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Goal setting is another very useful method of enhancing employee performance. From a motivational perspective, a goal is a meaningful objective.

Goals are used for two purposes in most organizations. First, they provide a useful framework for managing motivation. Second, goals are an effective control device (control meaning the monitoring by management of how well the organization is performing). Social learning theory perhaps best describes the role and importance of goal setting in organizations. A person who achieves a goal will be proud of having done so, whereas a person who fails to achieve a goal will feel personal disappointment and perhaps even shame.

Goal-setting theory has been widely tested in a variety of settings. Research has demonstrated fairly consistently that goal difficulty and specificity are closely associated with performance.

MBO is often an effective and useful system for managing goal setting and enhancing performance in organizations. Research suggests that it can actually do many of the things its advocates claim but that it must also be handled carefully. In particular, most organizations need to tailor it to their own unique circumstances.