Goal setting

Importance of Setting Clear and Achievable Goals in an Organization

By on August 11, 2022

Goal setting is crucial for any organization to ensure its growth and that of its employees. Whether the company is small or large or the organizational structure is simple or complex, goal setting requires time and planning. Yet, even when goals are set and developed, a lack of proper communication and follow-through often results in derailing the process. This can be avoided with proper planning and alignment of goals that can help organizations and employees gain a sense of purpose. Setting clear, achievable, and measurable goals is more important than ever to motivate and galvanize employees to move forward on the path of self-growth, leading to the organization’s overall development.

What is Goal Setting?

Goal setting happens at different levels – the organization, specific team, and finally, individual employees. Yet, what remains common is setting an achievable target to be met within a particular time frame. For organizations, goals can be as ambitious as making sweeping societal changes. At the same time, for individual employees it can vary from learning or improving a new skill to meeting a specific sales target. 

The positive spin-off of goal setting is that it sets off better working habits and efficient behavior and helps your team members focus and retain momentum. Success or achievement can only be managed if properly measured, and setting clear and achievable goals is the first step in this direction.

Four Primary Purposes of Goal Setting

Goal setting has several constructive outcomes for organizations as it helps the employees realize their true potential and link their contribution to the organization’s success. Setting goals, working towards achieving them, and celebrating their fulfillment is extremely rewarding for the entire team. Here’s a look at four reasons why organizations must set goals:

Primary purposes of Goal setting

1. Motivating employees

Goal setting can egg employees and inspire them to improve their skill set and test their true potential. Research shows that employees are more engaged when they have targets to work towards, and goal setting can help them forge a deep connection to the organization they work for. The simple process of goal setting can help you create motivated teams who exude optimism that leads to better employee performance. 

2. Aligning resources to realize a shared vision

Every organization or team comprises employees with different capabilities and outputs. Goal setting at the team and individual levels can align everyone and help managers steer team members toward a common and achievable target. A goal-oriented mindset creates a shared vision that unifies disparate resources and creates team synergies.

 3. Creating accountability

In remote working environments, managers find it easier to assess employee performance with questions about meeting milestones or targets. Goal-setting is not a one-time exercise; it requires constant follow-up that includes evaluation of performances to check progress. This creates accountability within the team, as each member is aware of and responsible for their output. 

4. Meeting set targets 

At any given time, there are several active projects in any company. The surest way to judge their completion is through the goal-setting process. When targets are met, it creates a feeling of fulfillment and euphoria within the team leading to improved morale and a higher retention rate. While tracking the progress of a project or plan, employees also recognize their contribution and are likely to feel more valued. 

How Can Goal Setting Improve Performance?

Locke and Latham’s goal-setting theory propounds that “businesses can achieve greater success by applying specific and measurable goals for employees.” This theory, published by two management psychologists, Edwin A. Locke and Gary P. Latham, supports the notion that high performance is linked to specific and challenging goals. Furthermore, when performance is evaluated based on goals and is related to feedback on results, it leads to a feeling of acceptance and commitment amongst employees. Based on this theory, this is how goal setting can improve performance: 

  • The motivational impact of goals is related to ability and the employee’s belief that they can achieve something significant.
  • Deadlines can spur higher performance and the overall effectiveness of a goal. Also, compared to a performance goal orientation, a learning goal orientation leads to higher performance. 
  • Goal setting is a significant tool to give direction to employees and helps assess organizational progress. Clear, realistic, and achievable goals enable employees to perform better and accurately evaluate results. 
  • Setting goals can help you measure and define success. They also indicate how far you’ve come and must go to achieve your targets. 
  • Goal-driven performance can lead to employee fulfillment, even if the achievement is small. This sense of accomplishment leads to overall employee satisfaction and a higher retention rate as they feel more valued.
  • Goals enhance the decision-making skills of the employee by guiding the process. They act as reference points for employees to make decisions impacting the overall organizational goals. In challenging projects, goals provide the proper guidance to employees and leaders in making wise decisions. 
  • Individual goals linked to organizational goals foster teamwork and extract optimum performance from the entire team. As employees understand how their goals are linked to their peers, they will recognize the importance of working together to meet the overall goals.
  • Goals are a roadmap for employees to work toward their professional fulfillment. They help them define their journey and the steps they need to take to improve their skills and capabilities. 

Importance of Goal Setting in an Organization

The importance of goal setting in any organization cannot be overstated, as they boost employee performance by providing motivation and a sense of purpose. By quantifying results, goals help employees to contribute more towards achieving them. Setting goals is an elaborate process and requires a lot of research, thought, time, and participation. The following factors must be kept in mind while setting goals:

Importance of Goal Setting in an Organization

Provides direction

The goal-setting process must be meaningful and resonate with different team members. It should ensure that they get a clear idea of what the goals entail and their role in the process. Further, employees must be equipped with the right resources and tools to achieve these goals. The process guarantees you communicate goals clearly and transparently, and always be open to answering questions and offering feedback and support.

Increases motivation

Keeping employee morale high can be challenging for any manager, and goal setting is an easy way to keep your team members motivated and energized. With clear goals, employees focus their time and energy better and contribute more to productivity. Goal setting also helps boost their confidence and leads to higher job satisfaction.

Measures progress

When goal setting is done correctly and accurately, it can help managers measure the success of employees and the organization. The key is to create achievable, clear, and measurable goals that help evaluate results and employee performance quickly. This process involves using the ‘SMART’ method, which we will discuss in detail in the next section. 

Enhances decision-making

Goals are the compass for an organization that provides focus and direction to employees. They even lead to positive behavioral and attitudinal changes amongst team members, such as better decision-making. It gives your team the much-needed momentum that spurs them to improve every day and not give up even when times are challenging. 

