ORGANIZATIONAL EFFECTIVENESSAn organization is a value-creating tool that can be used simultaneously by different groups of stakeholders to accomplish a variety of goals– Gareth Jones.

WHAT IS O.E.?

Organizational Goals= reasons for org’s existence and

the outcomes it seeks to achieve.

Organizational Effectiveness=degree to which an org. realizes its

goals. Organizational Efficiency=amount of

resources used to produce a unit of output.

CONTINGENCY EFFECTIVENESS APPROACHES Goal Approach Resource-based Approach Internal process Approach Balanced Effectiveness Approaches

Stakeholder Approach Competing Values Approach

GOAL ATTAINMENT APPROACH Org’s effectiveness must be appraised in terms of

accomplishment of ends rather than means. Profit maximization is a popular criteria. Orgs must have ultimate goals that are tangible,

measurable, verifiable.(TMV) MBO most explicitly uses goal approach.

Problems:- Whose goals will be the ultimate goals? Official goals may be different from actual goals. Short-term goals are different from long-term, so

which will be used to measure effectiveness. Due to multiple goals there may be zero

consensus. Goals may not direct behaviour in some orgs.

RESOURCE-BASED APPROACH Effectiveness of org. is defined as its ability to

obtain scarce and valued resources, successfully integrate and manage them.

Indicators of effectiveness are: Bargaining position—org’s ability to obtain from

environment scarce and valued resources. Ability of decision makers in org to correctly interpret

external environment. Ability of managers to use resources to achieve

superior performance. Ability of org to respond to changes in environment.

Usefulness –valuable approach when other performance indicators are difficult to obtain( as in social welfare and not for profit orgs.)

Disadvantages –vaguely considers customers in external environment.

INTERNAL PROCESS APPROACH Effectiveness is measured as internal organizational

health and efficiency. This does not consider the external environment

Indicators of effective org are: Strong corporate culture, positive work climate Team spirit Confidence, trust, communication between workers and

management. Decision making near sources of information Undistorted horizontal & vertical communication Rewards to mgrs for performance, growth, subordinate

development Conflicts resolved in interest of organization

Usefulness—orgs believe happy, committed, actively involved employees and positive corporate culture are good measures of effectiveness.

Disadvantage—output and org-environment relation are not evaluated.

STAKEHOLDER/CONSTITUENCY APPROACH Stakeholder is any group that has a stake in the

org’s performance. Indicators :

Stakeholder effectiveness criteria Owners financial return Employees worker satisfaction, pay,

supervision Customers quality of goods & services Creditors creditworthiness Community contribution to community affairs Suppliers satisfactory transactions Government obedience to laws, regulations

Usefulness –takes broad view of effectiveness, includes social responsibility in its approach, includes multiple criteria.

COMPETING VALUES APPROACH

Developed by Robert Quinn & John Rohrbaugh

A comprehensive list of performance indicators was found to represent competing management values in organizations.

Indicators : Organizational focus

dimension—internal/external Organizational structure ’’ --stability/flexibility Structure

Human Relations Model

Open Systems Model

Internal Process model Rational Goal Model

Focus

OPEN SYSTEMS MODEL

External focus & flexible structure Primary goals- growth and resource

acquisition. Sub-goals- flexibility, readiness, positive

external evaluation Dominant value- good relationship with

environment to acquire resources and grow.

RATIONAL GOAL MODEL

External focus & structural control Primary goals- productivity, growth,profit Sub-goals – internal planning, goal setting Similar to goal-based approach

INTERNAL PROCESS MODEL

Reflects values of internal focus & structural control.

Primary goal – stable organizational setting Sub-goals- efficient communication,

information management, decision making.

HUMAN RELATIONS MODEL

Incorporates values of internal focus &flexible structure.

Primary goals – human resource development

Sub-goals--cohesion, morale, training

USEFULNESS OF COMPETING VALUES APPROACH

Integrates diverse concepts of effectiveness into a single perspective.

Opposing values are shown to be existing at same time, but all do not get equal priority.

Dominant values change with new environmental demands/ new top leadership.

Young org—emphasis on flexibility, innovation, resource acquisition, satisfaction of external constituencies. Stability not imp.

Established org—values are productivity ,profits