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OKRs and the science behind goal-setting

Francisco Homem de Mello

 Goal-setting has historically been used in the corporate world for two main purposes:

  • To motivate employees (efficiency)
  • To assess their performance

Let me explain this: HR common sense has always said that goals motivate employees towards achieving better results. Goal achievement, on the other hand, has historically been used as a proxy for performance: if I’ve hit 100% of my goals, it must mean I’m a good performer. However, we thought it made sense to briefly review goalsetting theory, or GST. We think HR professionals deserve to have this widespread practice correctly understood from a theoretical basis, because there’s more to it than just these two axes of purpose.

Goal-setting theory, or GST

According to GST, goals serve three main purposes:

Focus

Presuming that goals have been established according to the company’s long, medium, and short-term strategies, based on myriad methodologies like BSC, Hoshin Kanri, etc., goals help the company focus effort, attention, and energy on what’s relevant, relative to what’s irrelevant. According to Johnson, Chang, and Lord (2006), “goals direct individuals’ attention to goal-relevant activities and away from goal-irrelevant activities.” It’s proven that “individuals cognitively and behaviorally pay more attention to a task that is associated with a goal than to a task that is not.”

Effort

Another very important purpose of goals is to increase the level of effort that people exert at work. It’s also proven that “goals energize and generate effort toward goal accomplishment. The higher the goal, the more the effort exerted.” This is a tricky equation: too hard a goal and, as you’ll see in a bit, employees get demotivated; too easy a goal and employees will also get demotivated. In sum, there’s a right amount of hard, which pushes people to challenge themselves, but within a reasonable chance of achievement, that optimizes performance. This links us to persistence.

Persistence

Persistence is probably the trickiest thing to get right when setting goals. The right ones produce high effort input for longer periods of time, but the wrong ones can really wreak havoc: “large negative discrepancies may lead to a withdrawal of effort when individuals are discouraged and perceive low likelihood of future goal attainment” (Carver & Scheier, 1998). As we’ll see, there are derivative factorsthat influence persistence towards goals.

Getting goals right

When GST researches goal efficacy, a lot of attention is given to how individuals relate to their goals, and especially with regard to hitting and not hitting their goals. When there are negative gaps, or when individuals perform below their goals, they seek to attribute the reasons as to why goals haven’t been met: “When individuals face negative goal-performance discrepancies, they will likely consider the reasons why they are behind, which systematically determines their subsequent behaviors.” Different reasons mean different impacts on how these same individuals take on their future goals: “Attributions therefore are an important motivational mechanism that may explain under what circumstances individuals persist in goal pursuit or adjust their goal levels.” (By “adjusting their goal levels,” you should understand “lowering their goals,” or “sandbagging”.)

 Here’s a list of the main attribution mechanisms, and how these may affect future goal-setting:

Internal (self) and external (locus of causality)

If I think I’ve hit my goals because of my own competence, I’ll set harder goals in the future; if I think I’ve missed my goals because of my own incompetence, I’ll try to set easier goals in the future.

 Stable and unstable

If I think the reason I’ve missed my goals isn’t going to change (i.e., the reason, or condition, is stable), I’ll try to set easier goals, whereas if I think the reason I’ve missed my goals was a one-off (i.e., not stable,) I’ll set higher goals. So, if I think it was due to my lack of effort, it’ll be better than if I think it was my lack of competence, which is more stable: “When individuals perceive the cause of the failure or negative goal-performance to be stable and this likely to remain the same in the future, they will likely expect the outcome (i.e., failure to reach their goal) to recur.”

Controllable (under the person’s control) and uncontrollable

“If people believe that causes for failure are controllable, they will probably continue or renew their effort and commitment to their original goal, but be less likely to do so if the cause of a negative discrepancy or failure is perceived to be due to uncontrollable causes.”

 Linked to higher goals/purpose

“When making an internal attribution for goal failure, an individual may be more likely to continue goal pursuit when the goal contributes significantly to a highly valued superordinate goal. The individual may be more likely to revise the goal downward when the goal is tangential to the superordinate goal’s accomplishment”

Brief bibliographical note

New Developments in Goal Setting and Task Performance, edited by Edwin Locke and Gary Latham, is the most comprehensive piece of science on the effects of goal setting on the performance of people doing jobs. It’s a meta-study of more than 500 academic papers and theses on the subject, and it’s where we drank most of what’s in this chapter. So we won’t, for time’s sake, be using formal scientific citation formats, because it’s 2018 and frankly we don’t have time for it. Just remember it all came from them.

PS: If you want to learn more about how to manage your company using OKRs, download for free our book OKRs, From Mission to Metrics, also available for sale on Amazon.