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The Impact of Goal Setting on Organizational Performance

Less than 6 min read Minute Read
April 20, 2024
The Impact of Goal Setting on Organizational Performance

In his Art of War, Sun Tzu states that if the order is ambiguous, it’s not the soldiers' fault for not seeing it through - the fault lies in the management. 

Still, do entry-level employees need to understand the company's and their teams' broader objectives? Absolutely! First of all, younger workers are obsessed with making a difference. They need to know that what they’re doing matters. Even if they’re just a small part (a single cog in the machine), they still want/need to understand the end goal.

Also, to fulfill your expectations, your staff must start from a position of knowing what your objectives are. The simplest way to express these objectives is through goal-setting.

With that in mind and without further ado, here’s an insight into goalsetting's impact on organizational performance.




1. Improving commitment and motivation

Try to remember the last time you tried to work out. What was the most challenging part? Was it making yourself go to the gym or convincing yourself that it’s worth it because you still don’t see the results?

Veteran gym-goers and dieters know that the most challenging part is to hold out until the first results. Once you see the first results, you’ll never lack commitment or motivation.

By sharing goals with your staff, you’ll help motivate them even before the first results are visible. Even people at the bottom need to understand what’s going on and the purpose of all this. It may not be the best example, but according to one legend, Caesar ordered his legions to burn all their supplies before the battle of Pharsalus. This way, even a common soldier and auxiliary forces understood the importance of taking the enemy’s camo (along with their supplies).

In other words, even if your objectives are currently abstract, it might be a good idea to try and bring them closer to your staff. Give them something that they care about or can relate to. Make this goal one of your company’s core values even better. Of course, this has to be a long-term goal that your entire organization strives toward.

Even more importantly, you must give your staff members an example of how their performance affects this major outcome. This is like the voting dilemma, where people don’t turn out because they believe their vote doesn’t matter. This often results in a minuscule number of votes, completely changing the course of the election. 

So, it’s not just enough to tell them why the goal matters. Explain how their role in the project changes/affects the end goal and outcomes. 

One effective way to ensure that your staff members understand their role and feel motivated to contribute to the company's long-term goals is by utilizing employee engagement software. By incorporating such software into your organization, you can facilitate effective communication and collaboration, allowing employees to track their progress, share goals, and understand the impact of their individual performance on the overall outcome. 

This can also serve as a platform to bring your objectives closer to your staff, making them more tangible and relatable. By demonstrating how their efforts directly influence the end goal and outcomes, you empower your employees and make them feel valued, leading to increased motivation and commitment. 

Similar to the voting dilemma, where each vote can make a significant difference, employees need to see the significance of their contributions in order to feel valued and engaged.


2. Accurately measure performance with dedicated software

There are a lot of platforms that can help you monitor the performance of your employees. However, tracking performance and knowing exactly what you’re tracking are completely different things. 

First, you need the right tool for the job. Now, while our subheading mentioned Culture Amp as a choice many organization leaders go for, this is by no means your only choice. There are many Culture Amp competitors worth considering, as well. In other words, you have the freedom of choice to pick a platform that you find suits you the best. 

Remembering that these platforms do more than just track performance is worth remembering. They also assist when furthering goals like diversity and equity

By setting a measurable goal, you’ll know exactly how close you are to your goalpost. This is why so many development teams choose road maps - they give them a graphic representation of a project that may be hard to quantify.

This is also why sales goals are so amazing - they give you an exact number to work with. Whether or not you’re doing better than the same month last year can be expressed in dollars, cents, and percentages.

The most important thing to understand is that you have an objective representation of your current performance by monitoring how close you are to these goals. If you share this with the rest of your organization, you don’t have to communicate your opinion regarding results. If you express that you’re doing 10% worse than expected, everyone will understand the message, even without receiving negative feedback directly (everyone knows it’s bad). 


3. Setting a clear, meaningful goal can increase employee satisfaction

One of the most harmful stereotypes in the business world is that employees are only there for the money and show little to no regard for organizational interests. Even when it’s a non-profit organization, people often assign all sorts of selfish reasons why people show up every day for work. These excuses range from gaining social credit to trying to bolster their CV (like it’s a bad thing).

