The Power of Specificity: How Clear Goals Drive Performance and Savings

Numerous studies have shown that setting a specific difficult goal leads to significant increases in employee productivity (Locke & Latham, 1984). For example, loggers cut more trees (Latham & Kinne, 1974; Latham & Yukl, 1975), and unionized truck drivers increased the logs loaded on their trucks from 60% to 90% of the legal allowable weight (see Figure 3) as a result of assigned goals. The drivers saved the company $250,000 in 9 months (Latham & Baldes, 1975). A subsequent study saved $2.7 million dollars in 18 weeks by assigning unionized drivers the goal of increasing their number of daily trips to the mill (Latham & Saari, 1982). Word-processing operators with specific high goals increased their performance regardless of whether the goal was assigned or set participatively (Latham & Yukl, 1976). In a survey of companies from Dun’s Business Rankings, Terpstra and Rozell (1994) found a significant correlation between goal setting and organizational profitability.

Engineers and scientists who set goals for their scores on a behavioral index of their performance had higher subsequent performance than those who were urged to do their best (Latham et al., 1978). Unionized telecommunications employees had high performance and high satisfaction with the performance appraisal process when specific high goals were set. Moreover, self-efficacy correlated positively with subsequent performance (Brown & Latham, 2000a). As was the case with the engineers and scientists, the higher the goal, the higher and more positive the performance appraisal. (Locke & Latham, 2002)

While this paper is not specifically about the banking industry, it offers a valuable insight into how effective goal setting can lead to improved behavior and performance in meeting those goals. There are examples from multiple different industries that back up the idea that the overall clarity, level of difficulty, and conciseness of a goal or challenge are linked to the motivation and productivity of completing it. This same principle can be applied when people are dealing with their personal finances. Instead of a user simply stating that they want to save more money in the month, it would be more concise, such as saying they want to put 5% of each paycheck into a savings account. Incorporating more tools that assist in goal setting and tracking for users utilizing the motivational aspects, allowing users to stay committed to their goals.

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. https://med.stanford.edu/content/dam/sm/s-spire/documents/PD.locke-and-latham-retrospective_Paper.pdf