Setting Motivational Goals
The Art and Science of Motivating Employees
By: Jacilyn Bennett, Director of Business Development
An Introduction to Goal Setting
While many large corporations utilize formal goal setting and employee performance review plans to motivate employees towards the overall company goals, the question remains as to whether goal setting in small to mid-sized organizations is as effective and/or necessary to achieve organizational success. While larger corporations utilize corporate vision and mission statements and align departmental goals towards these, small to mid-sized organizations may also benefit from a formal installation of effective employee goal setting procedures. The same rules apply regardless of the organization’s size: financial achievement and motivation of employees only occurs through proper goal setting by management.
What We Know About Goal Setting
Every organization involves three types of stakeholders: (1) capital market stakeholders, (2) product market stakeholders, and (3) organizational stakeholders. While all stakeholders are both affected by the organization’s performance and hold the ability to withhold participation necessary for the organization to achieve survival, competitiveness and profitability, not all stakeholders are created equal (Darnell, Henrique, & Sadorsky, 2010, p. 1072-1122). Organizational stakeholders, which encompass employees, managers and non-managers, have a higher level of influence on the success of the organization (Van der Laan, Van Es, & Van Witteloostuijn, 2008, p. 299-310).
Understanding the impact that employees, organizational stakeholders, have on the success of the business, the question remains as to what employees seek in their employer. Hitt, Ireland and Hoskisson (2013) conclude that employees prefer to work for companies that are growing and take interest in employee skill development, especially those skills that are required to be effective team members and meet or exceed goals (p. 23). With this in mind, we will now examine how organizations should properly set employee goals.
Proper Employee Goal Setting
Dr. Edwin Locke and Dr. Gary Lathan published their guide to SMART goal setting in the 1990’s. Locke and Lathan defined SMART goal setting criteria as specific, measurable, attainable, relevant, and time-based (Dessler, 2012, p. 110). For the purposes of examples, we will use a small children’s book publisher with fifty employees. Setting specific goals for employees is not only the ability to clearly define what the goal is, but to also define which employees are to be involved in the achievement of the goal. For example, a specific goal for the children’s book publisher might be to have its sales department increase sales to national bookstore chains by 50%. This goal clearly lays out the specific goal to be achieved and what specific members of the company, in this scenario the sales department, are to be involved in attaining this goal.
The next part of SMART goal setting is to define how the goal will be measured. Going back to the example described earlier, the company could state that this goal will be measured through weekly sales and production reports. By establishing a method by which the goal will be measured, employees are able to track their progress against the goal. After establishing specific and measureable methods to goal achievement, the next step is to make sure the goal is attainable and provide suggestions as to how the goal can be achieved. Setting a goal that is not capable of being achieved using the current or expected resources of the organization only serves to frustrate and de-motivate employees. For example, explaining that the sales department will utilize industry contacts and referrals as a method to attaining the goal allows further clarification and suggestions as to how they can attain the goal.
The next step in SMART goal setting is to make sure the goal is relevant to the organization and explain to employees how the attainment of the goal ties back to the success of the business as a whole. For example, the children’s book publisher could explain that by achieving a 50% increase in sales to national bookstore chains will increase revenue, grow the business and expand the current markets served from regional to national. Finally, every goal needs to establish a deadline or timeframe that the goal should be achieved in. Simply setting a broad timeframe is not ideal, it is best to provide milestones along the way that allows employees to track their success in stages instead of as a whole. By correlating this back to our children’s book publisher, it would be wise to state that the goal is to achieve a 50% increase in sales to national bookstore chains within a six-month period. Tying all of these criteria together allows the goal to become the following:
The sales department of XYZ children’s book publisher will increase sales to national bookstore chains by 50% within the next six months. By utilizing industry contacts and customer referrals, the sales department will help XYZ children’s book publisher increase revenue, grow the business and expand into national markets.
The above goal now encompasses all aspects of SMART goal setting in that it is specific, measurable, attainable, relevant, and time-based.
Proper Goal Setting Leads to Financial Success
With the steps needed to properly set employee goals explained, the question remains as to why this is an important factor to organizational success. In a recent study by the Workforce Intelligence Institute (WII) and Success Factors (2006), researchers found a strong correlation between a small to mid-sized company’s financial performance and their ability to effectively set goals (p.1). With that said, it is not just the effective setting of goals that is critical to a company’s financial success but more so the ability to connect individual employee goals with that of the organization.
If employees are not able to understand how their goals coincide with the overall goals of the organization, confusion and lack of motivation are the unfortunate side effects that occur. Author Brian Tracy summarizes this best through his definition of the 10/90 rule of smart goal setting. Tracy (2012) believes that 10% of the time spent developing SMART goals, saves 90% of the mistakes, cost and time an organization incurs (p.1).
Reinforcing Employee Goal Achievement through Recognition
Once an organization understands the importance of goal setting and the correlation between SMART goal setting and financial success, the importance of recognizing employee successes becomes necessary. Individual employee recognition can be accomplished in many ways such as through cash bonuses, points based recognition systems, additional time-off and other tangible rewards. In a survey conducted by Sirota Consulting (2005) including 2.5 million employees across 237 private, public and non-profit organizations in 89 countries, only 51% of employees were satisfied with the recognition that they received after achieving a job well done (p. 207-208).
Psychologist Abraham Maslow’s Hierarchy of Needs explains that every human has a set of needs that must be satisfied. Included in these needs are those of social needs, esteem needs and self-actualization. Because these needs encompass self-esteem, personal worth, social recognition, acceptance and personal growth, employee recognition becomes more than just a desired behavior; it becomes a necessity for employee motivation and goal attainment (Internet Center for Management and Business Administration, Inc. [ICMBA], 2010).
Proper goal setting is a critical element to an organization regardless of its size. From organizations that contain less than 15 employees to those with over 100,000 employees, every employee should be aware of their personal goals as well as those of the organizations. This factor becomes even more critical within small to mid-sized organizations, as there is often little room for error. By engaging employees, instituting SMART goal setting techniques, and recognizing individual employees for their efforts and achievements organizations will achieve higher levels of financial success.
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