The idea of linking goals and motivation was developed by E.Locke (Edwin Locke put forward the Goal-setting theory of motivation in 1968) 

This theory argued that there is a direct relationship between goal setting and outcomes:

• Setting specific goals (for example, I want to make $ 500 more per month) leads to higher productivity.

• Setting general/non-specific, “doing better” goals (like I want to make more money) does not increase productivity.

• The more complex the goal, the more effort, attention and perseverance it requires, and the more motivating it is. Using complex goals can lead to better team productivity.

It’s easier to improve a person’s productivity with challenging, complex, and specific goals than easy, confusing, or seemingly pointless goals.

It sounds logical, but there is an opinion that using goals for management is a utopia. According to some studies in companies that implement the management by objectives approach, 70% of employees are dissatisfied / disagree with this approach. The management by objectives framework is constantly creating armies of demotivated people.

Why is it happening?

Indeed, in essence, the Goal is a fundamental property of almost all living beings. A person thinks based on goals, even if one does not think about it. A person often tries to imagine an ideal situation, which he or she tries to implement. Animals can deliberately improve their behaviour to achieve better results.

So, why is this principle often met with strong opposition in business?

Interesting Facts

Shortly before creating the Goal setting theory of motivation, another scientist created and developed a method of business management based on the Goals.

Business consulting guru Peter Drucker in 1954, wrote the book "The Practice of Management", in which he outlined his view of the problems of business management and created an approach called MBO (Management by Objectives).

In the 1950s, managers were focused on functions and processes, while Drucker argued that management should begin with setting goals and only then move on to shaping functions, interactions and processes.

Drucker, who believed that “It's more important to do the right thing than to do things right,” wanted to create a simple method using such questions:

• “What the organization wants to achieve?” 
• “What are our tasks in this concern?” 

In his book “The Practice of Management” (1954), he formulates the main principle of the Management by Objectives (MBO) approach:  

• The team focuses not on performing the work but on achieving the final result.
• Before embarking on a task, an effective leader asks himself the question: "What results are expected of me?"

But using goals to drive a business started to run into troubles in some companies.

Quick story about meeting between Edward Deming (father of TQM) and Peter Drucker. 

Deming drew Drucker's attention to how MBO is typically implemented with short-term numerical goals rather than a strategic management tool, as Drucker originally envisioned. Drucker thanked Deming and then investigated real-world MBO practices in organizations. He determined that MBO was being misused too often. This approach was often used in ways that are precisely the opposite of what Drucker was talking about.

What is usually on the agenda for today's managers when they get together for a meeting? Their discussions are dominated by a question like: "Where can we get good numbers by a certain date." The numbers for Wall Street or shareholders. And so, evaluating ideas turns into looking at metrics.

Drucker said that there are only three ways to get the best KPI values for goals:

• manipulate numbers (you can recall the meetings of some companies during the preparation of reports to shareholders)

• manipulate the system that gives these numbers (for example, cut the cost of the overhaul to increase EBITA, which will inevitably lead to problems in the next reporting year)

• improving the system, the processes that give these numbers - the most unpopular method, but at the same time the only healthy, truly managerial

Management by goals is about awareness and self-control, but not about quotas.

Drucker, in 1999, writes the book "Managing Oneself ". At the end of his career, he declares that a modern person’s main need and mission is to control himself instead of doing what is told. Employees should focus on their values. They need to take responsibility for relations in the organization since modern organizations are based on "trust and understanding".

Drucker was a close friend of renowned economists Joseph Schumpeter and Karl Polanyi. 

Schumpeter popularized the term ‘creative destruction’. The bottom line is simple - to continue to dominate and remain competitive, companies must use dynamic strategies of disruptive change and creative disruption. Economic innovation is a function of individuals whom Schumpeter calls entrepreneurs. An entrepreneur is an economic entity whose function is directed to implement new combinations and is an active element.

Management by Objectives is an excellent practice for companies with a mature culture and a high level of internal trust. But as many have noticed, this method becomes counterproductive in companies with high internal competition and a focus on short-term performance.

Goal Meaning

Edwin Locke was personally acquainted with Ayn Rand, the author of the world mega-bestseller “Atlas Shrugged”, the creator of the philosophy of objectivism, who argued that "there is no more moral goal than the achievement of one's happiness."

“My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute”.

Ayn Rand, in addition to “Atlas Shrugged”.

Ayn Rand's libertarian philosophy defined entrepreneurial and creative abilities as the most important human qualities. 

It is essential to understand here that an entrepreneur is an initially motivated person who can independently determine his goals and be responsible for them. In addition, the entrepreneur's motivation is deeply rooted in his psyche and is a natural state.

Achieving goals requires innovative solutions and the search for new methods that have not yet been used / unknown to the company. This can be done only by an independent and mature worker.

Management by Objectives is about uniting the company, not the opposite.

Both Drucker and Deming called for breaking down barriers within the organization. 

Here the simplified and incorrect implementation of MBO achieves the opposite effect - quotas and the struggle for their goals divide the company into fragments that begin to compete. Each department and each person in such an organization is only fighting for themselves.

Summing Up

The flaws in using the Goals that kill motivation are a consequence of the wrong application of the approach, which means that something essential has been missed:

• focus on short term goals

• manipulation of quotas

• misunderstanding the essence of the goal

• barriers within the company

• unethical behaviour

MBO needs maturity, deep analysis of cause and effect relationships and concentration on resources - as the source of all victories.

It is complicated to make a “result” person out of a “task” person ...

Therefore, the Goals find themselves in a difficult position when used as a tool in organizations where people are viewed simply to achieve goals and not as subjects of their desires and will.

The use of goals pays off when the following principles are observed:

• Proactive position: instead of a passive reaction to external impulses, the team seeks to actively manage its reality, which means it uses the Goals.

• The ability to achieve big goals is a consequence. The reason is the readiness of resources and the competence of the team.

• And a fundamental principle: the main task of management in such companies is to increase energy in the organization!

Do the right things, set better goals and your success will be inevitable!