learning and org eff sys persp

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Performance Improvement, 48, no. 1, January 2009©2009 International Society for Performance Improvement

Published online in Wiley InterScience (www.interscience.wiley.com) • DOI: 10.1002/pfi.20043

LEARNING AND ORGANIZATIONALEFFECTIVENESS: A SYSTEMS PERSPECTIVE

Nicholas Andreadis

The challenge for leaders today is to create and develop the capability of their organization.

Leaders must perceive and manage their organization as a dynamic, open system where

learning is the core competence underlying innovation, growth, and sustainability. Creating a

culture of learning is the first work of leadership. This article presents a practical framework in

which to consider organizational effectiveness, emphasizing the critical role of systems thinking

and learning theory in organizational development.

THE EMINENT SCHOLAR James MacGregor Burns(1978) opined, “Leadership is one of the most observedand least understood phenomena on earth” (p. 1). With-out hesitation, one can suggest that, in this regard, leader-ship shares company with the phrase organizationaleffectiveness. There is no single, universally accepted defi-nition of organizational effectiveness, though two schoolsof thought have contributed significantly to the develop-ment of a coherent framework for considering the sub-ject. The first posits that an effective organization is onethat consistently achieves its goals. Olmstead’s definition(2002) characterizes this perspective by defining orga-nizational effectiveness as “the accomplishment of mis-sions or the achievement of objectives” (p. 14). The secondschool of thought suggests that an organization is effec-tive when it acquires and develops its competencies, andthus its capacity, to perform at a high level of accomplish-ment. From this viewpoint, an effective organization isone whose strategy, structure, processes, and people areoptimally aligned such that, all things being equal, theachievement of results is predictable, if not expected.These two perspectives on organizational effectivenessrepresent a distinction without a difference. They presenttwo paradigms or mental models that in reality are sim-ply a means-end model of performance. Arguments thatsuggest that one model is more relevant or correct thanthe other are little more than academic exercises.

Two seminal articles have shaped modern thinkingabout organizational effectiveness and illustrate thismeans-end relationship. Kaplan and Norton (1993) pro-

vided a method, the balanced scorecard, for capturingand organizing the results that an organization generates.The balanced scorecard is an innovative and holisticapproach to organizational outcomes management. Thepremise of the balanced scorecard acknowledges the lim-itations of measuring organizational effectiveness solelyin terms of financial metrics, which are generally consid-ered to be lagging indicators of performance. Instead, thescorecard examines organizational performance fromfour vantage points:

• The financial perspective.

• The customer perspective.

• The internal process perspective.

• The innovation and learning perspective.

The financial perspective, though important, is “bal-anced” by incorporating a broader set of measures associ-ated with customer behavior, process management, andlearning. These four perspectives represent domains ofmeasurement that can be customized and weighted toreflect the specific nature of a business within the contextof its business cycle and competitive environment. Forexample, for a semiconductor company like Intel, therewill be periods of time when measures of innovation suchas patents and new product introductions will the mostimportant indicator of the future prospects of the com-pany. For a retailer of clothing, one is likely to see moreemphasis placed on same-store sales and customer serviceas key performance indicators. Recently some authors

6 www.ispi.org • DOI: 10.1002/pfi • JANUARY 2009

have suggested a fifth domain of performance measure-ment, social responsibility, reflecting an increased aware-ness that all organizations exist within a larger societalsystem to which they are eventually accountable.

Waterman, Peters, and Phillips (1980) present the 7-Sframework, a holistic model of how an organizationshould be conceptualized and designed to be effective.Their article was in reaction to the heavy emphasisplaced on structure as the key design variable of organi-zational performance, a bias that still exists in manyorganizations. The 7-S model suggests that the conse-quent performance of an organization is a result of theproper alignment and seamless interaction of seven keyelements:

• Overarching or superordinate goals.

• Business strategy.

• Organizational structure.

• Skills and knowledge of its workforce.

• Staffing policies and practices.

• Work and management systems and processes.

• Style, culture, and workplace ambience.

It is the proper development and alignment of theseseven organizational variables that creates the potential forperformance success. The 7-S model has spawned manyderivative models that form the basis of the design andapproach used by organization development practitionersto systematically build the competence and capacity oforganizations. An added feature of models of this form istheir utility in the diagnosis of performance problems byproviding discrete units of analysis for assessment.

