Module 1 Overview 1 of 2 https://ecampus.wvu.edu/bbcswebdav/pid-2756524-dt-content-rid-7938... Before you go any further... If you haven't yet read the Getting Started and Syllabus sections, and signed up for a team, please go to Getting Started and do so now. Then, come back and begin this learning module. The first module of this leadership course starts with a review of leader behaviors. This is a topic familiar to the students from their earlier course on organizational behavior. However, it is important to understand the similarities among various names and labels used to classify leader behaviors (Ohio State Studies, Leadership Grid, Hersey & Blanchard's model, alternative classification system with four leader behaviors, and Goleman's classification with six leadership behaviors). The other important message is that a leader has to adapt his/her style to the contextual factors in order to be effective. While the importance of contextual factors in leadership success is well known, what is not so well known is how a leader can switch from one style to another. The understanding of emotional intelligence competencies as the underlying bases for different leadership styles is a good starting point in enabling a leader to adapt to the situational demands. The article by Bernoff and Schadler illustrates the growing significance of empowering leadership in modern, knowledge-based organizations. The article by Latham gives a comprehensive summary of goal-setting theory and how to make it work in organizations. The article by Edmondson and colleagues describes a unique setting of cardiac surgery teams with an important challenge faced in many business organizations: How can a team be quick in learning a new work technology and what role the leader plays in this learning process? Given the importance of technological innovation in our economy, the article has implications that would be discussed again in the course. 1/28/2016 2:38 PM Module 1 Overview 2 of 2 https://ecampus.wvu.edu/bbcswebdav/pid-2756524-dt-content-rid-7938... West Virginia University 1/28/2016 2:38 PM Objectives 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756525-dt-content-rid-7938... Upon conclusion of this module, the student will be able to: 1. Illustrate, with examples, how leadership must vary according to the situational demands in order to be effective. 2. Explain the significance of emotional intelligence in effective leadership. 3. Explain, in practical terms, how goal-setting can be effective in employees producing the desired results. 4. Explain the role of leader in enabling team learning when there is a change in work technology. West Virginia University 1/28/2016 2:37 PM Learning Activities https://ecampus.wvu.edu/bbcswebdav/pid-2756526-dt-content-rid-7938... Things to Read Lecture notes for this module (Narrative commentary and video on two topics: a. Review of Leader Behaviors, and b. Review of past theories; Leadership and emotional Intelligence The following articles (Except for the Case Study) are available free of charge from the WVU Library website's EBSCO Host database. Bernoff, J., & Schadler, T. (2010). Empowered. Harvard Business Review, 88, 7/8, 94-101. http://www.libproxy.wvu.edu/login?url=http: //search.ebscohost.com.www.libproxy.wvu.edu/login.aspx?direct=true& db=buh&AN=51600665&site=ehost-live Goleman, D. (2000). Leadership that gets results. Harvard Business Review, 78, 2, 78-90. http://www.libproxy.wvu.edu/login?url=http: //search.ebscohost.com.www.libproxy.wvu.edu/login.aspx?direct=true& db=buh&AN=2839618&site=ehost-live (Topic 2: Setting goals for the employees and facilitating team learning) Edmondson, A., Bohmer, R., & Pisano, G. (2001). Speeding up team learning. Harvard Business Review, 79, 9, 125-132. http://www.libproxy.wvu.edu/login?url=http: //search.ebscohost.com.www.libproxy.wvu.edu/login.aspx?direct=true& db=buh&AN=5329331&site=ehost-live Latham, G. P. (2004). The motivational benefits of goal-setting. Academy of Management Executive, 18, 4, 126-129. http://www.libproxy.wvu.edu/login?url=http: //search.ebscohost.com.www.libproxy.wvu.edu/login.aspx?direct=true& db=buh&AN=15268727&site=ehost-live 1 of 2 1/28/2016 2:39 PM Learning Activities https://ecampus.wvu.edu/bbcswebdav/pid-2756526-dt-content-rid-7938... Things to Do Links to these items are located at the end of the module. 1. Module 1 Team Assignment 2. Discussion Questions West Virginia University 2 of 2 1/28/2016 2:39 PM Past Theories: Behavioral Styles Theory 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756528-dt-content-rid-7938... (Kreitner & Kinicki, 2001: 558) In the latter half of the last century, the research on leadership shifted from understanding the leader traits to examination of leader behaviors. Unlike traits, behaviors can be learned. In other words, the premise is that leadership skills can be acquired over time. Ohio State Research In the 1940s and 50s, scholars at Ohio University conducted several studies on how leaders conducted various activities. They categorized leader behaviors as either people-oriented or consideration, and task-oriented or initiating structure. A leader could score high or low on these dimensions and accordingly, one can categorize a leader into one of the four combinations. West Virginia University 1/28/2016 2:39 PM Leadership Grid 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756529-dt-content-rid-7939... Blake and Mouton built on this idea and gave different names to leadership styles based on whether the leader scored high, medium or low on the dimensions of concern for production and concern for people. For example, \"team management\" refers to a leadership style that shows concern for both people as well as production. Since both the categories of leader behavior seem important, it was believed for some time that the \"team management\" style is the most effective. However, later research showed that there is no universally best style of leadership. West Virginia University 1/28/2016 2:40 PM Situational Leadership Theory https://ecampus.wvu.edu/bbcswebdav/pid-2756530-dt-content-rid-7939... Rating