ORGANIZATIONAL
EFFECTIVENESS
PRESENTED BY:
ISMEET SIKKA
HERSOHENA
Organizational effectiveness can be described, using
the definition for the adjective "effective" by the
Merriam-Webster Dictionary, as an organization that
produces a desired effect. Likewise, organizational
efficiency can be described as an organization that is
productive without waste.
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.
HISTORICAL OPINIONS
ABOUT ORGANIZATIONAL
EFFECTIVENESS
1. FREDERICK TAYLOR
2. HENRI FAYOL
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
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.
APPROACHES TO MEASURING
ORGANIZATIONAL EFFECTIVENESS
• Goal Approach: Effectiveness is the ability to
excel at one or more output goals.
Flow Chart
Goal Approach
INPUTS TRANSFORMATION OUTPUTS
GOAL APPROACH
Internal Process Approach: Effectiveness is the
ability to excel at internal efficiency, coordination,
motivation, and employee satisfaction.
Flow Charts of
Internal Process Approach
INPUTS TRANSFORMATION OUTPUTS
INTERNAL PROCESS APPROACH
System Resource Approach:
Effectiveness is the ability to
acquire scarce and valued
resources from the environment.
Flow Charts of Approaches to
Organizational Effectiveness –
System Resource Approach
INPUTS TRANSFORMATION OUTPUTS
SYSTEM RESOURCE APPROACH
Constituency Approach:
Effectiveness is the ability to satisfy
multiple strategic constituencies both
within and outside the organization.
Flow Charts of Approaches to
Organizational Effectiveness –
Constituency Approach
INPUTS TRANSFORMATION OUTPUTS
STRATEGIC CONSTITUENCIES APPROACH
• Internal Process Approach: Effectiveness is the
ability to excel at internal efficiency, coordination,
motivation, and employee satisfaction.
• Domain Approach: Effectiveness is the ability to
excel in one or more among several domains as
selected by senior managers.
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
Also organizational effectiveness
can be achieved by:
•Efficiency
•Effectiveness
•Adaptability
•Culture
Efficiency
A late 19th century German sociologist, Max Weber,
who studied and wrote about organizational analysis,
said that organizations could develop unparalleled
efficiency by having a system of explicit rules and a
unique division of labor. Weber studied and
conceived an ideal organizational model that was
necessarily bureaucratic, impersonal and goal
oriented.
Effectiveness
In contrast, Peter F. Drucker, a 20th century Austrian
social scientist and author of many books on
organizational management said that a business
should strive for effectiveness in contrast to mere
efficiency. A quote from Drucker's book, The
Effective Executive, says that "Efficiency is doing
things right, effectiveness is doing the right things."
Adaptability
According to Paul Ferguson in Organizations:
A Strategic Perspective, the organization is an
open system and heavily influenced by its
environment. For an organization to achieve
and sustain success, it needs to adapt to its
dynamic environment. Evaluating and
improving organizational effectiveness and
efficiency is one strategy used to help insure
the continued growth and development of an
organization.
Culture
The Next Generation Business Handbook
reminds us that organizational effectiveness is
closely tied to organizational culture---
particularly organizations that work toward
building and maintaining an adaptive culture.
The organization that focuses on
organizational change strategies will benefit
in terms of both effectiveness and cost-
effectiveness---or organizational effectiveness
and efficiency
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 underlying
similarities were 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
PRGTTI-USAID PROGRAMME TO IMPROVE
INDUSTRIAL PRODUCTIVITY
PRGTTI-USAID programme to improve industrial productivity
KARACHI: The Pakistan Readymade Garment Technical Training Institute (PRGTTI) in collaboration with USAID Pakistan has initiated various
courses including employee assessment services at its Career Development Centre (CDC). The basic idea of creating CDCs is to improve
organisational effectiveness of the manufacturing units particularly the export-oriented organisations in Pakistan.
The Chairman PRGTTI, Razzak Hashim Paracha said that employers of such organisations are well aware of the importance of human capital and its
effectiveness in the success of an organisation and the institute with the assistance of USAID has emphasised the importance of identifying valuable
differences between an organisation's human resource that can lead to dissatisfaction for both employee and employer. "Career Development Center, an
initiative of USAID is offering a number of services to employers, assisting the corporate clients to reach their goals in identifying right person to fit
their slots. It offers information, trainings, assessment, placement and HR consulting services to help prepare clients for the world of work. Paracha
said that PRGTTI CDC is one of the 15 centers in Pakistan facilitated by USAID Pakistan Jobs Project. Based on the need of the industry and rapidly
growing worldwide significance of personality inventory in solving organisational problems in recent years, PRGTTI-CDC has opened an Assessment
Centre focused on understanding, facilitation and alignment of employee capabilities in order to work at his/her best. staff report
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