This discussion brings us to a working definition oforganizational effectiveness that bridges the two comple-mentary perspectives. A traditional definition of an orga-nization is that of a complex network of interdependentrelationships among people engaged in purposeful activ-ity (Olmstead, 2002). However an organization is morethan people with purpose. I offer that an organization is best conceived as the host for the elements of the 7-S framework. Although it is abstract, this definitionconceptualizes an organization as a physical, social, and purpose-driven entity and provides a parallel with liv-ing, organic systems. Two central characteristics of all living systems are their purposeful behavior and adapt-ability to changing environments for the purpose of sur-vival. It is this latter feature that stimulates the organismto gather data from its surroundings, reset its goals, alterits form within certain physical limits, and modify itsbehavior. Inspired by the parallel with living organisms, Ioffer the following definition of organizational effective-

ness: an organization is effective to the extent that itdevelops and adapts its systems, processes, and behaviorfor the purpose of consistent achievement of a balancedset of performance goals in virtual perpetuity.

Effective organizations acquire, develop, and aggres-sively manage to achieve results in such a manner that theorganization is sustainable despite turbulence in its envi-ronment. As Collins and Porras (1994) aptly wrote, theyare “built to last.” The success of these organizations is nota matter of luck or good timing. As I describe in this arti-cle, visionary leaders combine the elements of compe-tence, adaptability, teamwork, and a commitment tolifelong learning into an amalgam of strategic decisions,processes, and behaviors that results in an organizationthat consistently outperforms its competition.

THE OPEN SYSTEMLudwig von Bertalanffy (1968) inspired my concept of theorganization as a system when he described systems the-ory as the “general science of wholeness.” Systems theoryrejects the temptation of reductionism by viewing theorganization as an integrated whole rather than merelythe sum of its parts. All systems have inputs (raw materi-als) that are transformed through a series of linkedprocesses into outputs (products and services). A conse-quence results when consumers use the product or ser-vice. The nature of the consequence then becomes a newpiece of data as an input “fed back” into the system (seeFigure 1). For example, manufacturing companies gather

Visionary leaders combinethe elements of competence,adaptability, teamwork, anda commitment to lifelonglearning into an amalgam ofstrategic decisions, processes,and behaviors that results in an organization thatconsistently outperforms its competition.

Performance Improvement • Volume 48 • Number 1 • DOI: 10.1002/pfi 7

raw materials that are transformed through workprocesses into saleable products. A customer’s purchase ofthe product produces a positive or negative consequence.When the consequence is relayed back to the company, afeedback loop is generated and, depending on the natureof the consequence, the company’s members can chooseto maintain or change the product’s characteristics. Ineffect, the members learn and adapt. This cycle of trans-forming tangible and intangible raw materials into fin-ished products and services that are purchased and usedby its customers is a daily occurrence in all varieties oforganizations.

I find it useful to conceptualize the organization as onelarge “processing unit” whose primary purpose is to cre-ate valuable products and services through a series ofinterdependent and linked work processes. Each day,knowledgeable and skillful people perform hundreds ofsimple and complex tasks within this large processingunit. Each of these tasks is a minisystem or subsystemunto itself with inputs, outputs, and consequences. Asillustrated in Figure 2, every organization serves as host tofour interrelated and overlapping subsystems:

• The governance subsystem.

• The management subsystem.

• The work subsystem.

• The people subsystem.

Each of these four subsystems mimics the behavior ofthe larger system in which it is nested. Each transforms rawmaterials into outputs specific to their intended purpose.Each subsystem has points of intersection with one another(see Figure 3). This means that, for instance, products fromthe governance subsystem serve as inputs to each of theother three subsystems. Each subsystem receives and pro-vides data from each other, and all four receive and providedata to the organization’s external environment. This is the essence of the organization as an open system.Furthermore, each subsystem comprises additional subsys-tems. This matrushka, or Russian doll, of a system-within-

systems is replicated down to the smallest unit of the orga-nization: the individual performer. It is the performance ofhundreds of interdependent processing systems that ulti-mately determines the success and survival of the orga-nization. Significant disability occurs when the whole isreduced to its parts; key relationships are pulled apart, andperformance is placed in jeopardy. It would be just as friv-olous to separate the human respiratory system from thecirculatory system.

