Goal-Setting Theory in Employee Performance Management: A Contemporary Analysis and Application

Abstract

This paper examines the enduring relevance and application of Goal-Setting Theory in contemporary employee performance management systems, with particular emphasis on the Sri Lankan organizational context. Through a comprehensive analysis of the theory's evolution from Locke's seminal work in 1968 to modern implementations such as Objectives and Key Results (OKRs), this study explores the mechanisms through which goal-setting drives performance, the critical attributes that determine goal effectiveness, and practical applications in organizational contexts. Building upon Opatha's assertion that "every Performance Management system begins with goal setting" (Opatha, 2024, p. 351), this paper synthesizes theoretical foundations with practical applications. The analysis particularly considers the Sri Lankan organizational context, addressing cultural considerations in goal-setting practices within a developing economy framework. Findings suggest that while Goal-Setting Theory remains fundamentally sound, its application requires careful consideration of moderating factors including task complexity, employee commitment, cultural dimensions, and the evolving nature of work in the digital age. The paper contributes to performance management literature by providing an integrated framework for implementing goal-setting practices that balance theoretical rigor with practical applicability, offering specific insights for organizations operating in South Asian contexts.

Key Words: Employee Performance, Goal-Setting Theory, Performance Management, Human Resource Management