Organizational effectiveness

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 is 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.

To be effective and achieve its goals, an organization must successfully respond to environmental factors. How can the effectiveness of an organization be measured? Various models of determining organizational effectiveness exist because organizations face different environments, they produce different products, their organizational members are made up of different kinds of people, and the organizations are at different stages of development. Each model is most useful to an organization having a particular combination of these environmental and organizational attributes.

Two different underlying dimensions may be considered to develop models of organizational effectiveness. The first is the organization’s internal versus external focus. The second dimension is the organization’s emphasis on flexibility versus control. Flexibility allows faster change, whereas control allows a firmer grasp on current operations. When these two dimensions are drawn at right angles to each other, the first four models of organizational effectiveness can be plotted. They are the rational goal, open system, internal process, and human relations models.

According to the rational goal model of effectiveness, an organization is effective to the extent that it accomplishes its stated goals. For example, the formal goals of the Toronto Blue Jays are to win their division, the American League pennant, and the World Series.

With an open system model an organization is effective to the degree that it acquires inputs from its environment and has outputs accepted by its environment. The University of Alberta follows this model when it is concerned about the quality and number of students applying for admission and what jobs they receive on graduation.

The internal process model focuses on the effectiveness of the internal transformation process. When Hamilton’s Stelco Inc. examines its steel-making methods to determine price and quality competitiveness, it is focusing on its internal processes.

The human relations model focuses on the development of the organization’s personnel. Marlin Travel sends its agents on familiarization trips to expand their knowledge of specific hotels, cruises, and destinations.

The competing values model requires that an organization scrutinize the balance among the above four effectiveness models. In this model there are three sets of competing values. The first is the tension between internal versus external focus. The more the organization focuses on one, the less it can concentrate on the other. For example Apple Computer has focused externally on its customers and making computers that are intuitive and easy to use. The computer chip maker Intel has had a more internal focus on how to make faster and more powerful central processing units at a low price. The second set of values in competition is flexibility versus control. Flexibility allows quick response to changing conditions and values innovation.

Control values the opposite. Stability and predictability mean that routine activities are performed well but change is more difficult. The third set of competing values is the relative concern with the feelings, needs, and development of the people making up the organization versus the organization and its requirement to accomplish its tasks.

A private hospital, for example, is concerned with how patients are treated and the success rate of surgeries (the rational goal model). It is also interested in how hospital procedures are performed (the internal process model) and with the skills and abilities of hospital staff (the human relations model). Finally, because it is a private hospital and must make a profit to survive, it needs to take into account how many and what kinds of patients are admitted (the open system model). The hospital must balance the three sets of competing values in order to be effective.

With the strategic constituencies model an organization would aim to at least minimally satisfy the most important constituents (or stakeholders) in its environment. The owner of an A&W franchise must satisfy the customers and A&W head office management. Customers care about the quality and price of the food as well as the speed and friendliness of service. Head office cares about these issues along with financial reporting, product promotions, and the store’s relationship with its community.

An organization seeking legitimacy survives by acting in a manner seen by other organizations as legitimate. An example would be producing a business plan and projected income statement in order to obtain a bank loan.

The organization adopting the fault-driven model of effectiveness seeks to eliminate traces of ineffectiveness in its internal functioning. The National Aeronautics and Space Administration (NASA) in the United States is a good example. Its systems are designed with backups to be reliable even if some components fail.

Finally, the organization as a high performing system compares itself to other similar organizations. The Vancouver Symphony Orchestra can measure ticket sales and customer satisfaction with performances. But to determine the quality of the orchestra itself, comparison is made to other orchestras in the world. Effectiveness is seen as the degree to which that comparison is positive. One method used by high performers to make such comparisons is to examine industry rankings. An example is the MacLean’s magazine ratings of Canadian universities.

Organizational Effectiveness Approaches

The creative change biz approach

Many company leaders scratch their heads over the difficulty of implementing technical and process improvements. Are you one of those leaders? Do your change initiatives get sidetracked or altogether de-railed?

