A goal is a desirable objective. The goal-setting theory of motivation suggests that appropriate goal difficulty, specificity, acceptance, and commitment will result in higher levels of motivated performance. Management by objectives, or MBO, extends goal setting throughout an organization by cascading goals down from the top of the firm to the bottom.

Performance measurement is the process by which work behaviors are measured and compared with established standards and the results recorded and communicated. Its purposes are to evaluate employees' work performance and to provide information for organizational uses such as compensation, personnel planning, and employee training and development. Two primary issues in performance appraisal are who does the appraisals and how often they are done. Performance can be appraised through individual assessment methods (graphic rating scales, checklists, essays, behaviorally anchored rating scales, forced choice, and management by objectives); comparative techniques (ranking, forced distribution, and paired comparison); and new approaches that use multiple raters and comparative methods.

To practice total quality management (TQM), performance measurement is imperative. Continuous improvement, the foundation of total quality management, requires effective performance management. The essential elements for success of TQM are commitment to objectives, job analysis, performance plans, and measurement of performance. Learning organizations attempt to promote continuous improvement through a strategy of constant employee learning, training, and development.

The purpose of the reward system is to attract, retain, and motivate qualified employees and to maintain a pay structure that is internally equitable and externally competitive. Rewards have both surface and symbolic value. Rewards take the form of money, benefits, perquisites, awards, and incentives. Factors such as motivational impact, cost, and fit with the organizational system must be considered when designing or analyzing a reward system.

The effective management of a reward system requires that performance be linked with rewards. Managing rewards entails dealing with issues such as flexible reward systems, employee participation in the pay system, the secrecy of pay systems, and expatriate rewards.