How Can Comprehensive Goal Setting Enhance Project Investment Decisions?

Abstract

Managers continuously make decisions on investing in projects that aim to enhance organizational performance. Poor project investment decision making results in lost benefits (rejecting a good project) and inefficiency (approving a suboptimal project). Whereas decisions regarding what project proposals to approve heavily rely on their stated goals, such goals are frequently unrealistic. This article aims at enhancing project investment decision making by extending decision comprehensiveness theory to the project goal-setting context. In an initial survey study, we found empirical support that a comprehensive goal-setting process enhances decision quality under uncertainty. In a second longitudinal study, we found that comprehensive goal setting further enhances project investment decision making above and beyond other established goalsetting dimensions (e.g., SMART goals), and eventually improves project performance. Last, we found that extensive consultation with key project stakeholders is the most effective comprehensive goal-setting practice. Based on research and practice, we describe what should comprise an effective goal-setting consultation process. This article extends goal-setting theory by suggesting that in addition to established characteristics, the goal-setting process under uncertainty should also be comprehensive.