7

Organizational Effectiveness
• The degree to which an organization
realizes its goals

1
 Contingency Effectiveness
Approach
• Draw value chain of an organization: inputs,
internal transformation and outputs
• Goal Approach to effectiveness is concerned
with the output side
– Indicators
– Use: easily measurable, evaluate performance
– Problems: multiple goals are conflicting
– Some are difficult to measure
– e.g. employee welfare etc.

2
 Contingency Effectiveness
Approach
• Resource Based Approach:
– Looks at the input side
– Indicators: materials, capabilities, competencies
– Use: valuable in Non-Profit Organizations (NPOs)
– Problem: vague
• Internal Process Approach:
– Measures internal organizational health
– Indicators: culture, team spirit, trust, undistorted
vertical and horizontal communication, reward on
performance
– Use: stress on internal elements
– Problem: output and environment ignored
3
• How to develop capabilities and
competencies

4
 Balanced Effectiveness
Approaches
• Stakeholder Approach:

Stakeholder Effectiveness Criteria

Owners financial return

Employees satisfaction, pay

Customers quality

Creditors creditworthiness
. Community contribution to community

Suppliers satisfactory transactions

Government Obedience to law, regulations

5
 Balanced Effectiveness
Approaches
Competing Values Approach:
• Around two values
– focus (internal or external)
– structure (stability vs. flexibility)

6
 Balanced Effectiveness
Approaches
Competing Values Approach:
• Four models resulted:
– HR model
– Open systems model
– Internal process model
– Rational goal model
• Use: brings together the competing forces
under the umbrella of Effectiveness
7