leadership on two scales: 1. Relationship Behavior(supportive behavior) 2. Task Behavior When the leader is participating and delegating, things are more followerdirected. When the leader is coaching and telling, things are more leaderdirected. These two spectrums combine to make four qudrants a leader can fall into, depending whether they are low or high on participating, delegating, coaching, or telling at a given time. West Virginia University 1 of 1 1/28/2016 2:40 PM Manz and Sims 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756531-dt-content-rid-7939... Over the years, many systems of classification of leader behaviors have been proposed and often times, different labels are used for various leadership styles or behaviors. One such classification system that is fairly comprehensive and yet not unwieldy is the one given by Manz and Sims. These four leadership styles differ in terms of the method of influence used. Since leadership is an influence process, it is useful to identify various means of influence. For example: Click each item to read more about it. Directive Leaders Transactional Leaders Transformational Leaders Empowering Leaders West Virginia University 1/28/2016 2:41 PM Empowering Leadership https://ecampus.wvu.edu/bbcswebdav/pid-2756532-dt-content-rid-7939... As discussed in the article by Bernoff and Schadler that is an "...empowering leadership assigned reading for this module, is becoming more empowering leadership is common..." becoming more common in modern knowledge-based organizations, with the availability of online social networking, and with the new generation of employees. Empowerment implies building self-confidence and capabilities of employees so that the leader can share power with them in terms of involving them in decision-making and delegating decision-making authority to them. Empowering leadership builds on the coaching, participating, and delegating styles mentioned under Hersey and Blanchard's situational leadership model. We will now discuss two leadership styles, transactional leadership and empowering leadership, in more detail. We will discuss visionary leadership in other modules. Directive leadership is limited in its effectiveness, as indicated by research in Goleman's article, an assigned reading for this module. West Virginia University 1 of 1 1/28/2016 2:44 PM Transactional Leadership https://ecampus.wvu.edu/bbcswebdav/pid-2756533-dt-content-rid-7939... An important aspect of transactional leadership is the use of rewards to motivate employees to work hard and accomplish organizational goals. An effective transactional leader must be able to design effective reward systems. While the type of reward is a debatable issue, as we will see in the second module, the fact is that formal monetary incentives are common in organizations. If they are designed effectively, they are indeed effective in producing results. A theory that is helpful in this regard is the expectancy theory. West Virginia University 1 of 1 1/28/2016 2:44 PM Expectancy Theory 1 of 2 https://ecampus.wvu.edu/bbcswebdav/pid-2756534-dt-content-rid-7939... There are three components of expectancy theory: 1. Expectancy 2. Instrumentality 3. Valence Expectancy Expectancy refers to the belief that one's hard work would lead to demonstration of good performance. If one lacks the skills, confidence, or resources to achieve a high performance level, the expectancy is low. No matter what the reward might be, an employee is not willing to work hard because s/he does not visualize being successful. Instrumentality Instrumentality refers to the belief that once an employee achieves a high or desired performance level, s/he will actually get the reward. Despite good performance, why is it that an employee might not get the deserved reward? A likely reason is employee's perception of lack of fairness or justice in the organization. Valence Valence refers to the value an employee associates with a reward. If a reward such as a $500 bonus or free vacation to a beach resort does not hold much significance for an employee, there will be little motivation to work hard to 1/28/2016 2:45 PM Expectancy Theory 2 of 2 https://ecampus.wvu.edu/bbcswebdav/pid-2756534-dt-content-rid-7939... gain that reward. Thus, valence should be high for the reward to be effective. West Virginia University 1/28/2016 2:45 PM Expectancy Theory, continued 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756535-dt-content-rid-7939... Thus, for rewards to be effective, it is important that all three components - expectancy, instrumentality, and valence - are present. The multiplication sign conveys that if any one of the three components is absent, there is no motivation to work hard, and so, the reward system is not effective. As one can see, there are several important implications of expectancy theory for a transactional leader. Motivation = VxIxE The Implication of Expectancy Theory for leaders is the possibility of being able to: Determine the outcomes employees value. Link desired outcomes to targeted levels of performance. Make sure employees can achieve targeted performance levels. Monitor the reward system for inequities. West Virginia University 1/28/2016 2:45 PM Organizational Justice https://ecampus.wvu.edu/bbcswebdav/pid-2756536-dt-content-rid-7939... A discussion of instrumentality takes us to the topic of organizational justice that you have seen in your earlier class. We will briefly discuss two types of organizational justice - distributive justice and procedural justice. One of the theories that helps explain distributive justice is the equity theory. In the equity theory, there are two basic components: 1. the inputs that an employee contributes to the organization 2. and the outcomes one receives from the organization in exchange for the inputs. Employees evaluate the outcomes in relation to the inputs. They also tend to compare the ratio of their outcomes to inputs with the ratio of outcomes to inputs of other employees. The value of inputs, outcomes, and the comparison of ratios are all perceptions