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date: 27 June 2022

# Goal-Setting Theory: Causal Relationships, Mediators, and Moderators

• Gary P. LathamGary P. LathamRotman School of Management, University of Toronto

### Summary

Consciously setting a specific, difficult, challenging goal leads to high performance for four reasons. Specificity results in (1) the choice to focus on goal-relevant activities and to ignore those that are irrelevant. Challenge leads to an increase in (2) effort and (3) persistence to attain the goal. The combination of specificity and difficulty cue (4) the search for strategies to attain the goal. However, for this to occur, an individual or team must have the ability and the situational resources to attain the goal. In addition, the goal must be important; there must be commitment to goal attainment. Finally, feedback must be provided on goal progress so that adjustments can be made, if necessary, regarding effort or strategy for attaining the goal.

### Subjects

• Organizational and Institutional Psychology

Theories in psychology enable predicting, explaining, and influencing behavior. To qualify as a theory, causal relationships must be specified, mediators that explain the causal relationships must be identified, and the boundary conditions within which the theory is applicable must be known. Locke and Latham’s (1990, 2002, 2013; Latham & Locke, 2007, in press) goal setting theory of motivation satisfies these three criteria. This article explains the theory, describing the inductive method used to develop that theory, examples of experiments supporting the theory, the perils in ignoring the theory’s moderator variables, the various ways of setting goals, and the economic benefits of setting specific, high goals. It concludes with a discussion of goals that are primed in the subconscious.

### Goal Setting Theory

With regard to causal relationships, goal setting theory makes three assertions. First, specific, high goals lead to higher performance than setting no goals or even a vague goal such as the exhortation to “do your best.” Second, the higher the goal, the higher an individual’s performance. Third, such variables as feedback or knowledge of one’s results, participation in the making of decisions, or competition with others have little or no effect on a person’s behavior unless they lead to the setting of a goal that is both specific and difficult.

The mediators that explain why specific, high goals increase an individual’s performance are four-fold. First, consistent with the definition of motivation, a specific goal involves the choice to take action to pursue X to the exclusion of other factors. Thus a goal that is specific enables people to focus, to have a purpose in what they do rather than to meander relatively aimlessly. Second, a goal that is difficult as well as specific engenders effort, a second cornerstone of motivation. Hence, the higher a specific goal, the more effort that is expended. The third mediator is persistence. When a goal that is chosen is specific rather than vague, and difficult rather than easy, people persist in their pursuit of the goal until it is attained. The problem with a vague goal is that it allows multiple interpretations as to whether the goal is attained (e.g., my goal is to lose weight). Thus people may pat themselves on the back undeservedly. A specific goal makes explicit the desired level of performance and hence whether it has been attained (e.g., my goal is to lose 15 pounds). Persistence is a third cornerstone of motivation (Latham, 2012). A fourth mediator is relatively cognitive in nature. Setting a specific, high goal cues an individual’s extant strategies necessary to attain it.

Moderator variables specify the boundary conditions within which the above assertions are applicable. A specific, high goal leads to higher performance than an easier goal, a vague goal, or no goal only under four conditions. First, the person must have the ability to attain a high goal or the person is unlikely to commit to attaining it. Goal commitment is a second, and arguably the most important, moderator variable. If an individual is not committed to goal attainment, by definition that individual does not have a goal. Third, people must receive feedback on their performance in relation to the goal they are striving to attain. In the absence of feedback, people lack the information necessary to ascertain whether they should adhere to or change their strategy, a mediator in goal setting theory, for goal attainment.1 Finally, the requisite resources must be available for goal attainment. Situational constraints can mitigate ability for and commitment to goal attainment, no matter how difficult or easy the goal may be.

### Induction

Many, if not most, theories in psychology are developed through deduction. The authors of a deductive theory typically begin with plausible statements based on their observations. They then make predictions regarding the relationships between variables, they offer an explanation for the alleged relationships (i.e., mediators), and they state the conditions (e.g., boundary/moderators) under which the relationships should occur. Finally, empirical experiments are conducted to test the predicted causal relationships, mediators, and moderators that the theorist expects to observe. An example of a deductively derived theory in organizational psychology is Vroom’s (1964) expectancy theory.2

A major limitation of developing a theory through deduction is that it can lead to what Kahneman (2011, p. 211), the Nobel Prize–winning psychologist, labeled as theory-induced blindness: “Once you have scripted a theory and used it as a tool in your thinking, it is extraordinarily difficult to notice its flaws. If you come upon an observation that does not seem to fit the model, you assume that it must be a perfectly good explanation that you are somehow missing. You give the thought the benefit of the doubt, trusting the community of experts who have accepted it.”

