Goal-setting theory of motivation is one of the type of process theories. It refers to the effects of setting goals on subsequent performance. The theory states that specific and difficult or challenging goals along with appropriate feedback lead to higher and better task performance.

Goal setting theory has four motivational mechanisms that can affect individual performance which are goals direct attention, goals regulate effort, goals increase persistence, and goals foster the development and application of task strategies and action plans.There are some advantages and disadvantages of this theory. One of the advantages is a technique used to raise incentives for employees to complete work quickly and effectively.

Also, it leads to better performance by increasing motivation and efforts, but also through increasing and improving the feedback quality.