Organisation Effectiveness

Definition
Organisation effectiveness is defined
as the degree to which an organisation
realized its goals.
In short, Organsation effectiveness
means different things to different
people.
 Importance of organisation
Effectiveness
What makes organization
“effective”?

➢ The answer is proper organization

structure– means the way we put
people and jobs together and
define their roles and relationships
is an important determinant in
whether an organization is
successful.
➢ Some structures work better under
certain conditions than do others .
➢Importantly those managers who
understand their structural options and the
conditions under which each is preferred will
have a definite advantage over their less
informed counterparts.
➢Organisation theory ,as a discipline clarifies
which organization structure will lead to ,or
improve organization effectiveness
Approaches to Organisational
Effectiveness
◼ There are basically 5 approaches to
organisational effectiveness
◼ Goal attainment approach
◼ Systems Approach
◼ Strategic approach
◼ Constituencies approach
◼ Competing value Approach
Goal attainment approach
◼ STATEMENT OF THE APPROAH
◼ The goal Attainment approach states that an
organiasation’s effectiveness must be
appraised in terms of the accomplishment of
ends rather than means.
◼ The common denominator is that they
consider they consider the ends to which the
organisation was created to achieve.
Assumptions
◼ Organisations are deliberate ,rational,goal seeking
entities.
◼ Organisations must have ultimate goals.
◼ These goals must be identified and defined well
enough to be understood.
◼ These goals must be few enough to be manageable.
◼ There must be general consensus or agreement on
these goals.Finally,
◼ Progress toward these goals must be manageable.
How to make the goals Operative?

◼ Goal attainment approach is most prominent in

management by Objective(MBO).
◼ MBO is a well known philosophy of management that
assesses an organisation and its members by how
well they achieve specific goals that superiors and
subordinates have jointly established.
◼ Tangible,verifiable and measurable goals are
developed.
◼ Conditions under which they are to be
accomplished is specified.
◼ The degree to which each goal must be satisfied is
also specified.
◼ Actual performance is then measured and
compared with the goals.
◼ Hence MBO represents the ultimate in a goal –
oriented approach to effectiveness.
PROBLEMS/OBSTACLES
◼ Goals are general not specific.
◼ Organisation official goals does not reflect its
actual goals.
◼ Short term goals are different from its long
term goals.
◼ Goals may be multiple also.
System approach
STATEMENT OF THE APPROACH
◼ In system approach,end goals are not ignored ,but
they are only one element in a more complete set of
criteria.
◼ Systems model emphasize criteria that will increase
the long term survival of the organisation—such as
organisations ability to acquire resources ,maintain
itself internally as a social organism,and interact
suceessfully with its external environment.
◼ Hence systems approach focusses not so much on
specific ends as on the means needed for the
achievement of these ends.
ASSUMPTIONS
◼ A systems approach to OE implies that org
are made up of interrelated subparts.
◼ Effectiveness requires awareness and
successfull interactions with environmental
constituencies.
◼ Survival requires a steady replenishment of
the resources consumed.Failure to replenish
will result in the org decline.
PROBLEMS

◼ According to critics the problem is its focus is

on the means necessary to achieve
effectiveness rather than on organisational
effectiveness itself.
◼ Measuring end goals may be easy compared
with trying to measure process variables such
as “flexibility of response to environmental
changes”or clarity of internal
communications”.
 VALUE TO MANAGERS
◼ Systems approach increases the managers
awareness of the interdependency of
organisational activities.
◼ Used as a application tool where end goals
are very vague.
◼ Measure of organisation effectiveness.
STRATEGIC CONSTITUENCIES
APPROACH
◼ It proposes that an effective organisation is
one that satisfies the demands of those
constituencies in its environment from whom
it requires support for its continued existence.
◼ Its emphasis is not concerned with all of the
organisation environment,but only those in
the environment who can threaten the
organisation survival.
 ASSUMPTIONS

◼ This approach views org as political arenas where vested

interests compete for control over resources.

◼ It assumes that org has a number of constituencies with

different degrees of power each trying to satisfy its
demands.But each constituency also has a unique set of
values,so it is unlikely that their preferences will be in
agreement.
◼ Finally it assumes that managers pursue a
number of goals and that the goals selected
represent a response to those interest
groups that control the resources necessary
for the org to survive.
 Making Strategic Constituencies
Operative
◼ Managers should identify the constituencies
that are critical to the organisation survival.
◼ This input can be combined and synthesised
to arrive at a list of strategic constituencies.
 Typical OE Criteria of selected Strategic Constituencies

CRITERIA
CONSTITUENCY
CONSTITUENCY
• Return On investment;growth in
earnings.
• Owners
• Owners • Compensation;fringe
benefits;satisfaction with working
conditions.
• Employees • Satisfaction with price,quality,service.
• Employees
• Satisfaction with payments;future
• Customers sales potential
• Competitive wages and
• • Customers benefits;satisfactory working
Suppliers conditions
• Lack of damage to the community’s
• • Suppliers
Unions environment.

