Elaborating on 40 years of research, Locke and Latham (2002) propose that some organizations perform better simply because “they have different performance goals”. Locke and Latham proposed a comprehensive framework for linking goals to performance in an organizational setting. In short:

1. Difficult goals lead to higher performance than easy goals or no goals. However, the connection between difficulty and performance will break if people perceive the goal as too difficult.
2. Specific goals will lead to higher performance than general goals, like urging people to do their best.
3. Feedback and praise lead to higher performance by encouraging people to commit to higher goals.
4. People are more likely to commit to and persist in attaining goals when they have confidence in their abilities to achieve the goal. As proposed by social-cognitive theory (Bandura, 2001), people are held back by their lack of ability, perceptions of ability, or low self-efficacy. People with high self-efficacy believe that their actions produce desired effects and stop undesired effects. This leads to commitment to higher goals.
5. Goal setting affects fundamental mechanisms of motivation and the cognitive process that lead people to discover ways to attain the goal.

Elements of goal setting theory

Locke and Latham (2002, p. 714) proposed the following essential elements of goal setting theory:

1. Specific and challenging goals lead to higher performance.
2. Elements that moderate goal performance includes: organizational and member commitment to the goal, the relevance of the goal, the self-efficacy of the people tasked to achieve the goal, feedback, and the complexity of the goal.
3. The motivational mechanisms driving goal achievements are choice and direction, effort, persistence, and strategies.
4. Member satisfaction increases when they receive the reward of goal attainment (perform). Attaining goals influences members’ willingness to commit to new challenges. New challenges affect the moderators that influence performance toward the new goals.

Setting practical goals

Given the elements of goal setting theory, Locke and Latham (2002) offered the following characteristics of a practical goal:

1. Specific. Set clear and specific goals.
2. Relevance. Make goals relevant to the individual and the organization.
3. Challenge. Make goals challenging.
4. Commitment. Gain goal commitment. It doesn't matter who sets the goal as long as the person responsible for attaining the goal commits to the goal. 
5. Resources. Provide resources needed to attain the goal.
6. Feedback. Provide feedback concerning the goal.

References

Bandura, A. (2001). Social cognitive theory: An agentic perspective. Annual Review of Psychology, 52, 1-26.

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation. American Psychologist, 57 (9), 705–717.