Goal setting, planning, and organizational performance: An experimental simulation

Abstract

This study is a preliminary attempt to bridge the gap between macro- and microlevel studies of the effects of goal setting and planning on performance. Much has been written about the effects of goals and planning on performance but these variables have virtually never been studied causally at the organizational level in a controlled setting. The present study examined the effects of these variables on organizational performance using 16 simulated organizations. The study involved two levels of goal setting, a measure of the amount of planning time and a measure of planning quality. Important distinctions were made between the actual time spent planning and the quality of the planning process. It was found that setting specific organizational goals was positively related to planning quality and organizational performance. More total time spent planning was associated with high performance when planning quality was high but with low performance when planning quality was low.