Why goal setting is important


Whether they’re personal or professional, linked to a new start or part of a regular process, setting and defining goals is something that we often do without really examining why. This blog sets out to explore why we set goals, and what we can do to get the most out of them. 

What is goal setting?

Goal setting is a powerful process for thinking about an ideal future to achieve success, and for creating the motivation (in ourselves or in others) to turn our vision into reality.

The good news is that goal setting is equally powerful whether you are doing it for yourself or for other people. As an individual, setting goals improves your performance and your well-being.[1] As a manager, assigning employee goals to team members can be just as effective as ones that are self-set (providing you give a rationale).[2] And goal setting in the workplace has been shown to keep employees engaged and increase employee performance, motivation and organisational commitment.[3]

The benefits of goal setting

So why does goal setting have such a powerful effect?  Firstly, setting a goal creates purpose.2 From original theories of motivation to our own recent research on future-fit leadership, we know that purpose is critical to performance. A meaningful mission acts as a kind of fuel or source of energy, providing a sense of fulfilment and underpinning your performance edge.

Secondly, setting a goal highlights a gap between what we are doing and what we want or expect ourselves to do. Being aware of that gap, and potentially being unhappy about it,1 motivates us to address it. 

And lastly, goals also affect our performance by providing us with:

  • Clear direction – we have an idea about what we have to do.
  • Information about effort – based on how difficult the goal is, we can judge what we need to do to achieve it.
  • Information about persistence – and finally, we can judge how long it is going to take to achieve it. [4] 

So, not only can goals create purpose and motivation to achieve, they can also lay out a clear roadmap for how to do it. 

Not all goals are created equal

Just having a goal is not enough to guarantee success. The kind of goal you set, and how you set it, affects your performance.

Let’s look first at two different kinds of goals.[5]

Performance goals

Performance goals are short-term objectives typically related to our current position and used to measure progress and evidence performance to other people. These goals align with organisational goals: “Become the leading provider of XX services by the end of the year”, “win the award for XYZ next year”. This is then reflected on in a yearly performance review.

Whilst performance goals have their place, they rely on external motivation and expose us to continual cycles of success or failure. That is why you should consider setting mastery goals as well.

Mastery goals

Mastery goals are about ongoing improvement: “Grow the business into three new sectors in the next 12 months” or “build team’s skills in XYZ in Q1” for example. They focus attention on systematically solving a problem.3 Mastery goals rely more on internal motivation and encourage us to focus on incremental growth and adaptation.

SMART goals

It’s not just what kind of goals you set but how you do it that makes a difference. We’ve all been told to set SMART goals (Specific, Measurable, Achievable, Relevant and Time-bound), but rarely does anyone ever explain why. Studies show that there are a number of reasons why this well-used acronym holds more power than we typically give it credit for:4

  1. Explicit and difficult goals lead to the highest performance. 
  2. When goals are specific and difficult, then higher commitment creates better performance. 
  3. Commitment comes when you believe the goal is important and attainable. 

So, making your goal specific, measurable and time-bound is about ensuring it is explicit enough to drive performance. Making it relevant ensures that it is important enough to create commitment. And making it achievable is about creating that fine balance between it being difficult enough to motivate, but attainable enough to maintain commitment.

It might feel hackneyed, but SMART works for a reason!

A worthwhile investment

The important of goal setting as a process often gets overlooked or maligned. But, for the relatively small investment of effort required to carefully set and craft appropriate goals, the potential rewards are significant.

Now that you know why you should set goals, the next question is how? Check out these tips from Olympian Mark Richardson. And once you've read that, learn how to stick to your goals with advice from Lane4's Managing Director, Adrian Moorhouse.


If you want to learn more about harnessing your personal drive and ambition for business, read our white paper The future of leadership: developing a new perspective.



[1] Macleod, A.K., Coates, E. & Hetherton, J.  (2008).  Increasing well-being through teaching goal-setting and planning skills: results of a brief intervention.  Journal of Happiness Studies, 9.  185-196

[2] Latham G.P. & Locke, E.A.  (2006).  Enhancing the Benefits and Overcoming the Pitfalls of Goal Setting.  Organizational Dynamics, 35(4), 332-340.

[3] Latham, G.P. (2004).  The motivational benefits of goal-setting.  Academy of Management Executive, 18 (4).  126-129.

[4] Locke, E.A. (1996).  Motivation through conscious goal setting.  Applied and Preventive Psychology, 5.  117-124. 

[5] Ames, C., & Archer, J. (1988). Achievement goals in the classroom: Students' learning strategies and motivation processes. Journal of Educational Psychology, 80(3), 260–267.

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