GovernanceIt is the function of organizational leaders to take pur-poseful, unified action in an environment of uncertainty(Olmstead, 2002). The governance system makes, directs,and audits the decisions and actions that provide thisunity of purpose and guides the affairs of the orga-nization through uncertainty. The governance processuses information it acquires from the external and inter-nal environment in the following ways:

• Develop the organization’s mission, vision, and values.

• Formulate the organization’s goals and strategy.

• Make major policy decisions.

• Establish the core business areas and, in broad terms,its products and services.

• Audit all aspects of organizational performance.

• Evaluate the performance of the organization’s seniormanagement team.

• Ensure leadership succession and the future viability ofthe organization.

The individuals who execute the governance processare typically members of a board of directors and often

FIGURE 1. GENERAL SYSTEMS THEORY

FIGURE 2. THE ORGANIZATIONAL SUBSYSTEMS


include senior managers. Ideally the governance team will include individuals from outside the organiza-tion whose role is to provide a degree of independentoversight.

ManagementThe management system implements the decisions madeby the governors. The management process transformsthe decisions of the governors into reality. The manage-ment system uses information it acquires from the exter-nal and internal environment in the following ways:

• Translate goals and strategy into operational plans.

• Allocate organizational resources based on the plan.

• Structure the organization for optimal performance.

• Facilitate the day-to-day performance of employees.

• Outsource functions not core to the organization’scompetence.

• Communicate key messages to all employees.

• Measure progress toward goal achievement.

WorkThe work system transforms raw materials into interme-diate and finished products and services. The systemincludes people, and their tools and equipment, who exe-cute the work processes and possess the requisite knowl-edge, skills, and personal attributes necessary toaccomplish the following:

• Optimally design lean and efficient work processes.

• Define job responsibilities that support the workprocesses.

• Establish work space policies, practices, and ergonomics.

• Acquire and maintain the necessary work-associatedequipment, technology, and information systems.

• Measure work process performance in real time.

PeopleThe people system influences the way people think, feel,and act on the job. Typically associated with the humanresource department, the processes of the people systemare best designed, managed, and performed in partner-ship with executives, line managers, and administrativestaff to do the following:

• Create and manage the performance management system.

• Define human resource policies and practices.

• Train and develop employees.

• Design and manage compensation and incentive systems.

• Plan for the current and future workforce.

• Plan staff and management succession.

• Communicate essential information to all internal andexternal stakeholders

The Integrated System at WorkIt is axiomatic of all integrated dynamic living systemsthat when one unit takes an action, another unit some-where else in the system is influenced. It is impossible todescribe the infinite number of interactions that takeplace daily in complex organizations. The following sec-tions describe three common interactions.

Governance-People Subsystems Interaction. Establish-ing an organization’s business strategy occurs in the gov-ernance subsystem but not in a vacuum. It is influencedby any number of external factors, including competitivepressures, technological breakthroughs, and identifiedmarket opportunities. The choices and decisions regard-ing a business strategy influence the people system in anumber of important ways. It determines who is hired,what skills are needed, and what organizational structure

FIGURE 3. ORGANIZATIONAL PROCESSING SYSTEM


best suits the implementation of the strategy. Similarly,people, through their creativity and innovation, may dis-cover new lines of business that offer the company oppor-tunities for unexpected revenue growth, resulting in themodification of a previously developed business plan.These ideas and proposed opportunities are raw materialfor the governance system to process.

Management-Work Subsystems Interaction. Work pro-cesses generate the products and services. The efficiencyand effectiveness of these processes are measured andmonitored by tools and metrics established by manage-ment. The Japanese refer to this form of on-the-job, real-time monitoring as shop floor management. Shop floormanagement allows the organization’s members to criti-cally assess the performance of a work process and, if andwhen variances from standard occur, to make adjust-ments as necessary. This is the essence of the total qualitymanagement (TQM) movement as it applies to a worksystem. TQM is a management process with direct linksto the work system.

Work-People Subsystems Interaction. The interactionbetween work processes and individual contributors is sosubtle that it often is taken for granted. Processes are setsof work steps executed by trained and knowledgeableworkers who perform those work steps with skill rangingfrom novice to master level. The essence of the work-people interaction is the alignment of process, technol-ogy, equipment, and talent. Misalignment commonlyoccurs when new technology is introduced to the work-place and worker training is not provided.