• • Unions
Local community

• Local community
PROBLEMS AND VALUES
◼ PROBLEMS
◼ Seperating the strategic
constituencies from the
larger environment is
difficult.
◼ Identifying the expectations
that the strategic
constituencies hold for the
org presents a problem.
Value to Managers
◼ If management knows
whose support it needs
if the org is to maintain
its health,it can modify
its preference ordering
of goals as necessary
to reflect the changing
power relationships with
its strategic
constituencies.
THE COMPETING VALUE
APPROACH
◼ The approach helps to identify all the key variables in
the domain of effectiveness and then determine how
the variables are related.Thus competing value
approach is an integrative framework.
◼ The main theme underlying the approach is that the
criteria you value and use in assessing an OE-return
on investment,market share,new product
innovation,job security --- depend on who you are
and the interests you represent.
 ASSUMPTIONS
◼ It is based on the assumption that there is no “best”
criterion for evaluating an OE.

◼ There is neither a single goal that everyone can

agree upon.Therefore the concept of OE itself is
subjective.

◼ Goals that an evaluator chooses are based on his or

her personal values ,preferences, and interests.
◼ The competing value approach argues that
there are common elements underlying any
comprehensive list of OE criteria & that these
elements can combined in such a way as to
create basic sets of competing values. Each
one of these sets then defines a unique
effectiveness model.
 Competing Values
◼ There are three basic sets of “competing values”
namely:

1. Flexibility verses control.

Flexibility values are innovation,
adaptation,and change.

2. People versus organisation.

3. Means verses ends.

 EIGHT OE CRITERA CELLS
CELLS Description Definition

OFM Flexibility Able to adjust to shifts in external conditions and demands.

OFE Acquisition of resources Able to increase external support & expand size of work force.

OCM Planning Goals are clear & well understood.

OCE Productivity & efficiency Vol of output s high;ratio of output to input is high.

PCM Avalability of information Channels of communication facilitate informing people about things that
affect their work.

PCE Stability Sense of order.continuity,& smooth functioning of operations.

PFM Cohesive work force Employees trust,respect,and work well with each other.

PFE Skilled work force Employees have the training,skills & capacity to do their work properly.
 PROBLEMS

◼ It overcomes the problems of using the goal-

attainment or systems approaches.

◼ Competing values include strategic

constituencies but do nothing to alleviate the
problems we pointed out with this approach.
 Value to managers
◼ By reducing a large number of effectiveness
criteria into four conceptually clear
organisational models,the competing values
approach can guide the manager in
identifying the appropriateness of different
criteria to different constituencies.
IMPORTANCE

◼ Organizational effectiveness is the concept

of how effective an organization is in
achieving the outcomes the organization
intends to produce. The idea of organizational
effectiveness is especially important for non-
profit organizations as most people who
donate money to non-profit organizations and
charities are interested in knowing whether
the organization is effective in accomplishing
its goals.
◼ An organization's effectiveness is also
dependent on its communicative competence
and ethics. The relationship between these
three are simultaneous. Ethics is a foundation
found within organizational effectiveness. An
organization must exemplify respect, honesty,
integrity and equity to allow communicative
competence with the participating members.
Along with ethics and communicative
competence, members in that particular
group can finally achieve their intended goals.
◼ Foundations and other sources of grants and
other types of funds are interested in
organizational effectiveness of those people
who seek funds from the foundations.
Foundations always have more requests for
funds or funding proposals and treat funding
as an investment using the same care as a
venture capitalist would in picking a company
in which to invest.
◼ Organizational effectiveness is an abstract
concept and is basically impossible to
measure. Instead of measuring organizational
effectiveness, the organization determines
proxy measures which will be used to
represent effectiveness. Proxy measures
used may include such things as number of
people served, types and sizes of population
segments served, and the demand within
those segments for the services the
organization supplies
◼ For instance, a non-profit organization which supplies
meals to house bound people may collect statistics
such as the number of meals cooked and served, the
number of volunteers delivering meals, the turnover
and retention rates of volunteers, the demographics
of the people served, the turnover and retention of
consumers, the number of requests for meals turned
down due to lack of capacity (amount of food,
capacity of meal preparation facilities, and number of
delivery volunteers), and amount of wastage.
◼ Since the organization has as its goal the
preparation of meals and the delivery of those
meals to house bound people, it measures its
organizational effectiveness by trying to
determine what actual activities the people in
the organization do in order to generate the
outcomes the organization wants to create.
◼ Activities such as fundraising or volunteer
training are important because they provide
the support needed for the organization to
deliver its services but they are not the
outcomes per se. These other activities are
overhead activities which assist the
organization in achieving its desired
outcomes.
◼ The term Organizational Effectiveness is
often used interchangeably with Organization
Development, especially when used as the
name of a department or a part of the Human
Resources function within an organization.