of employees that may be different from the perception of the supervisor. Factors Considered When Making Equity Comparisons Inputs Outcomes Time Education/training Skills Creativity Seniority Loyalty to organization Age Personality traits Effort expended Pay/bonuses Fringe benefits Challenging assignments Job security Career advancement/promotions Status symbols Pleasant/safe working environment Opportunity for personal growth/ development Recognition Participation in important decisions (Kreitner & Kinicki, 2001: 240) West Virginia University 1 of 1 1/28/2016 2:45 PM Negative and Positive Inequality 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756537-dt-content-rid-7939... Employees may count various inputs and outcomes in this equation. It is not a formalized process. What is important to note is that the employee perceptions plan an important role. If an employee perceives that other members of the team are receiving more valuable outcomes for the same inputs, they perceive a situation of negative inequity. It is also possible to have a situation of positive inequity where one receives more than what one thinks one deserves. West Virginia University 1/28/2016 2:46 PM Employees' Response to Negative Inequity 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756538-dt-content-rid-7939... The situation of negative inequity is discomforting for an employee and s/he is likely to do something to restore equity. Perhaps an extreme action that might be possible in this case is an employee leaving the company. An employee may respond in one or more of the following ways: Attempt to change inputs. Attempt to change outcomes. Mentally distort one's own inputs or outcomes. Mentally distort others' inputs or outcomes. Leave organization or transfer to another department. Change the reference group. Research has shown that dissatisfaction of an employee is an important reason for voluntary turnover and one of the important reasons for employee dissatisfaction is perception of injustice. The important thing to conclude here is that the leader should care for and manage the perceptions of employees rather than sticking to one's own beliefs about the reality. West Virginia University 1/28/2016 2:46 PM Practical Lessons from Equity Theory 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756539-dt-content-rid-7939... There are several lessons to learn from equity theory as summarized on this slide. Justice in workplace is a highly desired outcome and a very important responsibility of leaders. Leaders should pay attention to employees' perceptions of distributive justice because they affect many different employee outcomes. Employees are more likely to accept change when they believe the organization is treating them fairly and equitably. Leaders can promote cooperation and teamwork among work group members by treating them equitably. Treating employees inequitably can lead to litigation and costly court settlements. West Virginia University 1/28/2016 2:46 PM Procedural Justice 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756540-dt-content-rid-7939... As the name indicates, procedural justice is about the process used by the leader to make reward decisions. For example: In a performance appraisal, the supervisor should give adequate opportunity to the employees to articulate the contribution they have made to the organization and apply the standards consistently across all employees. The supervisor must explain why the employee got a lower raise or was not recommended for promotion. There should be an appeal process in the organization. Finally, no matter how the employee has performed the job, s/he must be treated with respect and dignity. Treating employees with respect and dignity is also called interactional justice. A few tips for promoting procedural justice include: Give people a voice in how decisions are made. Provide an opportunity for errors to be corrected. Apply policies consistently and in an unbiased manner. Explain how decisions are made. Treat people with dignity and respect. West Virginia University 1/28/2016 2:49 PM Empowering Leadership https://ecampus.wvu.edu/bbcswebdav/pid-2756541-dt-content-rid-7939... Empowering leadership involves several behaviors such as the leader acting like a coach, demonstrating methods and skills for successfully accomplishing the goals, keeping employees informed about major developments in the company, valuing their inputs for decision-making, and showing genuine concern for the well-being of the employees. An empowering leader is likely to increase knowledge sharing by employees. They recognize the inputs of team members as valuable for decision-making and provide more opportunities for team members to share their ideas. Empowering leadership can motivate a search for solutions both inside as well as outside the team. An empowering leader is likely to increase the self-efficacy of employees and guide subordinates on how effective performance can be achieved. They coach team members to perform autonomously and provide access to strategic information. An empowering leader will also work to reduce fear and anxiety of team members. Importance of Empowering Leadership in Organizations Empowering leadership has been found to have a positive effect on several dimensions of organizational performance. These include: Innovation Quick response to environmental demands. Successful performance of knowledge-intensive jobs. Job satisfaction, career growth, and retention of employees. Knowledge sharing among employees. Boosts the confidence/self-efficacy of employees. For example: In our discussion later in this course, we will see the positive 1 of 2 1/28/2016 2:50 PM Empowering Leadership https://ecampus.wvu.edu/bbcswebdav/pid-2756541-dt-content-rid-7939... relationship between employee empowerment and innovation in companies like Google and 3M. In a study of nearly a hundred management teams, empowering leadership was found to have a positive effect on knowledge sharing among team members. Knowledge sharing improves the quality of decision-making and coordination among