The alternative to deductively developing a theory is to do so inductively. The primary difference between deduction and induction is the time-period or sequential order for conducting empirical experiments. As noted above, the deductive method involves the specification of causal variables, its mediators and moderators, before rather than after conducting empirical experiments to determine whether the deductions can be supported by scientifically obtained evidence. The inductive method requires conducting experiments, accumulating knowledge from these experiments, and then and only then developing a theory.

Empirical research was conducted inductively from the 1960s through the 1980s in both laboratory and field settings before the theory of goal setting was formally developed (Locke & Latham, 1990). The theory is based on nearly 400 studies involving close to 40,000 participants from eight different countries who performed one or more of 88 different tasks. The time span of these tasks ranged from 1 minute to three years. A decade later more than 1,000 studies had been conducted (Mitchell & Daniels, 2003). These studies show that goal setting theory is not only applicable to the motivation of an individual, it is applicable to groups/teams (Kramer, Thayer, & Salas, 2013), departments (Porter & Latham, 2013), and organizations as well (Pritchard et al., 2013; Saari, 2013).

The time span showing the beneficial relationship of goal setting to performance has been shown to be considerably longer than three years. A goal for job promotion at AT&T correlated positively with actual job promotion 25 years later (Howard, 2013).

### Empirical Research

Field experiments have been conducted with pulpwood crews in the southeastern United States. They were matched on such variables as crew size, type of terrain where they were cutting trees, and the level of mechanization they owned to cut the trees. Then they were randomly assigned to the experimental or control condition. The crews that were assigned a specific, high weekly goal to attain had significantly higher productivity the very first week of the three-month experiment than the crews in the control condition who were urged to do their best. “To do one’s best” was not a meaningless exhortation because all the crews were paid on a piece-rate basis. Yet those with a specific, high goal not only had higher productivity (cords per employee hour) throughout the experiment, they also had higher job attendance than those who were urged to do their best. People were now eagerly coming to work because their job, previously viewed by them as tedious, was now viewed as meaningful. The performance goal became a self-evaluative standard for comparing their current performance with their previous performance. The goal also allowed the employees to assess their personal effectiveness relative to others. Thus, the goal setting initiative engendered competition among the crews, competition that could just as easily have occurred, but did not occur, among the crews in the control condition who had been urged to do their best (Latham & Kinne, 1974).

The wood supply of pulp and paper companies sometimes exceeds their processing capacity. Consequently, the companies impose a wood quota where they restrict the number of days they will buy wood to three rather than five. Independently owned logging crews were found to perceive this restriction as a challenging goal. That is, they made the choice to exert the effort necessary and to persist in doing so until they harvested as many trees in three days as they normally did in five (Latham & Locke, 1975).

The beneficial effect of goal setting on job performance has also been shown with high level employees, namely, engineers and scientists with masters and doctoral degrees in an R&D department (Latham, Mitchell, & Dossett, 1978). There were 10 conditions. Employees (1) were assigned a goal, (2) participated in setting the goal, or (3) were urged to do their best. This latter condition was highly relevant for these employees because an ad hoc task force of line managers was examining ways for the company to reduce costs. Rumors abounded that R&D was likely to be reduced in both funding and manpower. The employees in these three goal conditions received feedback in the form of (1) praise, (2) public recognition, or (3) a monetary bonus. This 3 × 3 experimental design yielded nine conditions. A 10th condition was a true control group consisting of engineers/scientists who were not aware that they were involved in this field experiment.

Consistent with the predictions of goal setting theory, the employees in the do-your-best conditions performed no better than the employees in the control condition, even though those in the control condition did not receive performance feedback in the form of praise, public recognition, or a monetary bonus. Remember, the theory states and research shows that feedback only affects performance positively if it leads to the setting of a specific, high goal.

Consistent with goal setting theory, those engineers/scientists whose goals had been assigned to them performed better than those in the do-best and control conditions. But, the highest performing employees were those who had participated in the goal setting process even though their goal commitment was not significantly higher than their peers with assigned goals. The reason for the higher performance is explained by the theory—they set higher goals. The theory states that the higher the goal, the higher the performance, given the presence of the four moderators.

In all of these studies, money was not necessary for goal commitment. When money is tied to goal setting, it should not be tied to only goal attainment but rather to the attainment of subgoals as well as the final goal.

### Perils in Ignoring Moderators

Ignoring the moderators in goal setting theory is done at one’s peril.