Do you quietly declare victory and move on to another change initiative? Whether they are a relatively modest effort such as a new order fulfilment system, or computer aided product design, or wholesale changes to your product development process, change is tough for you and your employees. Would you like to increase the success rate of your change initiatives?

We offer you an opportunity to do just that. As Organization and Systems Development experts, we offer a systemic framework for understanding your business challenges, and as experienced coaches, we can offer you on-going coaching support.

In our work with organizations, we apply a systems view of our clients that greatly improves the success of your change initiative. We use a model that employs the proverbial three-legged stool:

--->People ---> Process ---> Technology --->

People: includes formal structures, informal relationships, and organizational culture

Process: includes manufacturing and business activities such as Lean Thinking and Six Sigma

Technology: includes computers, robots, etc.

While it isn't always apparent to managers and leaders, implementing new Processes and Technology always forces a culture change and quite often changes in structures and organizational power relationships. Organizational leaders are more often than not, naive about the impact of the Process and Technology "improvements" to their organizations. For example: a utility company we worked with implemented a new computerized order fulfilments system. Employees resisted the change because the new system completely upended the formal and informal power hierarchy among order fulfilments technicians—it equalized the playing field between telephone order takers and senior technicians who saw themselves as engineers. Senior technicians viewed the new system as a Trojan horse: management's real intent was to weed out higher paid employees. Senior management was astonished by and unprepared for the revolt.

Our expertise is in people systems. Improve your success rate implementing whatever technical process you wish —Lean Systems, Six Sigma, new order fulfilment processes, etc, by paying attention to the people side. Further, we help you appropriately integrate structural and people changes that overlooked, will undermine your initiative. That includes assessing and eliminating outdated and redundant processes and procedures, implementing new accounting procedures designed to accurately track your new initiative's ROI, a performance management system that rewards cross-functional collaboration rather than rewarding only individual performance, coaching for leaders.

We teach leaders new ways of assessing and leading their organizations that will sustain the new systems they are implementing. After all, Rome did not fall in a day, and a century's worth of habits won't either, no matter how much self-discipline is employed!

Strategic Planning - We provide a systemic approach to planning for the future which ensures that everyone in your organization is working together toward common objectives.

Change Management - We provide an integrated seven-element model, which emphasizes the importance of quality execution as well as the appropriate balance of all the change activities.

Lean Thinking - We help you understand the culture change inherent in Lean Thinking, whether it be manufacturing or in any other part of your organization. We also assist you in creating plans for change that ensure your successful transition to Lean.

Business Start-up - Our consultants have the process and content expertise and experience to assist you in anticipating and implementing all the components of a new business start-up.

How do we increase organizational effectiveness

To increase organizational effectiveness, winning companies create sustainable competitive advantage by aligning their talent and business strategies.

Mergers or acquisitions, restructurings or shifts in business strategy are examples of fundamental organizational change that create strong demand for processes and systems to bring focus and restore the organization’s capability to function effectively.

Our organizational effectiveness capability brings value to our clients’ organizations by facilitating the integration and alignment of the business strategy with a workable talent management strategy.

At the heart of Right Management's organizational effectiveness capabilities, is our holistic approach to helping companies build and align the capabilities, processes, attitudes, and talent needed to more effectively implement its chosen strategy.

Organizational Effectiveness Solutions

Strategy-implementation: Right Management’s Strategy Implementation consulting services improve an organization’s ability to successfully execute strategy. This is achieved by focusing on structure, people systems and processes, and to deliver great customer experiences.

Strategic Workforce AlignmentStrategic Workforce Alignment is a unique interactive process for executives to quickly assess and prioritize various workforce strategies, employee needs and investments. Based on proven Six-Sigma methodologies, individuals use a specially designed diagnostic process called Right Navigator to prioritize (based on importance and satisfaction) a comprehensive set of organizational workforce strategies.

Chang-EffectivenessRight Management’s Change Effectiveness offerings are designed to support change at all levels of the organization. Our change management programs assist executives to drive organizational change, empower managers to lead through change, and enable employees to navigate and respond to change appropriately.