Literature Review: Exploring Goal Setting Theory in Business Context

This literature review examines the goal-setting theory and its significance in the modern business environment. It explores the role of goal-setting models in managing organizational performance and motivating employees. The review analyzes various goal-setting theories, including those developed by Locke and Latham, and discusses the concepts of goal commitment, self-efficacy, and the high-performance cycle. It delves into the elements of goal-setting theory, such as commitment, specificity, difficulty, and feedback, while also highlighting the importance of process-based theories. The review emphasizes the impact of goal setting on employee motivation, productivity, and overall organizational success, supported by research and theoretical frameworks.

Running head: LITERATURE REVIEW
Literature Review
Name of the Student
Name of the University
Author note

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Table of Contents
1. Introduction............................................................................................................................1
2. Research Questions................................................................................................................1
3. Analysis of Significance of Goal-Setting Approach..............................................................2
4 Concepts and Theories Related to Goal-Setting.................................................................4
4.1 Theory of Goal Setting Developed by Locke and Latham’s............................................4
4.2 Process Based Theories....................................................................................................6
5. High-Performance Cycle in Goal Setting Theory..................................................................7
6. Elements of the Goal-Setting Theory.....................................................................................8
6.1 Commitment towards Achieving the Goals.....................................................................8
6.2 Specificity of the Goals....................................................................................................9
6.3 Difficulty in Achieving Goals..........................................................................................9
6.4 Feedback Relating to Goals...........................................................................................10
6.5 Theoretical Framework..................................................................................................11
7. Conclusion............................................................................................................................11
References................................................................................................................................13

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1. Introduction
In the modern and ever-changing business environment, proper maintenance of the
well-motivated employees helps in attaining the different organizational goals along with
different objectives. The motivated type of workforce will be remaining productive, increase
the organizational performance which will ultimately contribute to the attainment of the
satisfaction of the different stakeholders. Furthermore, to enhance performance, the different
companies set organizational and individual goals.
These are the goals among others which reinforces the overall performance along with
triggering job satisfaction among employees and it will enhance the commitment of the
different employees towards the organization. The main aim and purpose of the literature
review are to examine the different approaches of the goal setting theory that will identify the
degree of organizational commitment among the employees. The other focus of the literature
review is on analyzing the theoretical models as well as concepts based on goal-setting theory
within the companies which will be setting a baseline of the plan to take decisions effectively.
2. Research Questions
 Explain the role of the models of goal-setting in managing the performance of the
organization in an appropriate manner
 What is the role of goal-setting theory in motivating the different employees in the
organizations?
 Explain and analyze the different goal-setting theories which are followed by the
companies?

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3. Analysis of Significance of Goal-Setting Approach
As commented by Beal (2017), one of the essential management theories is goal
setting theory wherein it is utilized in the setting of the business which will be beneficial in
creating the different incentives for the different employees to complete the different tasks
more efficiently. Furthermore, Berson et al., (2015), have opined that the different goals have
a prevalent influence on the behavior of the different employees as well as organizational
along with management performance. Moreover, there are different organizations wherein
each new organization has different forms of goal setting operation in operation.
As opined by Burns, Martin and Collie (2018), the different programs such as
management by objectives, management information system along with benchmarking are
the strategic planning which will be inclusive of the development of the different specific
goals. Besides, as commented by Clements and Kamau (2018), there are different companies
along with the managers who will be creating different kinds of incentives which will be
beneficial in improving the morale of the employees and it will improve the overall
productivity of the company. The goals should be specific rather than being general as it will
assist the different individuals in understanding the processes which are involved in helping
to achieve the goals successfully.
As stated by Downes et al., (2017), employee motivation is the crucial task for the
upper-level management team as it will be beneficial in managing the different activities of
the company appropriately. When the management of the companies wants the employees to
perform appropriately, it is essential for them to motivate them which will be generating
positive results and making employees proactive in their approach. It has been identified that
the goal-setting theory in the company can lead to an increase in the motivation among
employees as it is the most powerful weapon which will be beneficial in motivating
employees. Moreover, as opined by Erez (2015), the goal-setting theory is the technique