Creates coordination and synergy

Teams need a unifying factor to work well, and goals are the glue that binds employees together. Coordinated efforts and synergy are among the many positive outcomes of goals where teams strive in a shared direction. Managers must ensure that they align short-term and longer-term goals to keep the momentum going.

Prioritizes work

Any job entails juggling many responsibilities, but some tasks are more critical than others. Having clear goals helps employees prioritize work and focus on the most crucial tasks. This leads to a systematic and logical approach resulting in fewer errors and higher output. Goal setting also helps a team align their priorities and understand what work needs to be completed and by when.

Better time management

Time is gold and a precious resource for any enterprise, and having clear goals helps employees manage their time more efficiently. Goals set the work priorities clearly, leading to sharper focus and reducing the possibility of wastage of time and resources. Employees who manage their time well are more driven and productive, which ultimately benefits the organization.

Five keys to goal setting

The key to creating smart goals is to follow the SMART method, which stands for specific, measurable, achievable, relevant, and time-bound. When followed, these five indicators ensure the goals are clear and meaningful and lead to the professional growth of employees and the whole organization.


For any goal to work, it must serve a specific end. The improvement it aims for could include pushing sales, introducing a new product, or reducing customer grievances. When the goal is clear and sharp, it helps managers plan and execute the project successfully. 


Apart from being specific, the goal should also help to measure progress. This gives employees a more precise working scenario where their actions and outcomes can be measured. Measurable goals also help managers to bring the team back on track and create new goals if the results are unexpected and off the mark.


Some goals may appear ambitious and lofty on paper, but the practical approach is to keep them realistic and attainable. Keeping them a little out of reach of employees keeps the team on their toes and ensures they keep testing their potential.


Goals cannot be set in isolation and must be firmly rooted in the present. The business world is constantly evolving, and managers must recognize the need to reinvent constantly. This means setting goals that are relevant in the current corporate climate. 


Creating timelines and deadlines is a sure way to keep team members motivated and organized. Goals that are time-bound and correspond to milestones are likely to be met. Managers should keep sight of any potential roadblocks that might derail the efforts of their team members and cause delays.

Top six ways to set organizational goals

For any manager and the human resource department of an organization, goal setting is a significant responsibility. Processes and systems are usually in place to set goals that include interacting and discussing them with employees. Managers, along with the HR department, follow guidelines to set business objectives and communicate business goals and key results to employees. Goal setting not only enhances employee engagement but also improves work satisfaction and the organization’s overall growth. 

An essential factor to consider while setting goals is clear communication with employees. The management’s expectations must be spelled out, along with targets that must be met. At the same time, employee goals should also give due importance to personal growth and development. Regular updates and progress report meetings must be organized to keep team members engaged and motivated.  

Below are six tested strategies for managers to consider when setting goals for their team members.

Tips for setting organizational goal

1. Bottom-up approach

This goal-setting strategy enhances understanding of goals while boosting employee engagement and motivation. When employees are involved in defining organizational goals, they understand their roles and tasks and are more committed to achieving them. This approach requires close collaboration between managers and the HR department to create performance benchmarks for employees. They must also assist employees in linking their professional goals to the organization’s broader goals. 

2. Setting realistic deadlines 

Realistic deadlines motivate employees and managers to align their time and efforts and work together to achieve goals—this collaboration and teamwork boosts team morale and fosters solidarity. Deadlines should be tight yet realistic to help achieve the best results. While keeping employees on their toes is important, creating a false sense of urgency may prove counter-productive. 

3. Linking individual and organizational goals

Employees must be aware of their responsibilities and how their contribution leads to the organization’s growth. Once they see how their individual goals are tied up with the broader organizational goals, they are likely to be more committed and diligent. With a clearer understanding of the impact of their output, they are keen to see its effect on the company’s goals. Since they understand the impact of their performance, they are more eager to see its effect. With the help of tools such as objectives and key results (OKRs), managers can set lofty goals and link individual growth to the organization’s growth and track the progress.

4. Rewarding excellence

All wins, no matter how small or big, must be recognized and rewarded. This goes a long way in motivating employees and creating an atmosphere of healthy competition. Creating a quarterly rewards and recognition program where star performers are rewarded can be a simple way to ensure that goals are met and progress is tracked regularly. On the other hand, if an employee feels his efforts have gone unnoticed, it may create an atmosphere of discontentment and negativity that also impacts other employees.

5. Setting clear milestones

To track goals, managers must establish milestones. This exercise provides a system to ascertain whether a team or employee has reached a certain benchmark. This will give managers a clear view of the larger picture and help them decide the future course of action. Frameworks like OKRs must be adopted along with metrics that help managers measure the progress toward the goal or objective. 

6. Caring for your employees

While achieving goals and meeting deadlines is paramount, what is equally important is the well-being of your employees, who are expected to reach them. Managers who care about their employees win their loyalty and can expect them to go the extra mile to deliver their best. Such employees are also motivated to learn new skills to enhance their output further. 


Achieving goals is important for an organization to grow, yet equally important is setting these goals and working toward their fulfillment. Leaders, HR departments, and companies at large stand to gain immensely from setting clear and achievable goals. Research shows that when specific, attainable, measurable, and time-sensitive goals are set along with clearly defined results, the overall performance of an organization goes up several notches. Another positive outcome of clearly defined expectations is higher employee satisfaction and retention.

Setting clear and attainable goals is a time-tested way to measure individual and organizational performance and track your team’s progress. Goal setting is a dynamic process, and one must be prepared to set new goals to guide your team in a new direction. With changing market conditions, managers must be ready to alter existing goals and add new ones. It’s also important to be resilient and accept failure to reach a goal. Ultimately, we all need goals to work towards and challenge ourselves to improve.

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