and progress of each employee against the established objectives. Ideally, if the employees themselves are involved in setting goals and deciding their course of action, they are more likely to fulfill their obligations.

Steps in Management by Objectives Process

1. Define organization goals

Setting objectives is not only critical to the success of any company, but it also serves a variety of purposes. It needs to include several different types of managers in setting goals. The objectives set by the supervisors are provisional, based on an interpretation and evaluation of what the company can and should achieve within a specified time.

2. Define employee objectives

Once the employees are briefed about the general objectives, plan, and the strategies to follow, the managers can start working with their subordinates on establishing their personal objectives. This will be a one-on-one discussion where the subordinates will let the managers know about their targets and which goals they can accomplish within a specific time and with what resources. They can then share some tentative thoughts about which goals the organization or department can find feasible.

3. Continuous monitoring performance and progress

Though the management by objectives approach is necessary for increasing the effectiveness of managers, it is equally essential for monitoring the performance and progress of each employee in the organization.

4. Performance evaluation

Within the MBO framework, the performance review is achieved by the participation of the managers concerned.

5. Providing feedback

In the management by objectives approach, the most essential step is the continuous feedback on the results and objectives, as it enables the employees to track and make corrections to their actions. The ongoing feedback is complemented by frequent formal evaluation meetings in which superiors and subordinates may discuss progress towards objectives, leading to more feedback.

6. Performance appraisal

Performance reviews are a routine review of the success of employees within MBO organizations.

Benefits of Management by Objectives

Management by objectives helps employees appreciate their on-the-job roles and responsibilities.
The Key Result Areas (KRAs) planned are specific to each employee, depending on their interest, educational qualification, and specialization.
The MBO approach usually results in better teamwork and communication.
It provides the employees with a clear understanding of what is expected of them. The supervisors set goals for every member of the team, and every employee is provided with a list of unique tasks.
Every employee is assigned unique goals. Hence, each employee feels indispensable to the organization and eventually develops a sense of loyalty to the organization.
Managers help ensure that subordinates’ goals are related to the objectives of the organization.

Limitations of Management by Objectives

Management by objectives often ignores the organization’s existing ethos and working conditions.
More emphasis is given on goals and targets. The managers put constant pressure on the employees to accomplish their goals and forget about the use of MBO for involvement, willingness to contribute, and growth of management.
The managers sometimes over-emphasize the target setting, as compared to operational issues, as a generator of success.
The MBO approach does not emphasize the significance of the context wherein the goals are set. The context encompasses everything from resource availability and efficiency to relative buy-in from the leadership and stakeholders.
Finally, there is a tendency for many managers to see management by objectives as a total system that can handle all management issues once installed. The overdependence may impose problems on the MBO system that it is not prepared to tackle, and that frustrates any potentially positive effects on the issues it is supposed to deal with.

Key Takeaways

Management by Objectives (MBO) is an approach adopted by managers to control their employees by implementing a series of concrete goals that both the employee and the organization aim to accomplish in the immediate future and work accordingly to achieve.
The MBO approach is implemented to ensure that the employees get a clear understanding of their roles and responsibilities, along with expectations, so that they can understand the relation of their activities to the overall success of the organization.
If the management by objectives strategy is not adequately set, decided upon, and controlled by organizations, self-centered workers can be likely to misinterpret results, wrongly portraying the achievement of short-term, narrow-minded goals.

Additional Resources

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