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which is recommended to the different companies to increase the level of motivation, and it
will be appropriate for shaping the behaviour of the different individuals to become more
motivated in achieving the goals appropriately.
Furthermore, as commented by Ganegoda, Latham and Folger (2016), the attributes of
the goal are defined as the object goal or aim of the action which is consisting of both
external and internal characteristics. As opined by Gardner et al., (2016), internally, the
different goals are seen as the idea which will be including the desired conclusion, however,
externally; the goal can be related to the performance of the employees or the sale which is
going on in different stores. Additionally, as stated by Itzchakov and Latham (2018), the
theory of goal-setting includes goal commitment along with self-efficacy. The different
pieces of literature have shown that self-efficacy has a direct impact on the performance of
the different individuals working in the organization.
Furthermore, the different studies have proven continuously that different individuals
with the high level of self-efficacy will be performing in a much better manner in the
different tasks which are challenging and it will prove to be beneficial for the overall
productivity of the organization in an accurate manner. As opined by Landers, Bauer &
Callan (2017), the goal commitment is the necessary action which the individuals take in
order to attain the objectives which will be beneficial in completing the assigned tasks
appropriately.
4 Concepts and Theories Related to Goal-Setting
As commented by Latham (2016), the goal-setting theory is one of the most powerful
techniques which is because the value related to goal-setting is well-recognized as the theory
states that the goal setting is linked properly to the performance of the tasks. Moreover, it
states that the challenging along with the specific goals with the appropriate feedback helps in

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contributing towards high and better performance of the tasks positively. Additionally, as
commented by Latham and Arshoff (2015), there are eventualities of the respective theory
which includes self-efficiency along with goal commitment as these play a vital role in
leading to better performance through increasing efforts and motivation along with increasing
as well as improving the quality of feedback which is being provided to the employees.
Additionally, as stated by Latham and Seijts (2016), the goals should be realistic and
challenging in approach as it will be providing the different individuals with the feeling of
pride and triumph when they attain the set objectives and it will be enhancing the overall
appropriateness of the tasks which are given to them.
4.1 Theory of Goal Setting Developed by Locke and Latham’s
Ever since the human relation undertaking, there are two major and dominant theories
which are being used in order to investigate the motivation of the employees appropriately.
The two types of theories related to motivation include the process-based theories along with
need-based theories that have remained the constant competition to one another. As stated by
Latham, Brcic and Steinhauer (2017), the Management by Objectives along with theories
related to goal-setting is the major field of studies in the organizational behaviour segment as
the different objectives and goals are the key and major elements which will be appropriate
for creating positive organizational climate appropriately. As stated by Latham, Mawritz and
Locke (2018), the different kinds of goals are related with enhancement of the performance
as it will organize the efforts along with encourages the level of performance appropriately.
Furthermore, as argued by Locke (2015), the different goals which are ambitious in
nature will be beneficial in contributing towards improving the overall organizational
performance along with it will enhance the overall business objectives. Moreover, as
hypothesized by Locke and Latham (2015), the different kinds of goals create an inescapable

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influence on the behaviour of the different employees which will create a huge impact on the
long-term work performance of the company appropriately. As proposed by Locke and
Latham in the year 1960, it can be emphasized that specific and clear feedback plays a major
role in motivating the employees who will be appropriate for improving the morale of
employees which will encourage them in performing in an appropriate manner.
According to Travers, Morisano and Locke (2015), there are major principles of the
goal setting approach which can improve the rate of success within the company such as
challenge, clarity, feedback, commitment as well as complexity related to the tasks. The main
aim and purpose of the respective theory are that it is the dual process wherein the individual
employees set their own and personal goals and the different companies should focus on the
setting of team goal which will comprehensively attain organizational and personal growth of
the different employees.
Additionally, as suggested by Neubert and Dyck (2016), the willingness of the
employees to work towards the achievement of the goals is one of the major sources of
motivation for the employees within the company. On the contrary, McEwan et al. (2016),
have argued that there can be different circumstances in the different organizations, there can
be different conflicts between the organizational and personal goals which can affect the
overall effectiveness in a negative manner. In such scenarios, the goal setting theory analyzes
that the different companies need to frame the different goals which are complex wherein the
employees can attain the goals, and it will be bringing a sense of self-satisfaction among the
different employees working in the organization and increase the overall level of
productivity.