the team members. Empowering leadership also boosts the self-efficacy or self-confidence of the team members. West Virginia University 2 of 2 1/28/2016 2:50 PM Empowering Leadership: Exceptions 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756542-dt-content-rid-7939... Despite its potential advantages, empowering leadership may not be suited to all situations. Going back to situational leadership theory, if the employees are neither willing nor capable, and if there is a time/resource constraint, it is difficult to justify the approach of empowering leadership. However, even if empowering leadership is the right match for the situation, it is not easy to practice. For example: It is not easy for everyone to become a good coach. In addition, there are several barriers due to the limitations of the leader. For example, the leader might lack self-confidence, could see some employees as future threats, and may be risk-averse. The organizational culture may be unforgiving and there might not be any role models for the leader to help him/her become an empowering leader. West Virginia University 1/28/2016 2:51 PM Empowering Leadership: Challenges 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756543-dt-content-rid-7939... Barriers to Delegation (Kreitner & Kinicki, 2001): Belief in the fallacy, "If you want it done right, do it yourself." Lack of confidence and trust in lower-level employees. Reluctance to take the risks involved in depending on others. Low self-confidence. Fear of being called lazy. Fear of competition from those below. Poor example set by bosses who do not delegate. Lack of controls that provide early warnings of problems with delegated duties. West Virginia University 1/28/2016 2:51 PM Emotional Intelligence https://ecampus.wvu.edu/bbcswebdav/pid-2756544-dt-content-rid-7939... Our next topic for the first module is the role of emotional intelligence in effective leadership. Similar to cognitive intelligence, emotional intelligence refers to clusters of different capabilities or competencies. The four clusters that constitute emotional intelligence are: 1. self-awareness, 2. self-management, 3. social awareness, 4. and social skill. Each cluster, in turn, consists of several capabilities. For example, self-management implies taking initiative and being conscientious. 1 of 2 1/28/2016 2:51 PM Emotional Intelligence https://ecampus.wvu.edu/bbcswebdav/pid-2756544-dt-content-rid-7939... West Virginia University 2 of 2 1/28/2016 2:51 PM Constituents of Emotional Intelligence https://ecampus.wvu.edu/bbcswebdav/pid-2756545-dt-content-rid-7939... Two important constituents of self-awareness are accurate assessment of oneself and being confident about oneself. Self-efficacy is similar to self-confidence and is specific to a task. Emotional intelligence consists of four fundamental capabilities: 1. Self-awareness (e.g., accurate self-assessment, self-confidence) 2. Self-management (e.g., achievement-orientation, initiative, conscientiousness) 3. Social awareness (e.g., empathy, organizational awareness) 4. Social skill (e.g., developing others, teamwork and collaboration) For example: A person's self-efficacy for a sales task might be different from his/her self-efficacy for conducting market research. Self-efficacy for a particular task is one of the most important predictors of good task performance. A very important practical question is why people differ in their self-confidence despite being similar in their academic background, work experience, and cognitive capabilities? Psychologist Albert Bandura has done some influential research on this topic. Among other things, the three most important factors that influence one's self-confidence are: 1. enactive mastery (that is, past success on those tasks), 2. observational learning (that is, learning from a trainer, coach, or a role model how to successfully perform the task), 3. and verbal persuasion (that is, people we trust telling us that we can do the task successfully). West Virginia University 1 of 1 1/28/2016 2:52 PM Constituents of Emotional Intelligence, continued 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756546-dt-content-rid-7939... As mentioned earlier, people who score high on self-management are achievement-oriented, conscientious, and they take initiative. Being aware of one's social context implies being able to put oneself in the position of others and be able to think from their perspective. For leaders in organizations, sensing what the employees want and how they would react to the leader's initiatives are important aspects of social awareness. While it may seem obvious that a leader should be able to sense the perceptions of others, it does happen sometimes that leaders are not in sync with the reality. The following news item about the CEOs of GM, Ford, and Chrysler flying on their private jets to request Congress to give taxpayer's money indicates lack of social awareness. Big Three auto CEOs flew private jets to ask for taxpayer money CNN.com Social skills are very important too for emotional intelligence. An important question for our Discussion Board is, \"How does one build these emotional intelligence capabilities?