#### Feedback

In a dynamic environment where what is true in one time period is no longer true at a later point in time, blindly adhering to a strategy for goal attainment will likely prove to be costly. In such circumstances, proximal goals (i.e., subgoals) should be set. Proximal goals are advantageous for two reasons. First, they are motivational for maintaining focus, effort, and persistence until the distal goal is attained. Second, and arguably more important in a dynamic setting, is the informative nature of proximal goals. They provide feedback as to whether the strategy for attaining the distal goal requires modification (Seijts & Latham, 2001).

#### Ability

A series of laboratory experiments show that setting performance goals that only 10% of participants can attain sometimes leads to unethical behavior, as defined by overstating one’s performance. What is fascinating is that the exaggeration is only done by people who are close to attaining the goal, especially people who in addition receive a monetary bonus for goal attainment. An even more fascinating finding is that people who exaggerated their performance regarding goal attainment did not take the money even though the experiment was designed to allow them to do so (Schweitzer, Ordonez, & Douma, 2004).

Ordonez and colleagues (2009) concluded from their laboratory findings that performance goals should not be set in the workplace. There are at least two problems with their conclusion. First, by setting goals that only 10% of the participants could attain, they failed to take into account one of the theory’s moderator variables, ability. They did so based on Appendix C of Locke and Latham’s (1990) book, where this level of difficulty is recommended solely for laboratory settings to ensure variance in the participants’ performance.3 Second, Ordonez and colleagues failed to realize that the goals set in field settings reflect the values of the leaders and an organization’s culture. Goal setting is both a theory and a technique for increasing performance. As is any technique, goal setting is subject to misuse. Nevertheless, few if any historians blame goal setting for Hitler’s egregious behavior leading to the Holocaust. Rather, they blame his values and the Nazi culture. Few if any management scholars blame goal setting for market penetration into legitimate businesses by the Mafia. Instead, they blame the values of the Mafia leaders and the Mafia culture. Similarly, few if any people in the judiciary blame goal setting for the illegal behavior that took place in the undoing of Enron. The fault has been attributed to the company’s leaders and the values they inculcated throughout the organization.

In the field of education, there are students who set a specific high goal for the grade they want to attain and then cheat to ensure that they attain it. This is particularly true for some students who aspire to attain high grades in order to get into medical school, law school, or any of the graduate departments (e.g., psychology) where the number of acceptances relative to the number of applicants is small. Yet few people argue for the abolishment of grades because they sometimes lead to unethical behavior on the part of students whose values allow them license to engage in it.

As is the case in any endeavor where there are standards, there will likely be people who will lie about or cheat on ways to ensure their attainment. To paraphrase Shakespeare, the fault is not in the goals but in ourselves, that is, the values we hold while pursuing them (Latham & Locke, 2009). In short, goal setting theory provides an excellent framework for managers and employees to increase their performance. Yet as is the case with any scientific theory and/or technique, there is no foolproof way of ensuring that it will not be misused.

#### Situational Resources

During a downturn in the economy, senior management may set performance goals that are perceived by supervisors as too high for them to attain. A correlational study revealed that when supervisors see the goal as exceeding their ability to attain it, when in addition they believe they lack the resources to attain it, they experience “hindrance stress.” This in turn has been shown to correlate with their subsequent abuse of their subordinates (Mawritz, Folger, & Latham, 2014). This correlational finding is consistent with a seminal experiment conducted years ago that showed that frustration leads to aggression (Dollard, Doob, Miller, Mowrer, & Sears, 1939). Hence the importance of taking into account a person or teams resources when setting a goal.

#### Learning Goals

There are occasions when an individual lacks the ability to attain a performance goal (e.g., generate X new revenue streams; develop Y products that will not be easily copied by competitors) regardless of its specificity or level of difficulty. People may simply lack knowledge of the strategies necessary for goal attainment. When this is the case, urging people to do their best typically leads to higher performance than a specific, high performance goal. This is because the latter often increases anxiety that in turn yields to a mindless scramble to find solutions (Mone & Shalley, 1995). The solution is to set a specific, challenging learning goal. A learning goal shifts attention from the desired performance level to be attained to the discovery of X processes, procedures, systems, or strategies. Laboratory experiments show consistently that a specific, high learning goal leads to higher performance than urging people to do their best (e.g., Latham, Seijts, & Crim, 2008). A field study revealed that during a turbulent economic cycle, only learning goals correlated positively with a department’s performance (Porter & Latham, 2013).

