What is goal setting, and why should managers be concerned about it$?$ Goal$$setting theory and research emerged when the rational goal model$$the theoretical forerunner of the Compete quadrant of the competing values framework$$held sway as the dominant model of organizational effectiveness. The rational goal model assumes an organization is effective if it successfully achieves the goals it is pursuing. For most businesses, then as now, a primary goal is profitability. For other organizations such as nonprofits and governmental agencies, goals typically focus on accomplishing a mission, rather than achieving a profit. From a purely rational and logical perspective, goals define the results that people should aim to accomplish in pursuit of the organization$$s strategy and vision. Goals serve as the foundation for performance planning, review, rewards, and improvement efforts. Without goals, time and effort would be wasted on activities not specifically focused on the organization$$s success$$as defined by its goals.

Goal setting takes place at all levels in an organization. The focus, purpose, and kinds of activities that are part of the process, however, vary with the level of the organization in which they take place. At the most senior levels of managerial leadership$$at the enterprise level, for example$$goal setting tends to be focused primarily around what Latham and Wexley $(1994)$ refer to as the organization$$s vision. That focus tends to be strategic and directional. It involves an organization$$s most basic and fundamental decision: the choice of missions, strategies, and major allocations of resources. These strategic$/$visionary choices, taken together, will generally shape the organization$$s overall future.

As the goal$$setting process cascades down throughout the organization to operating unit levels, and ultimately to individual employees, goal setting should stay aligned with superordinate goals set by the most senior organization leaders. At these lower levels, goal setting tends to be more tactical, with a primary emphasis on implementing and carrying out decisions made as part of the vision development and strategic planning process. At the tactical level, the process involves the following elements:

Formulate specific objectives, targets, or quotas that need to be achieved by a certain time.

Develop an action plan to be followed and identify specific steps to be taken to meet or exceed those objectives.

Create a schedule showing when specific activities will be started and$/$or completed.

Develop a $$budget$($including any type of necessary resources$).$

Estimate or project what will have happened at certain points during the life span of the plan.

Establish an organization to implement decisions.

Set standards against which performance will be evaluated.