Final answer:
C) Demanding but achievable targets tend to improve employee performance by providing motivation and a clear path towards accomplishing their goals.
Step-by-step explanation:
The subject of the question is setting targets within an organizational context, which involves managerial approaches to goal-setting and employee motivation. Specifically, the question is asking about the impact of demanding but achievable targets on employee performance. When goals are set effectively—being achievable (realistic, attainable, barriers could be overcome) and relevant (supporting other goals and making sense within the context of the organization's objectives)—they can improve employee performance.
An example provided is that of a businessman who feels the need for a raise as a result of his hard work, which resonates with the need for founding targets that are not only achievable but also provide intrinsic motivation—as the hard work itself becomes rewarding. This is closely aligned with the understanding that people tend to be more satisfied when they are involved in setting their own work goals, which relates closely to Theory Y, where it is believed that people find work to be natural and enjoy taking responsibility.
Motivational theories, such as the Yerkes-Dodson law represented in the provided figure, suggest that there is an optimal level of arousal for task performance. This implies that moderate challenges, such as demanding but achievable targets, can enhance performance when they stimulate but do not overwhelm employees. Hence, the answer to the student's question is that demanding but achievable targets tend to C) improve performance of employees when they are closer to the target, by providing motivation and a clear path towards accomplishing their goals.