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4.2 Process Based Theories
As opined by Martin, McNally and Taggar (2016), the process-based theories create
strong conceptual models which will be serving to predict the motivation along with the
performance of the different employees working in the organizations. The expectancy along
with equity-based theories provides with expanded causes of the motivational aspects and the
respective theory suggests that needs, values along with the expectations of the different
employees are linked with the job-related responsibilities along with resulting in the
motivation of the different individuals. As commented by Locke and Latham (2019), the
other process-based theory which has been introduced is the goal-setting theory wherein the
main claim of the theory is that the predetermined goal can be helpful in serving as the
inducer of performance.
Moreover, as suggested by Martin, McNally and Taggar (2016), the different kinds of
specific goals which are accompanied through the challenging performance targets will be
helpful in improving the results of performance in comparison to the ambiguous or simple
goals. The setting of the goals by itself helps in providing emotional urgency, and the
achievement of the goals will create satisfaction, on the contrary, the different goals which
were unaccomplished can trigger dissatisfaction among the different employees, and it will
be leaving the different stakeholders with the emotional distress as well.
5. High-Performance Cycle in Goal Setting Theory
In addition, the goal setting theory is properly integrated into the High-Performance
Cycle that assists in providing a framework for analyzing the concept of motivation in a
thorough manner. As defined in High-Performance Cycle, the goal setting theory helps in
explaining along with influencing the job performance of the different employees along with

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the satisfaction which assists in triggering the commitment of the different employees
towards achieving the organizational goals.
As opined by McNally and Taggar (2016), the job satisfaction helps in affecting the
organizational commitment, and the job dissatisfaction leads to the reduction in the
commitment among the different employees towards achieving the goals of the organization
appropriately. Moreover, as stated by Travers, Morisano and Locke (2015), the job
satisfaction among the different employees helps in increasing the organizational
commitment, and it leads to the setting of high goals that will be indicating recursive nature
of HPC. As per the high-performance cycle, the specificity of the goals along with difficulty
level can affect the performance of the job positively which will be beneficial for the overall
success of the firm along with managing the motivating of the employees as well.
Locke (2015), has opined that the high goals help in leading towards high
performance and it will be leading to the different contingent rewards that can be both
internal or external in nature which will be leading to job satisfaction among employees. The
goal-setting theory provides the employees with long-term vision along with short-term
motivation that will be beneficial for the company in attaining the different objectives and
improve the self-efficiency level of the employees as well. As commented by Latham (2016),
the goal-setting theory is defined as the technique which will be used to raise the incentives
for the employees as it will make them complete the work more quickly and efficiently.
6. Elements of the Goal-Setting Theory
As opined by Landers, Bauer and Callan (2017), there are different elements along
with circumstances of the goal-setting theory which assists in making the goals realistic and
efficient. Moreover, it will be enhancing the level of performance through invoking the
motivation within the different employees which includes goal commitment, the specificity of

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the goals, and goal difficulty along with the different feedbacks related to the progress of the
goals which are being set by the management for the employees.
6.1 Commitment towards Achieving the Goals
As commented by Erez (2015), the commitment related to goals helps in analyzing
the acceptance of the goals by the different individuals. The goal acceptance is the initial step
towards the motivation among individuals which will be one of the major elements of the
respective theory. As commented by Beal (2017), when the goal is realistic and achievable, in
such scenario, the rate of acceptance is high and with the proper advent of acceptance among
the different employees as well. In such scenario, the different individuals will be applying
the required degree of self-efficacy and determination which will be helpful in the completion
of the goals, and it will help improve the morale of the employees working in the
organization to achieve such goals. However, on the contrary, Clements and Kamau (2018),
have commented that the commitment rate can be hampered to a large extent if the
employees feel that the goals are not found to be important by the employees.
Therefore, in such a scenario, to make the different goals achievable, the different
organizations must exert the significance of the different goals on employees. The main
factor which should be considered in the particular scenario is the casual attitude of the
different employees towards meeting the different goals. As commented by Erez (2015), the
organizations need to effectively provide the different details of the goals, properly establish
the relationship between the goals and the mission of the company that will draw to the
advantage that the individuals may incur from the overall attainment of the goals
appropriately.

