How Goal Setting Leads To Increased Sales

As a regional sales manager overseeing a group of individuals responsible for selling in a seasonal-based market, we often utilize the “off-season” to recharge the proverbial battery, but more importantly, we take time in the off months to sets goals for the next season.  For my team members, setting detailed and specific sales goals is vital to their success both professionally and financially.  For the purpose of this blog, I will be specifically speaking from personal experience within my company, and how the path-goal theory of leadership translates to my situation.

Why is goal-setting important for members of my team?  Looking at the research findings of Edwin Locke and Gary Latham, who studied the Theory of Goal Setting over a 35-year period, we can determine there is a direct correlation to goal setting and performance/outcome.  According to Locke and Latham, “specific goals consistently led to higher performance than urging people to do their best” (2002, p.706).  So as the leader of the sales team, I often look at what am I doing to help my team build their goals and then go beyond that with actionable input to keep them on the right track.  With 11 different sales reps under my direction, I often must use different styles of leadership depending on each person’s personality.  By doing so, I’m following the path-goal theory which “emphasizes the relationship between the leader’s style and the characteristics of the followers and the organizational setting” (Northouse, 2016, p.115).

In sales, the goals of most reps are often linked to financial gain.  This is the incentive or reward that is often linked to follower satisfaction.  For my company, our reps are paid on 100% commission, so the bigger the goal, and the ability to achieve along the path to that goal means more financial gain for the person.  Not only do we set broad goals for each rep, but we also establish mini goals to be achieved along the path to the big goal.  The company’s success is based on financial growth.  So, each sales rep is responsible for helping the company’s overall goal, but they all have individual goals as well.  They often find many obstacles along their path.  My job as their leader is to “help remove these obstacles so that they can meet their goals” (PSU, 2020, L6).  My job is to give them the tools and environment necessary to achieve their personal goals, which in turn, meets the company’s overall goal.

What are the reasons for setting goals?  In the research conducted by Locke and Latham, they determined there are four mechanisms to which goals affect performance.  These mechanisms include: a directive function, an energizing function, create persistence, and induce discovery or arousal in the subject matter (Locke, 2002, p.706-07).  As their leader, I need to alter my behaviors based on the personality of each person.  Northouse describes four different leadership behaviors.   They are directive, supportive, participative, or achievement-oriented leadership behaviors (2016, p.117-18).   Depending on a sales rep’s experience, as Sales Manager, I often will use three of the 4 types described.  I use directive leadership with all members of my team.  I tell them what is expected and what timeline should be followed.   For employees with less experience I often utilize supportive leadership behavior because being in sales is often a lonely place, where you are told “no” much of the time.  This can be disheartening for a young sales rep, so to keep their motivation level elevated, a supportive leader is necessary.  Most of my time is spent being an achievement-oriented leader.  I often challenge the sales force to achieve the difficult goal of excessive growth year over year.  We expect our company sales figures to grow 8-10% year.  This burden falls on each rep individually.

To obtain “buy-in” from the team members, I have them establish their own goals in conjunction with goals that I set.  In some of the research that Locke and Latham investigated, they discovered that “employees who were allowed to participate in setting goals set higher goals and had higher performance than those were assigned goals by the supervisor (2002, p.709).  While setting these goals, I make sure the rep is setting specific and difficult goals.  Without detailed and difficult goals, I am not able to provide effective feedback along their path, nor can they perform to the highest standard.  The Goal-Setting Theory with the High-Performance Cycle detailed by Locke and Latham is seen below (2002, p.714): This illustration shows how leadership affects goal setting and performance of followers.

Goal setting and its relationship to leadership is not a clear-cut scenario.  There are different avenues for each individual situation.  In summary: “different situations and subordinates require different types of leadership” (PSU, 2020, L6).  A good leader will recognize the differences among their followers and adapt their style to help everyone achieve their goals, which in turn, helps the organization achieve its goal.

References:

Locke, E. A., & Latham, G. P. (2002).  Building a practically useful theory of goal setting and task motivation: A 35-year odyssey.  American Psychologist, 57(9), 705-717. doi. 10.1037/0003-066x.57.9.705.

Northouse, Peter G. (2016). Leadership: Theory and Practice (7^th ed.). Thousand Oaks, CA: Sage Publications.

Pennsylvania State University World Campus (2020). PSYCH 485 Lesson 6: Contingency & Path-Goal Theories. Retrieved from https://psu.instructure.com/courses/2040131/modules/items/28001746.