1. Organizational Effectiveness
MG345
Organizations & Environment
Tony Buono

2. Universal & Centurion Len Semp’s Centurion Jack Harris’ Universal
$750 m sales
550 employees
Profitability through:
Efficiency
Process Standardization
Detailed org charts
Narrowly defined jobs & functional responsibility
Control through command / compliance
Jack Harris’ Universal
$600 m sales
480 employees
Profitability through:
Effectiveness
Employee Satisfaction
No organization charts
Cross-training & inter-departmental collaboration
Control through commitment / mutual adjustment

3. Management Control & Organizational Effectiveness
Type of Work
Programmable Non-programmable
High
EFFECTIVENESS
Low
Command/
Compliance
Commitment/
Mutual Adjustment
MANAGEMENT CONTROL
ORIENTATION

4. Perspectives on Organizational Effectiveness
Organizations as Input-Process-Output Systems
Output
Input
Conversion
Process
Goal
Resource-based
(System Resources)
Internal Process
Excellence &
Competency
Efficiency
Strategic Constituencies
(Stakeholder Model)

5. Goal Approach
Official goals: Formally stated, abstract goals that are often difficult to measure
Operative goals: reflect the activities the organization is actually performing
Examples:
profitability  growth  market share
product quality  efficiency  diversification
employee welfare  financial stability  R&D
social responsibility  management development
Limitations:
multiple goals
identification of operative goals
subjective indicators of goal attainment

6. Perspectives on Organizational Effectiveness
Organizations as Input-Process-Output Systems
Output
Input
Conversion
Process
Goal
Resource-based
(System Resources)
Internal Process
Excellence &
Competency
Efficiency
Strategic Constituencies
(Stakeholder Model)

7. Strategic Constituencies Approach (Stakeholder Model)
Organizational effectiveness as the extent to which key stakeholders are satisfied with the firm’s performance.
Stakeholder
Owners/investors
Employees
Customers
Creditors
Local community
Suppliers
Government
Example Effectiveness Criteria
Financial return, shareholder value
Job satisfaction, compensation
Quality and cost of goods/services
Creditworthiness, company rating
Contribution to community affairs
Satisfactory transactions
Adherence to laws, regulations

8. The Balanced Scorecard: Integrating Goals & Stakeholders
Process-Centric
Organization
Results
Investor
Results
Internal
Focus
External
Focus
Customer &
Other Relevant
Stakeholder
Results
Employee
Results
People-Centric
Source: Adapted from Ulrich, et al, Results-Based Leadership (2000)

9. Perspectives on Organizational Effectiveness
Organizations as Input-Process-Output Systems
Output
Input
Conversion
Process
Goal
Strategic Constituencies
(Stakeholder Model)
Internal Process
Excellence &
Competency
Efficiency
Resource-based
(System Resources)

10. Resource-based Approach
Key assumption: to be effective organizations must obtain scarce and valued resources from its environment
Indicators:
Bargaining position ~ ability of an organization to capture
critical resources at a fair price
Ability to accurately perceive and interpret the external
environment
Ability of the organization to respond to changes in its
Limitations:
Focus on acquisition of resources ~ use? To
what end?

11. Perspectives on Organizational Effectiveness
Organizations as Input-Process-Output Systems
Output
Input
Conversion
Process
Internal Process
Excellence &
Competency
Efficiency
Goal
Strategic Constituencies
(Stakeholder Model)
Resource-based
(System Resources)

12. Internal Process Approach
Focus is on internal organizational health (harmony, competency, excellence) and efficiency (use of resources)
Indicators:
 Use of time, money, people
 Team spirit, group loyalty, teamwork
 Employee-management trust
 Open communication and information sharing
 Interdepartmental cooperation and collaboration
Limitations:
(1) Total output not evaluated
(2) Closed system orientation
(3) Measurement can be highly subjective

13. Perspectives on Organizational Effectiveness
Organizations as Input-Process-Output Systems
Output
Input
Conversion
Process
Goal Accomplishment
Strategic Constituencies
(Stakeholder Model)
Resource-based
(System Resources)
Internal Process
Excellence &
Competency
Efficiency

14. Competing Values Approach to Organizational Effectiveness
STRUCTURE
MEANS:
Adaptability
Flexibility
Flexibility
ENDS:
Valued HRs
Skilled Work Force
Open-System
Model
Human Relations
Model
ENDS:
Resource
Acquisition
External Support
MEANS:
Morale
Cohesive
Work Force
Internal
External
FOCUS
ENDS:
Productivity
Efficiency
MEANS:
Communication
Availability of Information
Rational-Goal
Model
Internal-Process
Model
ENDS:
Stability
Control
MEANS:
Planning
Goal Setting
Control

15. Universal & Centurion Len Semp’s Centurion Jack Harris’ Universal
$750 m sales
550 employees
Profitability through:
Efficiency
Process Standardization
Detailed org charts
Narrowly defined jobs & functional responsibility
Control through command / compliance
Jack Harris’ Universal
$600 m sales
480 employees
Profitability through:
Effectiveness
Employee Satisfaction
No organization charts
Cross-training & inter-departmental collaboration
Control through commitment / mutual adjustment

16. Mapping Organizational Effectiveness
STRUCTURE
Flexibility
Open-System
Model
Human Relations
Model
Universal
Internal
External
FOCUS
Centurion
Rational-Goal
Model
Internal-Process
Model
Control

17. Factors Influencing Organizational Effectiveness Criteria
Top Management Influence
Value Judgments & Leader Choices
Organizational Culture & Structure
Goal Measurability
Routine internal tasks  measurable efficiency goals
Non-routine internal tasks  output goal criteria (e.g., quality, growth) & internal processes (e.g., satisfaction, collaboration)
Environmental Conditions
Uncertainty & Resource Scarcity  focus on resource-based (input) & internal efficiency criteria
Turbulence & Change  emphasis on stakeholder satisfaction & internal processes (e.g., competency, adaptability)