Goal setting
Sources of performance expectations
There are various routes through which performance expectations can be communicated
to employees. One traditional route is a job description; another important channel is
daily management. In addition, the employees themselves can set goals for their
performance. A further route is goal setting that takes place as part of a performance
management process, and that is the primary focus here.
Type of goals
Many companies use the acronym SMART to help set good, effective goals (Armstrong
and Baron, 1998). The acronym SMART indicates that goals should be Speci? c,
Measurable, Agreed, Realistic and Time-related. Both laboratory and ? eld research
have repeatedly shown that the setting of speci? c goals dramatically improves employee
performance (Meyer et al., 1965; Latham and Wexley, 1982; Locke and Latham, 1984;
Robertson, 1987; Lee et al., 1991; Campbell and Furrer, 1995). Speci? c performance
goals are typically ‘hard’, i.e. objective, quantitative and directly measurable. They are,
for example, pro? ts, market share, return on investment, units produced and turnover
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(Murphy and Cleveland, 1991; Szilagyi, 1988; Jacobs, 1986). Data on the achievement
of hard goals are the easiest to collect and seemingly the easiest to interpret. Also,
increasing goal speci? city results in clear expectations and reduces the probability of
misunderstandings between managers and subordinates (Locke and Latham, 1984).
However, hard performance goals do have their drawbacks. They tend, for example,
to be available for only a limited number of jobs (Ghorpade and Chen, 1995); and they
are obtainable only when the empl ...