A basic premise of organizational effectiveness is thatall four subsystems must function as one fully integratedand aligned processing system. A principal factor inensuring this integration and alignment is the quality andextent of learning that takes place in the organization.The degree to which learning is rooted in the day-to-dayfunctioning of the organization determines its perfor-mance and sustainability.

LEARNINGDuring the past 20 years, interest in organizational learn-ing has grown substantially. This is generally attributedto the emergence of the knowledge economy, globalcompetition, and technological innovations that requirepeople and organizations to anticipate and adapt to anever-increasing pace of change. More specific incentivesfor learning become evident on probing more deeply.For-profit companies that focus on learning garner prof-itable rewards from innovation, enjoy greater customer

loyalty, recruit and retain the best people, and deliver better returns to their shareholders (DiBella 2001). Non-profit organizations retain their relevance and reputationwith clients and position themselves to be consistentrecipients of donations and grants. Organizations thatignore the importance of learning as an essential corecompetency suffer the consequences of inefficiency, stag-nation, and cultural decline, which inevitably lead to thedemise of their enterprises. Sophisticated managers real-ize that measurable benefit is achieved when work andlearning are integrated. A number of theories and modelsof organizational learning appear in the literature, butmany use abstract concepts and jargon that do not assistmanagers in establishing learning as a tangible asset. It isessential that we demystify the concepts and move peo-ple’s understanding about learning from abstract con-cepts to the concrete and practical steps needed to buildthe systems, processes, and culture of a learning orga-nization (Lipshitz, Friedman, & Popper, 2007).

Learning is a multifaceted subject. Learning, as I usethe term, is grounded in constructivist theory wherein anindividual’s learning facilitates growth in his or herknowledge, skill, wisdom, and mastery of a particular setof processes. It is mastery that enables the individual toinnovate, solve problems, and alter his or her behaviors inpursuit of improved performance. The integration, pro-ductivity, and performance of the people and processesthat operate within the four organizational subsystemsdepend on the quality and integrity of the learning thatoccurs within the organization.

An essential building block of organizational effective-ness is the competence of the individual and his or herteam members. Although many authors use the termscompetency and competence interchangeably, I suggest adistinction is warranted. Knowledge, skills, and personalattributes are competencies and represent the capacity,capability, and potential of the individual to performeffectively. Competence is the actual demonstration ofworthy performance or, stated in another way, theachievement of intended purposes in an efficient manner(Gilbert, 1978). Learning plays a direct and central role inboth the acquisition and development of competenciesand in competence, accomplished through a set of learn-ing processes executed by individuals who possess anddisplay certain personal attributes.

Learning is often described as natural phenomenon ofliving organisms. While this is true enough, nature hasprovided living organisms with four essential learningprocesses that must be developed and effectivelyemployed for optimal learning to take place:

• Scanning for and acquiring relevant data.

• Data synthesis and meaning making.


• Dissemination of information to others.

• Use of information to solve problems, make decisions,and take appropriate action.

These processes are best executed when individuals pos-sess the following personal attributes:

• Sufficient desire and curiosity to scan for and acquiredata about the world around them generally and theconsequences of their work and behaviors specifically.

• Cognitive ability to interpret and make sense of thedata they acquire.

• Readiness to share information with others.

• Openness, rather than defensiveness and rationaliza-tion, when data are provided.

• Willingness to change and experiment with newprocesses and behaviors.

It is the marriage of these four processes and personalattributes that create the potential for making peopleeffective. As illustrated below, it is competency in learningthat enables individuals and teams to make the properdecisions that align the subsystems.

Learning enables people engaged in the governancesubsystem to do the following:

• Assess whether the organization’s mission, vision, andstrategy are viable and competitive.

• Improve the quality of socially responsible decisionmaking.

• Synthesize, interpret, and appropriately use new information gathered from the environment.

• Use performance data to determine the effectiveness ofthe organization and its management team.

Learning enables people engaged in the managementsubsystem to do the following:

• Determine the optimal structure of the organization.

• More effectively manage the performance oforganizational members.

• Make accurate decisions about outsourcing.

• Improve the quality of management problem solving.

Learning enables people engaged in the work subsys-tem to do the following:

• Assess and improve the quality of their performance.

• Distinguish well-performing work processes fromthose that are dysfunctional or poorly performed.

• Identify the means by which work processes can beimproved.

