OB Research Seminar - Liliane Keopraseuth, HEC Lausanne

Most goal-setting research has studied the use of goals to motivate performance in terms of outputs. The key parameter has been effectiveness as the extent to which output goals were reached. However, in today’s organizations that seek sustainability, efficiency, which refers to optimizing the use of inputs relative to outputs, has become more important. Therefore, we examined in a laboratory experiment the effects of output-input goals on effectiveness and efficiency. We manipulated goal types and we examined the incentive scheme as a moderator of the effects of output-input goals. Consistent with our hypotheses, dual output-input goals (i.e., specific goals for both outputs and inputs) resulted in higher efficiency (but not effectiveness) than did single output-input goals (i.e., specific goals for a difference between outputs and inputs) and than did mere output goals. In addition, as hypothesized, incentive scheme moderated this relationship, such that performance pay relative to fixed pay reduced the positive effect of dual output-input goals on efficiency. We discuss the implications for research and practice.