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6.2 Specificity of the Goals
In case of goal specificity, as commented by Ganegoda, Latham and Folger (2016), it
is being identified with the help of measurability, and the author suggested that highly
specific goals will be beneficial in attaining the goals and it will create an impact on the level
of performance. Moreover, the different kinds of goals which are absurd can make it difficult
for the different employees to decide on the quality of performance which is required to be
generated by employees. In such a scenario, Erez (2015), has hypothesized that the goals
should be clear in regards to the specifications which will be beneficial in assigning the tasks
to the employees and setting goals for them. The main focus of the management of the
organization is to reduce the ambiguity from the goals which should be performed by the
employees. According to Downes et al. (2017), the different targets which are numerical in
approach will help make the goal more realistic, and it will be highly motivating for the
employees to achieve the goals appropriately with proper concentration and motivation.
Furthermore, depending upon the diverse skills of the different employees, the goals can be
made challenging and specifications can be changed which will play a vital role in the
completion of the tasks.
6.3 Difficulty in Achieving Goals
As opined by Downes et al. (2017), in order to encourage the high performance of the
different employees working in the organizations, it is essential for them to formulate the
highly difficult goals which will be beneficial in improving the morale of employees as they
will have a feeling that the goals are productive and they can achieve it. As commented by
Erez (2015), the different employees in the organizations tend to behave and act dishonestly
when the different goals which are required to be achieved by them become unattainable or
too difficult to be achieved by them.

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Therefore, it is essential for the different companies to set the level of difficulty in a
correct manner which will be enhancing the level of performance appropriately and
encourage motivation among employees as well. As commented by Açıkgöz and Latham
(2018), the level of difficulty of the different tasks which are being performed by the
employees should be within the range of power of the different employees who will be
performing it. In measuring the particular scenario, the companies can perform the SWOT
analysis which will be identifying the internal strengths along with weaknesses which will be
applicable for the company to generate the goal standards and improve the overall scenario of
the goal objectives of the company.
6.4 Feedback Relating to the Goals
Lastly, as commented by Açıkgöz and Latham (2018), the feedback is one of the
essential aspects which should be provided for evaluating the overall performance of the
employees who have achieved the goals in the organizations. As suggested by (), the
feedback plays a vital role in case of measuring the overall effectiveness of the employee’s
commitment towards achieving the goals and providing them with solutions which will be
beneficial in solving the deficiencies.
Moreover, as commented by Erez (2015), when there is no such system of feedback
available in the companies, it is one of the difficult aspects which are faced by the employers
and employees as the employees do not understand the work progress and it becomes too
difficult for them to achieve the goals appropriately. There can be a proper understanding of
the different loopholes which are present in the goals and feedback helps in the appropriate
modification of the goals, and it will be generating positive results.
Lastly, as commented by Açıkgöz and Latham (2018), the feedback can be both
process-oriented or the outcome-oriented, therefore, in such scenarios, by the help of

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feedback, the different employees will be aware of the different tasks which are being
performed by them and they can rectify the same with the help of the feedbacks generated.
6.5 Theoretical Framework
Figure 1: Theoretical Framework of Goal Setting Theory
(Source: Epton, Currie & Armitage, 2017)
7. Conclusion
Therefore, from the overall literature review relating to the Goal-Setting Theory, it
can be identified and analyzed that goals are one of the most integral parts in the different
organizations as it is helpful for the employees to achieve the same with proper motivation.
The organizational management needs to set appropriate and attainable organizational goals
which have provided proper insight on negative as well as positive aspects of the goal-setting

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theory. Motivation is one of the vital elements which should be provided to the different
employees as it will increase their morale in appropriately performing the tasks.

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References
Açıkgöz, A., & Latham, G. P. (2018). The mediating effect of team reflection on the
relationship between a challenging learning goal and new product success. Canadian
Journal of Behavioural Science/Revue canadienne des sciences du comportement,
50(3), 136.
Beal, M. A. (2017). How Does Goal Setting Impact Intrinsic Motivation And Does It Help
Lead To Enhanced Learning At The Kindergarten Level?.
Berson, Y., Halevy, N., Shamir, B., & Erez, M. (2015). Leading from different psychological
distances: A construal-level perspective on vision communication, goal setting, and
follower motivation. The Leadership Quarterly, 26(2), 143-155.
Burns, E. C., Martin, A. J., & Collie, R. J. (2018). Understanding the role of personal best
(PB) goal setting in students’ declining engagement: A latent growth model. Journal
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Clements, A. J., & Kamau, C. (2018). Understanding students’ motivation towards proactive
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Downes, P. E., Kristof-Brown, A. L., Judge, T. A., & Darnold, T. C. (2017). Motivational
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Epton, T., Currie, S., & Armitage, C. J. (2017). Unique effects of setting goals on behavior
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Erez, M. (2015). Goal setting. Wiley Encyclopedia of Management, 1-4.
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primed goal on fair behavior. Human Resource Management, 55(5), 789-807.
Gardner, A. K., Diesen, D. L., Hogg, D., & Huerta, S. (2016). The impact of goal setting and
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