• Generate new ideas for valuable products and services.

Learning enables people engaged in the people subsys-tem to do the following:

• Establish progressive human resource policies thatattract, retain, and inspire employees and will positionthe organization for success today and tomorrow.

• Create an organizational culture conducive to individ-ual and organizational growth and prosperity.

• Determine and develop the knowledge and skillresources of the organization.

In the absence of even one of these learning processes orpersonal attributes, individual and organizational effective-ness is suboptimized. Organizational dysfunction is a fail-ure of the people in the organization to learn effectively.

For optimal learning to occur, the organization mustintentionally develop the tools, processes, mechanisms,and culture that support individuals’ learning. It mustexhibit a commitment to (1) scanning the environmentfor data relevant to current and future success of the orga-nization; (2) building the capacity to assess the reality thatsurrounds it and interpret what is happening in the con-text of the organization’s mission, vision, and goals in realand practical terms; (3) making meaning and sense of thedata that are collected; and (4) acting on the informationto improve performance.

CONCLUSIONIn living systems, learning is a biological imperative, forlearning results in adaptation, alignment, renewal, andsurvival. No less is true of the complex organizationsoperating in today’s environment of threat, challenge, andopportunity. Although people are learners by nature,learning in organizations is rarely optimal. Accordingly,performance improvement professionals and organiza-tional leaders must create the conditions that encouragepeople to learn in a systematic matter that will influenceimproved results in individual and team performance.This takes time, skill, and commitment. Ideally, organiza-tions will hire people who are curious, open to feedback,

Organizational dysfunction isa failure of the people in theorganization to learneffectively.


willing to make changes, and unafraid of criticism. Butlike any other intervention, the creation of a learningorganization begins with the organization as it existsand with the people it currently employs. Thus, itbehooves HPT professionals to help organizations take asystematic inventory of their learning assets, though thetask does not need to be onerous. It can begin by askinga few relatively simple but yet profoundly introspectivequestions:

• How well do we scan the environment for informationabout our business?

• What information do we collect regarding the experi-ence of our customers with our products or services?

• Are we collecting sufficient relevant data on the perfor-mance of our core work processes?

• Is there a sense of urgency for us to learn?

• Do we seek solutions from within, or do we consultwith outsiders?

• Are our mechanisms for disseminating data to oneanother adequate?

• How much experimentation is appropriate for ourcompany and industry?

• Are we willing to pilot new ideas?

• Do we promote and otherwise reward people forlearning?

It is the organization’s demonstrated commitment toask and answer these questions and make the necessaryinvestments in learning systems that will earn it the dis-tinction of being called a learning organization.

References

Burns, J.M. (1978). Leadership. New York: HarperCollins.

Collins, J.C., & Porras, J.I. (1994). Built to last. New York:HarperBusiness.

DiBella, A.J. (2001). Learning practices: Assessment and actionfor organizational improvement. Upper Saddle River, NJ:Prentice Hall.

Gilbert, T.F. (1978). Human competence: Engineering worthyperformance. New York: McGraw-Hill.

Kaplan, R.S., & Norton, D.P. (1993). Putting the balancedscorecard to work. Harvard Business Review, 71, 134–142.

Lipshitz, R., Friedman, V.J., & Popper, M. (2007). Demystifyingorganizational learning. Thousand Oaks, CA: Sage.

Olmstead, J.A. (2002). Creating the functionally competentorganization: An open systems approach. Westport, CT:Quorum Books.

von Bertalanffy, L. (1968). General systems theory: Foundations,development, applications. New York: Bazillier.

Waterman, R.H., Peters, T.J., & Phillips, J.R. (1980). Structureis not organization. Business Horizons, 23, 14–26.

Recommended Readings

Argyris, C. (1992). On organizational learning. Cambridge,MA: Blackwell.

Marquardt, M.J. (2002). Building the learning organization.Palo Alto, CA: Davies-Black.

NICHOLAS ANDREADIS, MD, is assistant professor for counselor education and counseling psy-chology and coordinator of the master’s program in human resource development at WesternMichigan University. He also serves as associate dean of the Lee Honors College. His researchinterests and consulting activities include organization development with a special emphasis onperformance technology, organizational learning systems, and program evaluation. He receivedhis BA from Kent State University and MD from Creighton University. He may be reached [email protected].

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