\" West Virginia University 1/28/2016 2:52 PM The Role of Emotional Intelligence in Effective Leadership https://ecampus.wvu.edu/bbcswebdav/pid-2756547-dt-content-rid-7939... In order to understand the importance of emotional intelligence for leadership, it is useful to categorize the functions of top executives into strategy formulation and implementation. While these processes are interrelated, it is important to note that both the processes are equally important. A good strategy without proper implementation does not help the bottom-line. Similarly, mobilizing the organization to work relentlessly in implementing a strategy is not so valuable if the strategy has lot of scope for improvement. While IQ and emotional intelligence are important for both the activities, emotional intelligence is perhaps more important for the implementation of a strategy. EI versus IQ (Goleman, 2004: 250) Research was conducted across several large companies to compare the relative effects of EI, technical skills (e.g., accounting, business planning), and cognitive abilities (e.g., analytical ability) on job performance. Emotional intelligence plays an increasingly important role as an employee moves up in the corporate hierarchy. Higher positions often involve leadership roles where one has to get the task accomplished with the cooperation of others. West Virginia University 1 of 1 1/28/2016 2:53 PM Leader Behaviors https://ecampus.wvu.edu/bbcswebdav/pid-2756548-dt-content-rid-7939... Shifting our attention to leader behaviors, Goleman reported a study of nearly four thousand executives done by a consulting company. They found leadership styles to fall under six different categories. Comparing this classification with the classification systems we have seen earlier (e.g., findings of Ohio State scholars, situational leadership theory), there are similarities across these classifications. Hay/McBer Consulting Study Leadership Styles Coercive - "Do what I tell you." Authoritative/Visionary/Transformational - "Come with me." Affiliative - "People come first." Democratic - "What do you think?" Pacesetting - "Do as I do, now." Coaching - "Try this." Different labels have been used to express similar ideas. Leadership is one of the most popularly discussed topics in journals, magazines, news items, etc., that it is helpful to remember some core ideas. For example, coercive style is similar to the directive/telling approach discussed earlier. Affiliative leadership is similar to \"consideration\" in Ohio State studies. Democratic leader is similar to the participating style of leadership and coaching overlaps with empowering leadership. Pacesetting style shows \"initiating structure\" or concern for production, seen earlier. While the research findings of Hay/McBer Consulting Group showed negative association of coercive leadership with organizational performance, the important thing to note is that coercive leadership was effective under certain conditions (e.g., corporate turnaround or dealing with problem employees). Similarly, while pacesetting style was found to have an overall negative effect, it could be effective when the business depends on chasing deadlines and employees are motivated and competent. Examples of pacesetting style can be found in consulting, law, and media companies. West Virginia University 1 of 1 1/28/2016 2:53 PM Links with Situational Theory of Leadership 1 of 2 https://ecampus.wvu.edu/bbcswebdav/pid-2756549-dt-content-rid-7939... The important findings from the Hay/McBer study are that each leadership style is relevant according to the situational demands. It is the same general idea that Hersey and Blanchard's situational leadership theory proposed. The research study also found that visionary or transformational leadership was the most effective. We will discuss visionary leadership in more detail in the subsequent modules. The other important finding of this research was that successful leaders display multiple leadership styles. It is perhaps a limitation if a leader can display only one kind of leadership. Along with being a visionary leader, sometimes it helps to be directive and controlling, as seen in the case of Steve Jobs at different phases of Apple. As mentioned earlier, the findings of Hay/Mcber study are consistent with the situational leadership theory in the sense that both argue that the best 1/28/2016 2:53 PM Links with Situational Theory of Leadership 2 of 2 https://ecampus.wvu.edu/bbcswebdav/pid-2756549-dt-content-rid-7939... leadership style is the one that best fits the requirements of the situation. The situational theory of Hersey and Blanchard identified the readiness level of the follower (or the subordinate employee) as the sole situational variable and built their recommendations around it. Goleman's article broadens the situational view. However, it is not as specific as the model of Hersey and Blanchard. In reality, there are numerous elements of the situation (e.g., types of employees, customers, competitors, investors, market challenges, etc.) and the key to effective leadership is to correctly identify the important elements of the situation, know what the appropriate leadership style would be, and then act it. With effective leaders, these steps flow very spontaneously due to several years of experience. It is like tacit knowledge that will be discussed later in another module. One of the important points in Goleman's article is that emotional intelligence competencies underlie each leadership style. Therefore, a leader with multiple emotional intelligence competencies will be able to move from one leadership style to another. West Virginia University 1/28/2016 2:53 PM Building Emotional Intelligence 1 of 1 https://ecampus.wvu.edu/bbcswebdav/pid-2756550-dt-content-rid-7939... Building emotional intelligence is possible after one joins the workplace. At that age, cognitive intelligence is difficult to change. Building emotional intelligence does take a long time - several months, if not years. 1. The first step is accurate self-assessment where feedback from multiple sources is helpful. 