The reality is that people care about goals - they just sometimes doubt that they’re making a difference. 

This is why setting goals that will get an organization-wide consensus (even if it’s non-verbal) might make everyone try harder. It may even make them feel a greater sense of purpose at work. 

Just imagine all the horrors that an average firefighter or paramedic has to endure in their line of work. No money can compensate them for all they’ve seen and experienced in the line of duty. However, things become much easier to bear when you don’t see your job as work but as a calling. This is what the right goal can do for your enterprise.

Also, some jobs require no small amount of sacrifice. The thing is that keeping a work-life balance gets a lot easier when people at home understand why your work matters. By conveying the significance of these goals to your staff members, you may help them share this message back at home. This way, everyone is on the same page.

Remember how organizations often refer to their members as a family - this would make their actual family members distant. A mutual goal can bring everyone together. 


4. Coordination means everyone working towards the same goal

From the organizational standpoint, you need both macro and micro goals. Now, you get micro goals (those that are relevant to individuals, teams, and departments) by breaking down your macro goal. This is like working a newspaper labyrinth puzzle, starting at the exit and slowly tracing the line back to the entrance.

Imagine your major goal was to mark X growth. The best way to get there is to: 

  • Increase the number of visitors on your site by Y percentage (your digital marketing has their goal) 
  • Increase your sales by Z percentage (your sales team has their objective).
  • Boost the CX by a certain margin (your customer support and PR teams have their objectives).
  • Reduce the number of complaints and get new features on the product (your R&D department will get a vague idea of what they should do).

These goals can be broken down into individuals within each team or department.

Sure, in departments like sales, most people will do the same, but in other teams, each person may have a unique task. When each team member completes this task, all of them may come together. Just imagine a manufacturing process where each worker makes a part of the end product of the device. Cross-functional coordination is one of the most critical aspects of productivity improvement


5. Learning and continuous improvement

Even when your team executes everything flawlessly and meets its goal, there are always things you could have done better. Now, you don’t want to be nitpicky, but striving for perfection is the only way to reach excellence. This is the only way to stay afloat in a modern competitive business world.

Now, at the end of the day, when you start analyzing your previous experience and goals, there will be a few things that you’ll notice.

Chances are that you’ve managed to fulfill these tasks too quickly because they were too simple from the start. This means that achieving them won’t be as meaningful, and there’ll be a lot of unused potential that you never got to tap into.

If the goal is too ambitious, failure to fulfill it will result in disappointment. Not many people will find comfort in the fact that the task was impossible from the start - people just feel the natural psychological urge to get the job done. Still, this experience will give you a better idea of your current capacities and ensure you set more attainable goals the next time. 

It’s also important to mention that when faced with an impossible task, people are likely to come up with brilliant solutions that they never before would have thought of. Also, there’s the issue of Parkinson’s law, where giving people too much time kills their productivity. 

Either way, at the end of the task, you’ll be left with many metrics showing you exactly how far off from the “optimal” goal-setting you were. Your aim is always to hit that sweet spot between simple and impossible


Setting the right goals is the first step in achieving something significant

Even if you’re the head of the firm, it’s inaccurate to assume that you’re the only one who cares about the organization's goals. People want to participate in something great, and they want to know that their work matters. Also, breaking down larger objectives can help set smaller ones (day-to-day and month-to-month). Top-to-bottom or bottom-to-top, objectives matter either way.



Srdjan Gombar

Veteran content writer, published author, and amateur boxer. Srdjan is a Bachelor of Arts in English Language & Literature and is passionate about technology, pop culture, and self-improvement. His free time he spends reading, watching movies, and playing Super Mario Bros. with his son.


Veteran content writer, published author, and amateur boxer. Srdjan is a Bachelor of Arts in English Language & Literature and is passionate about technology, pop culture, and self-improvement. His free time he spends reading, watching movies, and playing Super Mario Bros. with his son.

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