### Goal Setting Method

Goal setting theory is silent about the optimum method for setting the goal. Programmatic research involving at least 11 experiments revealed that an assigned goal is as effective a method for increasing task performance as a goal that is set participatively between the employee and the supervisor. However, there are a number of caveats regarding this conclusion. First, the statement is correct as long as there are no significant differences in the level of goal difficulty between the two goal setting methods (Latham & Saari, 1979a). If the assigned goal is significantly higher than the goal the employee was involved in choosing, consistent with goal setting theory, the higher goal leads to higher performance (Latham, Steele, & Saari, 1982). Second, a rationale must accompany an assigned goal; a goal that is assigned curtly is unlikely to increase an individual’s performance (Latham, Erez, & Locke, 1988).

Latham and Steele (1983) manipulated independently participative decision-making (PDM) on task strategy versus assigned, PDM, and do-best goals. The results revealed that only setting a specific high goal increased performance. PDM had no effect. However, another caveat is in order. In all the field and laboratory experiments conducted by Latham, the supervisor/experimenter who assigned the goal did so in a supportive manner in interacting with the employee/participant. In the one laboratory experiment where the experimenter deliberately behaved in a nonsupportive manner, the participants set significantly lower goals than those who had been randomly assigned to the supportive condition (Latham & Saari, 1979b).

These findings are consistent with Dember (1974), who, after reviewing the literature on motivation, concluded that in the right setting, being told to do something is tantamount to being motivated to do it. It seems that instructions that are deemed appropriate by an individual take on the formation of powerful internally generated drives. Similarly, Salancik and Pfeffer (1977) concluded that the assignment of a goal implies to an individual that she or he is capable of attaining it. A meta-analysis by Wagner and Gooding (1987) of the research on this topic revealed no noteworthy relationship between participation in decision-making and either job performance or job satisfaction.

Subsequent research has shown that researchers were going down the wrong path in their attempts to show the beneficial effect of an individual’s participation in deciding on the goal that should be set. When there is a beneficial effect for PDM, the effect is primarily cognitive rather than motivational. When the task is complex, participants ask more questions than do those who are assigned goals. The information gleaned from these questions improve their performance (Latham & Saari, 1979b). Moreover, participation in decision-making can lead to the development of an effective strategy for attaining the goal; this in turn increases a participant’s self-efficacy that the goal is attainable. Strategy and self-efficacy have been shown to have a reciprocal effect on one another, and both have been shown to mediate the PDM–performance relationship (Latham, Winters, & Locke, 1994). Self-efficacy is defined as one’s belief or confidence that the goal is attainable. Self-efficacy influences goal choice and goal commitment (Bandura, 2013). That is, people with high self-efficacy choose and commit to high goals. They are resilient in the face of goal setbacks. People with low self-efficacy quickly abandon the goal when they experience difficulties in goal pursuit.

With regard to self-set goals, an experiment conducted in a government agency showed that goal difficulty level, goal acceptance, goal attainment, and task performance were as effective as goals that were assigned or set in a participatory manner (Latham & Marshall, 1982). In summary, from a motivational standpoint, one method of goal setting is not necessarily more effective than another. From a motivational standpoint, the critical factor for increasing performance is the level of difficulty of the goal that is set.

There are contexts where only self-set goals are appropriate, especially off-the-job settings. Frayne and Latham (1987) successfully taught a self-management program to unionized state government employees whose job attendance was low. The core of the program was goal setting and its moderator, feedback, regarding weekly/monthly job attendance. Millman and Latham (2001) taught displaced managers who had been out of work for 13 months to set a goal for re-employment and to use verbal self-guidance to increase self-efficacy for goal attainment, namely, re-employment. Similarly, Latham and Budworth (2006) used this approach for enabling Native North Americans to obtain employment, as did Yanar, Budworth, and Latham (2009) for enabling women in Turkey over the age of 40 to attain their goal of becoming re-employed.

### Economic Benefits

Latham and Baldes (1975) reported that goal setting regarding loading trucks to their maximum legal weight saved a forest-product company a quarter of a million dollars over 9 months. Schmidt (2013) used utility analysis procedures to estimate the economic value of goal setting to employers in today’s dollars. Specifically, he examined the difference between do-your-best or no-goal conditions and specific, difficult goals. The dollar value figures indicate the increase in revenue from improved performance. His sample is based on four meta-analyses of goal setting experiments. These four meta-analyses included 19,839 data points. The results revealed that the average increase in employee output per year as a result of a goal setting intervention is $9,200. A goal setting intervention that lasts for 5 years, involving only 35 employees, costing$200 per employee yields an organization \$1,603,000 due to the increase in production. The percentage increase in employee output is 9.2%.