2. If one has guidance from a coach or a mentor, that is another important step. 3. Finally, it requires constant practice, self-evaluation, and seeking feedback from others. West Virginia University 1/28/2016 2:54 PM Academy of Management Executive, 2004, Vol. 18, No. 4 ........................................................................................................................................................................ The motivational benefits of goal-setting Gary P. Latham One beauty of valid theories in the behavioral sciences is that they facilitate predicting, understanding, and influencing one's own actions as well as the actions of others. An excellent example is goal-setting theory. Its underlying premise is that one's conscious goals affect what one achieves.1 This is because a goal is the object or aim of an actionfor example, to attain a specific standard of proficiency within a specified time limit. Having a specific goal improves performance. Goal-setting theory also asserts that people with specific hard goals (often called \"stretch\" goals) perform better than those with vague goals such as \"do your best\" or specific easy goals. Further, the theory states that a goal is a standard for assessing one's satisfaction. To say that one is trying to increase revenue by 30 per cent means that one will not be fully satisfied until that goal is attained. To the extent that the goal is met or exceeded, satisfaction increases; and conversely, to the extent that performance falls short of the goal, one's satisfaction decreases. The more goal successes, the higher the person's satisfaction. In short, employees who are committed to attaining high goals are high performers, because they are not satisfied with less. Working with Edwin Locke as well as my former graduate students Dennis Dossett, Collette Frayne, Lise Saari, Gerrard Seijts, and Dawn Winters, we found that the application of goal-setting theory is highly beneficial in organizational settings. specific high goal, gave out tally meters to enable people to keep count of the number of trees that they cut down, and then stood back and watched. The people who were assigned goals started bragging to one another as well as to family members as to their effectiveness as loggers. Productivity soared relative to those crews who were urged to do their best. Goal-setting instilled purpose, challenge, and meaning into what had been perceived previously as a tedious and physically tiresome task. A by-product of the goal intervention was that within the week, employee attendance soared relative to attendance in those crews who were randomly assigned to the condition where no goals were set. Why? Because the psychological outcomes of setting and attaining high goals include enhanced task interest, pride in performance, a heightened sense of personal effectiveness, and, in most cases, many practical life benefits such as better jobs and higher pay. What is wrong with urging people to \"do their best,\" especially when they are paid on a piecerate basis? The answer is that people simply do not do their best because this exhortation is too vague, too abstract. There is no external referent for evaluation. Consequently, it is defined idiosyncratically. It allows for a wide range of performance levels that are acceptable to different people. Setting a specific high goal, on the other hand, makes explicit for people what needs to be attained. Applications of Goal-Setting Theory Causal Mechanisms The American Pulpwood Association was searching for ways in which pulpwood producers, that is, independent loggers, could increase their productivity (cords per employee hour). The majority of the employees were uneducated, unskilled laborers who were paid on a piece-rate basis. Cutting pine trees in the southern United States can be tiring, monotonous work. Based on goal-setting theory, pulpwood crew supervisors assigned a Why is goal-setting effective? What are the causal mechanisms? The answer to this question is fourfold.2 First, in committing to a goal, a person chooses to divert attention toward goal-relevant activities and away from goal-irrelevant activities. Second, goals energize people. Challenging goals lead to higher effort than easy goals. This is true regardless of whether goal attainment requires physical or cognitive effort. Third, goals affect per126 2004 Latham sistence. High goals prolong effort; tight deadlines lead to a more rapid work pace than loose deadlines. Fourth, goals motivate people to use the knowledge they have that will help them to attain the goal or to discover the knowledge needed to do so. Conditions for Effectiveness What conditions increase or decrease the benefits of goal-setting? Here the answer is five-fold. First, as implied above, the person must have the ability and knowledge to attain the goal. If the goal is a performance outcome (e.g., increase market share by 20 per cent within the next twelve months), and employees lack the knowledge to attain it, urging them to do their best can sometimes be even more effective than setting a specific performance-outcome goal. An outcome goal can make people so anxious to succeed that they scramble to discover strategies in an unsystematic way and hence fail to learn what is effective. This in turn leads to evaluation apprehension and anxiety. The antidote for this problem is to set a specific highlearning goal rather than an outcome goal (e.g., discover five ways to master this task). A learning goal requires people to focus on understanding the task that is required of them and to develop a plan for performing it correctly. In short, when behavioral routines have yet to be developed, a specific high-learning goal focuses attention on systematic problem solving and ultimately on high performance.3 Second, the person must be committed to the goal, especially if the goal is difficult. Achieving a difficult goal requires a great deal of effort, with low probability of success. Goal commitment is likely if the outcome of the goal is important to the person, and the person believes that the goal is indeed attainable. With regard to importance, (a) Making one's goal public enhances commitment because striving to attain it enhances one's integrity in one's own eyes as well as in the eyes of others. (b) To the extent that a leader is supportive, goals that are assigned create \"demand characteristics\" in that they are an implicit expression of the leader's confidence in the person that the goal can and will be attained. (c) A vision provided by a leader that galvanizes and inspires people is likely to increase goal commitment to the extent that the goal leads to concrete action steps toward the attainment of the vision. (d) Monetary incentives can be tied to goals, but 127 to do so is tricky as discussed in the next article by Edwin Locke. Third, people need feedback on their progress toward the goal. Feedback enables them to adjust the level or direction of their effort and the