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Goal-Setting Theory in Management: Definition & Examples

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  • 0:02 Why Set Goals?
  • 0:36 What Are Goals?
  • 2:22 Lesson Summary
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Lesson Transcript
Instructor: Cori Arnold
This lesson provides an overview on how to set goals both personally and professionally. We'll learn how goals propel us toward our individual and organizational targets.

Why Set Goals?

Goals are an important part of our lives. They keep us focused and allow for us to achieve things we never thought possible. Goals are also critical in organizations. Companies set targets every year, which include both operating targets and financial targets. These targets create one primary direction for the company.

The purpose of goal-setting, whether in our personal lives or within organizations, is to set our focus and increase our motivation levels. Let's first understand how to set a goal.

What Are Goals?

We all have dreams, but how many of us have goals? Goals, unlike dreams, identify the specific achievements we want to pursue in our lives.

Goals are:

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Timely

This concept of the SMART goal was introduced in the November 1981 issue of Management Review, by George Doran. A goal must first be specific, meaning that the goal should be focused on one clear objective. For example, if my goal was to lose weight, then I would need to identify how many pounds I wanted to lose.

Second, the goal should be measurable. Being able to target a specific weight allows the goal-setter to understand how many pounds he must lose.

Third, the goal needs to be achievable. Evidently, there is a threshold on how much a person should lose. By setting a goal weight too low, the person may risk his health. There is a healthy weight for most people based on their height.

Fourth, is the goal realistic? If the individual sets an outrageous target, then he may get discouraged and give up completely when he cannot achieve the target. However, there needs to be a balance. If the goal is too easy, then what is the purpose of the goal? The goal must be difficult to achieve, but at the same time, it must be realistic. This promotes ambition and allows individuals to stretch themselves.

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