Goal Setting and Motivation MANA 4328 Dr. George Benson

Goal Setting Basics 1.Specific 2.Challenging 3.Achievable 4.Participatively set  “SMART” Goals Specific, Measurable, Attainable, Realistic, Trackable  Set interim or subgoals.  Use action verbs.  Specific dates, times, and amounts.

Participation  No one knows the job better than those who do it.  Workers are more likely to accept the goals with input. Employee High Employee Low Management High ParticipationUnilateral Management Low Empowered / Self Managed No Goals

Why Do Goals Motivate?

 Focus attention of the employee  Prolong persistence  Provide challenge – competition  Intrinsic and extrinsic rewards  When goals are achieved:  Positive affect  Job satisfaction  Self-efficacy  Organizational recognition and rewards

From "Relationship of Goal Level to Valence and Instrumentality," by Journal of Applied Psychology, 77, p Copyright 1992 by the American Psychological Association. Figure 3 - Effect of Goal Setting on Percentage of Legal Net Weight Achieved by Logging Truck Drivers

Expectancy Theory Motivation = E X I X V Expectancy: The connection between behavior and the outcome Instrumentality: The connection between outcome and a reward Valence: Is the reward something that the individual values?  People are motivated by intrinsic and extrinsic rewards they desire.  People will only be motivated if outcome is possible.  People will only be motivated if outcome is contingent on behavior.  People will only be motivated if a reward is attached to the outcome.  “Line of sight” is the perceived link between individual behavior and the reward.

Goal Challenge and Performance Easy Moderately Difficult Extremely Difficult High Performance Low Performance Note: Not to scale

Call Center? Shipping?Sales?R&D? 1.What performance measures did Hiram put in place? 2.What were the outcomes of the measures?

What measures did Hiram put in place?

“We announced targets and let everyone know we were going to monitor them” “Customer Service”  Number of calls handled  Time per call  24 hours from time is opened “On-time shipments”  Shipped when the goods were promised “Sales commissions”  Percent of sales actual price - period  Sales bonuses – sell the most you win “Research and Development”  Number of patents/ copyrights/ proposals

What were the outcomes of the measures?

“Customer Service”  Don’t open the s  “Wall of shame” “On-time shipments”  Left the building but not on the way the customer  “Promise” dates different from dates customers requested “Sales commissions”  Lower morale  No Mentoring or Prospecting  Keeping account information current  Bonuses to people in rich territories “Research and Development”  Negative attitudes  Unnecessary patents

Careful What You Wish For “You make the rules, we play the game.” What do we want employees to do differently? Why aren’t they doing it already? Don’t sacrifice long-term business success for short- term goals.

Types of Goals  Behavioral goals vs. Outcome goals  Often easier to observe outcomes  Gives employee discretion on how to achieve goals  Use Outcome Goals When:  Workers know how to achieve the goals  Workers have the necessary resources

Linking Individual & Organizational Goals What are the ultimate goals?  Profits, Sales, Customer Service, Quality  Balanced scorecard  Don’t focus on intermediate goals unless they matter.  Consider the importance of coordination among employees or units.  Consult with business leaders and employees on appropriate goals

Balanced Scorecard “What you measure is what you get”  Financial vs. operational measures  Short term vs. long-term effectiveness Specific goals and measures for:  Shareholder satisfaction  Customer satisfaction  Operational Excellence  Innovation and Learning  Others?