strategy necessary for goal attainment. When people discover that they are below their goal, they typically increase their effort and/or modify their strategy. As people attain their goal, they generally set an even higher goal because the goal attained diminishes in its effectiveness for inducing pride in one's performance. When people discover that they are below their goal, they typically increase their effort and/or modify their strategy. Fourth, tasks that are complex for a person, where strategy and behavioral routines have yet to become automatized, mitigate the normally positive effects of setting a specific high goal. Training is obviously one solution here. A second solution, as previously noted, is to set a learning rather than an outcome goal. A third solution is to set subgoals. In a manufacturing simulation, when people were paid on a piece-rate basis to make toys but market conditions changed unexpectedly, the people who were urged to do their best had higher paychecks than those with a specific high-outcome goal. However, those who had subgoals in addition to a long-term outcome goal had the highest paychecks of all. This is because in dynamic situations, it is important to search actively for feedback and react quickly to it. Subgoals yield information for people as to whether their progress is consistent with what is required for them to attain their goal.4 Fifth, situational constraints can make goal attainment difficult. A primary role of a leader is (1) to ensure that people have the resources to attain their objectives and (2) to take the steps necessary to remove obstacles in the way of accomplishing those objectives. Goal-Setting on Complex Jobs Do goals work on highly complex tasks? The Weyerhaeuser Company was impressed by the results of goal-setting obtained with loggers on the West Coast. Increases in productivity were as impressive as those obtained in the South even though the loggers in the West were hourly paid unionized employees.5 The question remained whether something as straightforward as goal-setting is effec- 128 Academy of Management Executive tive with highly educated employees performing complex work. The answer came as a result of a Weyerhaeuser task force consisting of line managers who recommended laying off engineers and scientists as a way of responding to an economic downturn. The task force failed to take into account the fact that the senior vice president of R&D carpooled to work with George Weyerhaeuser, the CEO! The R&D vice president subsequently set up an R&D taskforce to find ways to motivate engineers/ scientists to attain excellence. Step 1 involved a job analysis to gain consensus on the organization's definition of excellence in R&D. Step 2 serendipitously involved a dispute among the four R&D directors, who reported to the senior VP, as to what would motivate engineers/scientists to attain excellence. One director advocated assigned goals \"Because that is what we receive from the senior VP.\" Another director, an avid reader of management journals, advocated participatively set goals. Still another believed that goal-setting was appropriate only for lower-level employees in the company such as loggers. Goals were said to be unnecessary for scientists/engineers who were already highly goal oriented. This director advocated instead a monetary bonus system. This suggestion added fuel to the argument among the four directors as to what motivated their workforce. One director stressed the need for public recognition within the company rather than a bonus. Another poignantly stated that the unspoken philosophy in the company during that time period was \"If you screw up, you will hear from us; if you don't hear from us, assume you are doing well. Think,\" he exclaimed, \"what might occur if the reverse were true. If you hear from us, you are doing well; if you don't hear from us, assume you are not.\" Bets were made as to who was right. The following experiment was launched. Some scientists/engineers were given an assigned goal and received praise, public recognition, or a monetary bonus for achieving it. Others participated in setting their own goals and received one of these same three rewards. Still others were urged to do their best and given one of the same three rewards. This created nine experimental conditions. Because everyone knew who was doing what in terms of type of goal set (assigned, participative, do your best) and type of reward that was to be administered (praise, public recognition, and money), a tenth group of scientists was added to the experiment. This group was \"kept in the dark.\" The results? Those who were urged to do their best performed no better than those who were \"kept in the dark,\" despite the fact that those who November were urged to do their best received either praise, public recognition, or a monetary bonus. Goal commitment was the same regardless of the method by which the goal was set. However, those with paticipatively set goals had higher performance than those with assigned goals. Why? Because they set higher goals than was the case when the supervisor set the goal unilaterally. Consistent with goalsetting theory, higher goals led to higher performance. The performance of those who received a monetary bonus versus those who received praise was a virtual tie. Both methods of acknowledging high performance were more effective than providing people with public recognition.6 The outcome of this study led to a series of experiments which showed that when goal difficulty is held constant, performance is usually the same regardless of whether the goal is assigned or set participatively.7 An exception is when the task is complex. When working smarter rather than harder, when one's knowledge rather than one's effort (motivation) is required, participation in decision-making leads to higher performance if it increases the probability of finding an appropriate strategy for performing the task, and if it increases the confidence of people that the strategy can be implemented effectively.8 When goal difficulty is held constant, performance