### Priming Goals in the Subconscious

In suggesting directions for future research on motivation, Locke and Latham (2004) pointed to a limitation of goal setting theory, namely that it is a cognitive theory that ignores the subconscious. This is a limitation because cognitive resources are limited (Miller, 1956). In contrast to consciousness, the subconscious is a vast reservoir of information (Vorhauser-Smith, 2011).

Bargh’s (1990) automaticity model focuses on goals that are primed in the subconscious. As is the case with goal setting theory, the model asserts that a goal is a mental representation of a desired state that is pursued through action. The goal can be primed in the subconscious in one of two ways, subliminally or supraliminally. The model further asserts that an external stimulus in the environment can passively, subtly, and unobtrusively activate a goal. If the priming is done subliminally, the stimulus is presented below focal awareness; if the priming is done supraliminally, the individual is aware of the stimulus yet is unaware of its influence on subsequent behavior. In short, the model states that a primed goal guides behavior in the absence of conscious intention. In agreement with goal setting theory, this occurs only if the goal is important to the person.

After reviewing the literature in social psychology on primed goals, Latham, Stajkovic, and Locke (2010) concluded that this methodology should be examined with regard to organizational behavior. A laboratory experiment involving brainstorming had revealed that making sentences from scrambled achievement-related words (e.g., win) led to higher performance than making sentences from scrambled neutral words (e.g., tree) (Stajkovic, Locke & Blair, 2006).

Most social psychology experiments on primed goals involve the presentation of the prime and the measurement of the dependent variable seconds/minutes later (e.g., length of time to walk from a laboratory to an elevator). Thus a field experiment was conducted in a call center to determine whether laboratory findings on primed goals generalize to work settings.4 As was the case in the preceding laboratory experiment, a supraliminal prime was used to prime the goal for achievement, namely a photograph of a woman winning a race. At the end of the work shift, the employees with the primed goal raised significantly more money from donors than did those in the control group (Shantz & Latham, 2009). These results were replicated in two additional call centers (Shantz & Latham, 2011). Of further practical significance was the finding that the two goals, consciously set and primed, led to higher productivity than either goal alone (Shantz & Latham, 2009).

Consistent with goal setting theory, Latham and Piccolo (2012) hypothesized that a context-specific goal that is primed leads to higher performance than a more general goal. The results from a fourth call center supported this hypothesis. The employees who were primed with a photograph of call center employees in the work-place raised 16% more money than those who were primed with the photograph of the racer, and 85% more money than the employees in the control group. Those employees who were primed with the racer raised 60% more money than those in the control condition. Of further practical significance is the finding that these results were obtained on the first day and lasted throughout the four-day work week.

What remains to be explored is the time length with which a primed goal influences behavior and the frequency with which the prime should be changed to maintain high performance. The effect of a consciously set specific, high goal on an employee’s behavior has been shown to last for months, if not years (e.g., Latham & Baldes, 1975; Howard, 2013).

### Conclusion

Goal setting theory is among the most valid and useful theories of motivation of organizational behavior (Lee & Earley, 1992; Miner, 2003; Pinder, 1998). The theory is straightforward: set a specific, high goal and the result will be high performance. This is because the specific goal that is chosen focuses an individual’s attention on goal-relevant activities. Individuals exert far more effort for a higher goal than they do for an easier one, and they persist in doing so until the goal is attained. However, the beneficial effect of the goal–performance relationship only occurs if the person has the ability to attain the goal, is committed to goal attainment, receives feedback on goal pursuit, and has the requisite resources to pursue and attain the goal. Dysfunctional behavior is likely to occur if the theory’s moderator variables are ignored.

The theory was developed through induction rather than deduction. Thus it is an open rather than a closed theory; that is, goal setting theory is open to modification through findings from subsequent research (e.g., the discovery of the necessity for setting learning rather than performance goals). A new research frontier is the exploration of the effect of primed goals on organizational behavior and the extent to which their effects on performance are similar to or differ from the effects that have been found with goals that are consciously set.

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### Notes

• 1. Wood et al. (2013) found that strategy can also moderate, in addition to mediate, the goal–performance relationship.

• 2. Interestingly, Vroom himself never conducted an empirical experiment to test any aspect of his theory (Vroom, 2015).

• 3. To the author’s knowledge, no field experiment has set goals that only 10% of the participants could attain. Most practitioners adopt the heuristic explained by Mealiea and Latham (1996), namely, SMART—that is, a goal should be specific, measurable, attainable, relevant, and have a time frame for its attainment.

• 4. Findings from laboratory settings regarding consciously set specific, high goals do have external validity for the workplace (Latham & Lee, 1986).