2.

GOAL SETTING AND RISK TAKING

Introduction: Goal achievement is a factor that influences the success level of individual employees,
departments and business unit, and over all organization. A goal is a performance target that an individual or
group backs to accomplish at work. Goal setting is the process of motivating employees by establishing
effective and meaningful performance targets.

Major Dimensions of goal setting theory:

Values and Values Emotions and Intentions or Responses, action Consequences,

judgments desire goals or performance feedback or
reinforcement

The goal setting is not the only or necessarily the most important, concept of work motivation.

Research on the impact of goal setting:

Over the past decade, numerous studies have been conducted to refine and extend goal-setting theory and
practice. Recently, with long-time collaborator Latham, Locke summarized the 35-year work on goal setting
and task motivation and performance as follows:

Setting with goal-setting theory, specific difficult goal have been shown to increase performance on well over
100 different tasks involving more than 40,000 participants in at least eight countries working in laboratory.
Simulation, and field setting……… the efforts are applicable not only to the individuals but to groups,
organizational units and entire organizations.

Model for relating goals to performance and satisfaction

Moderators
Goal commitment
Goal Importance
Self-efficacy
Feedback task complexity

Core of goals
specify Performance Satisfaction

Difficulty

Mechanisms
Choice/direction

Effort persistence strategies

Importance of specific goals

Specific goals have been found to be more effective than vague or general goals. Such as “ do your best” , as
well as no goals at all. Specific goals result in higher levels of performance. For instance, sales people should
have goals in dollar amounts or units of volume, production departments should have targeted and defined goals
in terms of numbers, percentages and all other departments should incorporate measurable objectives or specific
metrics and dates rather than things as “ try as hard as you can”, or “try to do better than last year”.

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Importance of difficult and challenging goals

Besides clearly stated goals, performance targets should also be challenging rather than easy or routine. At the
same time, goal should be reachable and not so difficult that pursing them becomes frustrating. The
accompanying OB in action using stretch goals gives some practical guidelines.

Recent research indicates some moderators of the relationship between goal difficulty and subsequent
performance. Two forms of feedback can enhance goal.
1. Process feedback and 2. Out come feedback.

Process feedback is related to information as to how the individual or unit is proceeding in attempting to reach
the goal. Where as outcome feedback is information related to and stated in terms of the actual goal itself.

In another research stream, perceived goal difficulty had negative effects on self-reports of job performance. In
other words, an employee who thought a job was highly difficult reported performing at a lower level.

Objective and timely feedback:

Studies have also found objective and timely feedback is preferable to know feedback and as noted earlier, can
be related to the process used to achieve a goal or the content of the goal. It is probably fair to say that feedback
is a necessary but not sufficient condition for successful applications of goal setting. In one recent research
study it was found that daily feedback had positive influences on both productivity and employee satisfaction.

Application of Goal setting to organizational system performance:

The application of goal setting and appraisal by results of overall organizational systems generally follows the
series of systematic steps outlined in figure.

Set overall objective

1
and action plan

Conduct final 5 Develop the

Appraisal of results 2
Organization

Conduct periodic
appraisals and provide 4
feedback on progress Set individual
make adjustments.
objectives and 3
action plan

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RISK TAKING

Roles and methods of risk evaluation:

Insurance should be part of a comprehensive risk control programme and it is not a solution in itself. Insurance
shifts the exposure to a professional and compensated risk taken but it does not eradicate the risk.

Risks Controls

RISK AND CONTROLS

Insured sees a need Evaluates risk

Determines a strategy
Speaks to broker

Defines requirements
Broker makes a
recommendation
Consult broker (s)

Policy purchased Preserves position

Negotiates policy

Monitors

RISK EVALUATION AND INSURANCE

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INTERNAL REVIEW OF RISK:

Where an organization has the resources to carry out a risk evaluation study internally, the following steps are
recommended.

APPOINTMENT OF A PROJECT TEAM

Usually the most effective way of using internal resources is to co-ordinate them in a project team consists of
a senior accountant
a senior programmer
an internal audit representative
the security advisor
user department representatives
a computer specialist.
Who should have direct access to a board member.

RISK IDENTIFICATION:

The first task of the team is to identify risks in the system or department under review. This normally means
that large organization should be broken down into small logical units or systems for the purpose of evaluation.

Careful planning is necessary particularly in data processing, where it is difficult to define the boundaries of any
computer system since different application may share common environments and hardware components. The
team should take realistic decisions on the boundaries of the systems under review.

Special attention should be given to one-time land large scale risk and to the identity of employees and all other
not employed by the company who are graded rights equal to employees and who could exploit opportunities.