is usually the same regardless of whether the goal is assigned or set participatively. Self-Management Motivation of oneself is arguably as important as, if not more important than, motivating the behavior of others. Goal-setting is a key mechanism for self-management. The job attendance of unionized, state government employees in one American agency was abysmal. An analysis of the reasons for low attendance revealed that people lacked confidence that they could overcome problems that they perceived as preventing them from coming to work. The problems included family issues such as caring for a sick child and meeting with school teachers, as well as coping with conflicts in the work place. A training program in self-management was initiated that included self-set goals for job attendance and keeping a weekly attendance record. The latter was done because there is overwhelming data showing that \"what gets measured in relation to goals gets done.\" In addition, people 2004 Latham self-selected rewards (e.g., going to a sports event) and punishments (e.g., cleaning out the attic) to self-administer. Finally, people met in groups to discuss strategies for coping with job-attendance issues. The outcome was a dramatic increase in attendance. When several months later those in the control group (so named because to control for alternative explanations as to why job attendance increased, this group was identical in all respects except that it did not participate in the initial training program) were also given training in self-management, their job attendance increased to the same high level as the originally trained group.9 Downsides and Risks Virtually all techniques have drawbacks, including goal-setting. People may try too hard for quantity at the expense of quality or vice versa. Those who are highly committed to their goals may be less likely to help others to attain their goals. Hence Scott Paper Company, prior to being bought by Kimberly Clark, set goals for both performance quantity and quality, as well as behavioral goals for team playing that were assessed by peers. Virtually all techniques have drawbacks, including goal-setting. When there are two or more goals, goal conflict may occur in the absence of employee participation in the process. Performance on both goals may suffer. People can, however, pursue more than one goal effectively when goals are prioritized. Challenging goals over an extended time period, without sufficient time periods between them, can lead to exhaustion. In knowledge-based firms where employees lack the requisite information, specific high learning rather than outcome goals should be set. As noted earlier, performance-outcome goals in this setting some-times result in worse performance than an abstract goal of \"do your best\" and, worse, may also stifle innovation. If innovation is needed, goals should be set for innovation itself (e.g., discover ten new products in the next twelve months) rather than just for performance output. If employees are forced to try for hard goals, especially in a punitive environment, some may be tempted to fudge the figures. Organizations require ethical climates as well as controls to detect and prevent cheating by employees.10 If goal failure is judged severely, employees are also likely to find ingenious ways to set easy goals that appear 129 difficult to their managers. In contrast, if the anticipated outcome for employees who fail to meet goals is that organizational decision-makers will view the failure as transitory and part of the learning process (especially in high-innovation firms), employees will be more willing to risk setting goals that \"stretch\" them, and the positive benefits of goal setting will occur. Endnotes 1 Latham, G. P., & Locke, E. A. 1991. Self regulation through goal setting. Organizational Behavior and Human Decision Processes, 50(2): 212-247. 2 Locke, E. A., & Latham, G. P. 1990. A theory of goal setting and task performance. Englewood Cliffs, NJ: Prentice Hall. 3 Winters, D., & Latham, G. P. 1996. The effect of learning versus outcome goals on a simple versus a complex task. Group and Organization Management, 21: 236 -250. 4 Latham, G. P., & Seijts, G. H. 1999. The effects of proximal and distal goals on performance on a moderately complex task. Journal of Organizational Behavior, 20(4): 421- 429. 5 Latham, G. P., & Saari, L. M. 1982. The importance of union acceptance for productivity improvement through goal setting. Personnel Psychology, 35: 781-787. 6 Latham, G. P., Mitchell, T. R., & Dossett, D. L. 1978. The importance of participative goal setting and anticipated rewards on goal difficulty and job performance. Journal of Applied Psychology, 63: 163-171. 7 Latham, G. P., & Saari, L. M. 1979. The effects of holding goal difficulty constant on assigned and participatively set goals. Academy of Management Journal, 22(March): 163-168. 8 Latham, G. P., Winters, D. C., & Locke, E. A. 1994. Cognitive and motivational effects of participation: A mediator study. Journal of Organizational Behavior, 15(1): 49 - 63; Seijts, G. H., & Latham, G. P. 2001. The effect of learning, outcome, and proximal goals on a moderately complex task. Journal of Organizational Behavior, 22: 291-307. 9 Frayne, C. A., & Latham, G. P. 1987. The application of social learning theory to employee self management of attendance. Journal of Applied Psychology, 72(3): 387-392; Latham, G. P., & Frayne, C. A. 1989. Self management training for increasing job attendance: A follow-up and a replication. Journal of Applied Psychology, 74(3): 411- 416. 10 Jensen, M. C. 2001. Corporate budgeting is brokenlet's fix it. Harvard Business Review, 79(November): 94 -101. Gary Latham is the Secretary of State Professor of Organizational Effectiveness at the Rotman School of Management. He received his Ph.D. from the University of Akron. His research interests include employee motivation, self-regulation, and performance management. He is the recipient of the Distinguished Scholar-Practitioner Award from the Academy of Management. Contact: latham@ rotman.utoronto.ca