BUAD 670 Ch
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University of Delaware *
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May 10, 2024
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Motivate Employee Performance Through Goal Setting
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Goal setting theory provides a framework that specifies the most valid and practical ways
of increasing employee motivation. -
Goal setting theory states that the simplest most direct motivational explanation of why some people perform better than others is because they have different performance goals. -
Difficult specific goals lead to a significantly higher performance than easy goals,
no goals, or even setting the abstract goal. -
The higher the goal, the higher the performance. -
Personality traits and incentives influence an individual’s behavior
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Goal setting can have a cognitive benefit. -
Sub principles of goal setting theory…
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Set challenging and specific goals. -
Individuals must have knowledge to attain it. -
Feedback must be provided on progress in relation to goal attainment. -
Ways must be found to maintain goal commitment. -
Resources must be provided for, and obstacles removed, to goal attainment. -
For goal setting to be maximally effective, the goal and the measure of performance effectiveness must be aligned. -
Setting specific challenging goals is important for increasing both job performance and job satisfaction. -
“That which gets measured gets done.”
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Feedback moderates the positive effect of goal setting. Gain Goal Commitment
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Two primary ways to gain commitment are to focus on an individuals’ outcome expectancies and self-efficacy. -
Downside of setting challenging, specific goals is that people typically obtain tangible evidence that they did not attain to them. -
The solutions for maintaining goal commitment are…
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Focus on outcome experiences. -
Increase a person's self-efficacy. -
Four cell-empathy box can be used to understand…
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The outcomes an employee expects from committing to a goal.
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The negative outcomes expected from goal commitment. -
The positive outcomes expected from sticking with the status quo. -
The negative outcomes expected from doing so. -
Five questions asked are as follows…
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What positive outcomes do you expect from committing to and pursuing the goal?
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What negative outcomes do you expect from committing to and pursuing the goal?
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What positive outcomes do you expect from rejecting or ignoring the goal?
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What negative outcomes do you expect from rejecting or ignoring the goal?
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What should have to change for you to commit to the goal?
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When people lack the requisite knowledge to master a task, urging them to do their best results in higher performance than setting a specific difficult goal. -
Such tasks are complex for people. -
Such tasks require primarily learning rather than motivation. -
People with specific high goals feel pressure to perform well immediately. -
As uncertainty increases, it becomes increasingly difficult to set and commit to a long-
term goal. High Performance Cycle
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Diagnostic tool or framework for understanding why employees are or are not motivated. Issues in Implementation
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For what should goals be set?
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Who should set the goals?
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Holding goal difficulty constant, self-set goals are as effective in increasing performance as are goals that are assigned or set participatively. -
Limitation of goal setting theory is that it focuses solely on consciously set goals. -
No other theory of motivation has been found to be as consistently effective in the workplace as goal setting. SUMMARY
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The concept of motivating employee performance through goal setting is rooted in the goal setting theory, which asserts that individuals with different performance goals perform differently. Specifically, challenging and specific goals are found to enhance performance significantly compared to easier goals, abstract goals, or no goals at all. Moreover, the alignment between goals and measures of performance effectiveness is crucial for maximal effectiveness. To maintain goal commitment, it is essential to focus on outcome expectancies and self-efficacy, as well as to provide feedback and resources while removing obstacles. However, challenges arise when individuals lack the necessary
knowledge or face complex tasks that primarily require learning rather than motivation. Additionally, as uncertainty increases, setting and committing to long-term goals become more difficult. The high-performance cycle serves as a diagnostic tool for understanding employee motivation, yet issues persist in implementing goal setting effectively, such as determining what goals to set and who should set them. Despite its limitations, goal setting theory remains one of the most consistently effective methods of motivating employees in the workplace.
Pay for Performance
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Principle involves providing monetary rewards through carefully designed compensation systems that base pay on measured performance within the control of participants. -
Properly designed pay-for-performance systems will lead to better performance results. -
Make major contributions to performance through two main mechanisms…
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Positively influences the motivation to perform. -
Impact the attraction and retention patterns of organizations. Individual Level
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Three major types of pay-for-performance systems…
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Traditional Incentive Systems
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Piece-Rate Plans
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Employees are paid a specified rate for each unit produced or each service provided. -
Sales Commissions
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Sales incentive that is typically expressed as a percentage of sales dollars, a percentage of gross profit margins, or some dollar amount for each unit sold. -
Variable Pay Configurations
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Performance related compensation that doesn’t permanently increase base pay and that must be re-earned to be received again. -
Four methods of linking bonuses to goals…
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Assigning stretch goals and paying bonuses only if the goals are achieved. -
Having multiple goal levels and corresponding bonuses that increase as higher goals are met. -
Offering bonuses that grow incrementally as performance improves (with no upper limit). -
Setting specific, challenging goals but making decisions about bonuses after the fact so that contextual factors can be taken into account. -
Merit Pay Plans
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Rewards individuals for past work behaviors and outcomes by adding dollar amounts to their base pay. Team Level
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Provide monetary rewards based on the measured performance of the group or team. -
More research is needed to better understand the underlying conditions for effective team
pay-for-performance. Organizational Level
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Gainsharing
: compensation plan in which an organization shares with employees a portion of the added earnings obtained through their collective increases in productivity. -
Profit Sharing
: provides payments to employees based on the profitability of the business.
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Stock Ownership
: long-term incentive. Overall Effects
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Direct impact of pay plans on performance is not the only effect to consider.
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