ORGANIZATIONAL

EFFECTIVENESS
 HISTORICAL OPINIONS
ABOUT ORGANIZATIONAL
EFFECTIVENESS
1. FREDERICK TAYLOR
2. HENRI FAYOL
3. ELTON MAYO
FREDERICK TAYLOR

EFFECTIVENESS WAS DETERMINED BY

FACTORS SUCH AS PRODUCTION
MAXIMIZATION, COST
MINIMALIZATION, TECHNOLOGICAL
EXCELLENCE, Etc.
 HENRI FAYOL

EFFECTIVENESS IS A FUNCTION OF CLEAR

AUTHORITY AND DISCIPLINE WITHIN AN
ORGANIZATION
 ELTON MAYO

EFFECTIVENESS IS A FUNCTION OF
PRODUCTIVITY RESULTING FROM
EMPLOYEE SATISFACTION
 NEAR INTERMEDIATE DISTANT
TIME FUTURE FUTURE FUTURE
DIMENSION
Approx. Approx.
1 year 5 years

The organization
must be
1. EFFECTIVE in
accomplishing its The organization
purpose(s) must be
EFFECTIVENESS 2. EFFICIENT in the 4. ADAPTIVE to The organization
CRITERIA acquisition and use new opportunities must be
of scarce resources and obstacles 6. CAPABLE OF
3. A SOURCE OF 5. CAPABLE OF SURVIVAL in
SATISFACTION DEVELOPING a world of
to its owners, the ability of its uncertainties.
employees, members and of
customers and itself
clients, and
society.
 ORGANIZATIONAL
EFFECTIVENESS
MEETING ORGANIZATIONAL OBJECTIVES AND
PRVAILING SOCIETAL EXPECTATIONS IN THE
NEAR FUTURE, ADAPTING AND DEVELOPING IN
THE INTERMEDIATE FUTURE, AND SURVIVING
IN THE DISTANT FUTURE.
 APPROACHES TO MEASURING
ORGANIZATIONAL EFFECTIVENESS
• Goal Approach: Effectiveness is the ability to
excel at one or more output goals.
• Internal Process Approach: Effectiveness is the
ability to excel at internal efficiency, coordination,
motivation, and employee satisfaction.
• System Resource Approach: Effectiveness is the
ability to acquire scarce and valued resources from
the environment.
Approaches to Measuring Org.
Effectiveness, continued
• Constituency Approach: Effectiveness is
the ability to satisfy multiple strategic
constituencies both within and outside the
organization.
• Domain Approach: Effectiveness is the
ability to excel in one or more among
several domains as selected by senior
managers.
Flow Charts of Approaches to
Organizational Effectiveness –
Goal Approach

INPUTS TRANSFORMATION OUTPUTS

GOAL APPROACH
Flow Charts of Approaches to
Organizational Effectiveness –
Internal Process Approach

INPUTS TRANSFORMATION OUTPUTS

INTERNAL PROCESS APPROACH

 Flow Charts of Approaches to
Organizational Effectiveness –
System Resource Approach

INPUTS TRANSFORMATION OUTPUTS

SYSTEM RESOURCE APPROACH

Flow Charts of Approaches to
Organizational Effectiveness –
Constituency Approach

INPUTS TRANSFORMATION OUTPUTS

STRATEGIC CONSTITUENCIES APPROACH

 COMPARISON OF THE FOUR OE APPROACHES
Approach Definition When Used
An organization is effective Preferred when:
to the extent that:

Goal attainment it accomplishes its stated goals goals are clear, time
bound and measurable

System Resource it acquires needed resources a clear connection exists

between inputs and outputs

Constituencies all strategic constituencies constituencies have powerful

are at least minimally influence on the organization,
satisfied and the organization must
respond to demands

Internal Processes combines internal efficiency costs, outputs & satisfaction

and affective health are easily measurable

 OE Criteria for Selected
Constituencies
Constituency Typical Criteria
Owners Return on Investment; growth in earnings
Employees Compensation; fringe benefits; job satisf.
Customers Satisf. w/price, quality, service
Suppliers Satisf. w/payments, future sales
Creditors Satisf. w/debt payments
Unions Satisf. w/competitive wages & benefits;
satif. working conditions, fairness in
bargaining
Local Communities Involvement in local affairs; environmental
damage
Government Agencies
Compliance w/laws, avoidance of penalties
 The Contradictions Model of
Organizational Effectiveness

The idea of trying to characterize a whole organization as

totally effective or ineffective is problematic. In any complex
organization there may be parts of the organization that function
well and suggest effectiveness while other aspects of that same
organization perform poorly.
 Four Central Assumptions of
the Contradictions Model
1. Organizations face complex environments that place multiple and
conflicting demands and constraints on them. It may not be possible
to succeed in meeting all the environmental conditions an organization
faces.
2. Organizations have multiple, conflicting goals. It is impossible to
maximize achievement of all goals.
3. Organizations face multiple internal and external stakeholders or
constituent groups that make competing or conflicting demands. It
may be impossible to satisfy all groups of people who express interest
in a company.
4. Organizations must manage multiple and conflicting time demands.
Satisfying short- or long-term demands at the expense of the other may
result in sub-optimal performance.
 Competing Values Model

Organizational goals and performance are

defined by top and middle management. By
comparing the diverse effectiveness indicators
used by managers and researchers, Quinn &
Rohrbaugh looked for underlying similarities
and found underlying dimensions of effectiveness
criteria that reflected competing management
values in organizations.
 Competing Values Dimensions I
Focus: whether dominant values concern issues that are
internal to the organization or external to it.

Internal focus reflects management concern for well-being

and efficiency of employees. External focus reflects an
emphasis on the well-being of the organization itself and its
“fit” with its environment.
Competing Values Dimensions II
Structure: whether stability versus flexibility is the
dominant structural consideration.

Stability reflects a management value for efficiency

and top-down control, while flexibility represents
a management value for learning and change.
 Dimensions of Effectiveness
Structure
Flexibility

I II

Focus Internal External

III IV

Control
 Four Models of Effectiveness
Quadrant I : Human Relations Model – internal
Focus and flexible structure. Management
concern is on the development of human
resources. Employees are given opportunities
for autonomy and development. Management
works toward sub-goals of cohesion, morale, and
training opportunities. Organizations using this
are more concerned with employees than the
environment.
Four Models of Effectiveness II
Quadrant II: Open Systems Model – Combination
of external focus and flexible structure.
Management’s goals are primarily growth and
resource acquisition. Sub-goals are flexibility,
readiness, and positive evaluation by the external
environment. Dominant value is establishing
a good relationship with the external environment
to grow and acquire resources. Similar to the
Systems Resource Model.
 Four Models of Effectiveness III
Quadrant III: Internal Process Model – Reflects
the values of internal focus and structural
control. Seeks a stable organizational setting that
maintains itself in an orderly way. Well
established in environment and just wish to keep
their current position. Sub-goals include
mechanisms for efficient communication,
information management, and decision-making.
Four Models of Effectiveness IV
Quadrant IV: Rational Goal Model – Reflects
Management values of structural control and
external focus. Primary goals are productivity,
efficiency, and profit. Organization wants to
achieve output goals in a controlled way.
Sub-goals include internal planning and
goal-setting, which are rational management
tools. Similar to the Goal Approach.
 Competing Values
Four different opposing value sets within the
organization. Exist simultaneously, and the
“right” balance for the organization is subject
to managerial discretion.

Emphasis may change over time, especially as the

organization evolves through its life cycle.

Examples: hospitals, airlines