Effective goal setting is paramount for business leaders to cultivate a team of motivated employees that will help them achieve faster results and significant growth. Without goals, employees lack focus and direction; inefficiencies emerge as there is no clear aim and whilst people may still work hard, they often end up working hard on the wrong things.

This blog article will discuss the theory of goal setting and how effective this can be to achieve faster business growth.

In the beginning

Goal setting is based on the idea that creating something measurable and tangible is significantly more effective than setting vague or ambiguous goals without measures. It’s no secret that well-defined goals lead to more motivated employees as they work towards something specific. Those that create goals and write them down are 10x more likely to achieve them. Goal setting requires a certain mindset as it influences how a person prioritises their daily work.

Having a culture of goal setting also results in higher employee engagement; people often work together to achieve a challenging goal, giving them a sense of purpose which encourages hard work and ownership.

According to experts in this field, Dr Edwin Locke and Dr Gary Latham, state that there are 5 key principles in goal setting that can significantly improve the chances of success:

The 5 principles of goal setting

1. Clarity

Setting clear goals is vital for success. A goal should be easy to understand, be measurable and include a deadline for completion. Furthermore, the goal should inspire you and motivate you to achieve it. Any element of confusion will prevent such a positive impact.

For example, a clear goal would be:

An unclear goal would be simply asking an employee to do their best to improve customer satisfaction in the coming months.

2. Challenge

Your business goals should be challenging enough to motivate employees and keep them focused on the work required to achieve them and satisfy their own growth and personal development. Goals should be set with some degree of stretch to make them ambitious and move the business forward. However, goals also need to be realistic and not too challenging; there is definitely a sweet spot here. Having clear and correctly challenging goals can make all the difference between working hard and working smart.

For instance, setting the goal to reduce company expenditure by 80% would be too overwhelming. Replacing that 80% with 20% is a much more reasonable goal that is also fairly challenging.

3. Commitment

Right from the get-go, employees should understand and support the goal they are assigned to achieve. If they don’t understand the overall purpose of the goal and lack commitment to it, they are less likely to persevere through the process.

A no-commitment scenario would look something like this: Goals are decided by higher management and dictated to the team members without any input or involvement.

A goal-setting scenario with commitment would be when business leaders work together with their team members to determine the goals, objectives and targets, allowing input on how to best achieve them, communicating the business vision and sharing senior management goals. Allowing employees to realise how they can positively impact achieving those goals is a much more empowering way to approach this. When employees are allowed the autonomy to decide the best way to achieve a particular goal, they will take ownership and step up their performance.

4. Feedback

Feedback should be a regular component of the goal-setting process to ensure that everyone is on track. Feedback from other departments, the wider business and the business leader are important as it helps assess the suitability of the goals being set and align expectations with what is being fulfilled.

Let’s say you want to achieve a 20% improvement in positive customer ratings for a specific product. You can provide your customer service department with weekly or monthly feedback to let them know how their progress matches up with the goal set for them. They need to know if they are winning and on course for success or not. Visibility of progress and performance helps people realise how their efforts are paying off and if they need to step up their game.

5. Task Complexity

Larger goals should be divided into smaller milestones to avoid overwhelm. Our award-winning 1-3-5® business planning methodology is very effective in this area. It involves taking 1 overall business vision and splitting it into 3 mission-critical objectives, then breaking those objectives down further into 5 goals or key results each. The proven success of the 1-3-5® shows how effective it is at goal setting and execution. Dividing work into smaller tasks and milestones can help you achieve big goals.

Following the popular goal-setting framework of OKRs, an example of a top level objective could be:

This in itself is hugely overwhelming and an enormous task. However, if this objective is broken down into 5 smaller goals or key results, it becomes much less intimidating. These smaller goals should have their own measure and timeline for completion, each signalling when progress is being made towards the overall objective.

One of the 5 smaller goals in this endeavour would be:

So, why is goal setting so effective?

Goals are powerful. They can directly translate to profitability and significant growth if implemented correctly. But even before that, they provide employees with a clear direction of focus. Goals provide a comprehensive measure of achievement, progress and performance, and accountability and ownership as employees become empowered to make a difference, especially if their efforts are recognised and rewarded. With such a clear path, employees know their purpose within the organisation, which keeps them motivated to aim higher.

If you have any questions about anything in this blog, please get in touch by emailing our in-house goal setting expert, Pete Wilkinson, pete@reclaro.com.