1. Organization Effectiveness

2. Early Approach to Effectiveness (1950s)
The degree to which organization realized its goals
Definition ambiguous
Who’s goals?...which stake holders
Short term/long term
The goal of survival….
Organizations don’t die
They are reinvented by being merged, sold off, reorganized or totally moving in to new areas of endeavour

3. 1960s-70s
Identified 30 different criteria of OE (refer table 3-1,p 50)
Criteria ranged from general measures (quality, efficiency, stability) to more specific measures (accident rate, T&D effectiveness, managerial task skills)
Broad conclusions
No single definition
Criteria varied from sector to sector, interest of the evaluator
OE requires multiple criteria of evaluation
Different functions of the organization have to be evaluated differently
OE must consider both means (process)& ends (outcomes)

4. In Search of Excellence-Peters & Waterman
Studied 42 companies which were effective and well managed
Made the following observations
Had a bias for action and getting things accomplished
Stayed close to the customers and understood their needs
Allowed autonomy to employees and fostered entrepreneurial spirit
Increased employee productivity through employee participation
Employees actively handled problems at all levels
Stayed close to business they knew
Structure simple with minimal number of people in support systems
Blended tight centralized controls in for protecting the companies core values with loose controls in other areas to foster risk taking and innovation

5. Goal Attainment Approach
Organizations are there to achieve one or more specified goals
Effectiveness is determined in terms of achievement of ends than means
It is the bottom line that counts
E.g. profit maximization, curing a patient, winning a war
Most explicit in MBO
Specific goals
Jointly established by superiors and subordinates
Actual performance measured and compared against the goals

6. Goal Attainment Approach- Problems
Problem of operationalization
E.g. whose goals? Which stake holder
Short term goals different from long term goals
Multiple goals can also compete with each other (high quality vs. low cost)

7. Systems Approach Input through put output
Goal attainment is only a partial understanding of effectiveness
Goals are only outputs and organizations are also inputs and through put

8. Examples of Goals Profitability Growth Market Share
Social Responsibility
Employee welfare
Product quality and service
Research and development
Diversification
Efficiency
Financial stability
Resource conservation
Management development

9. Contingency Approaches to the Measurement of Organizational Effectiveness
External Environment
Resource
Inputs
Organization
Internal
activities
and
processes
Product and
Service
Outputs
Resource-based
approach
Internal
process
approach
Goal
approach

10. Input side of Systems Theory: Resource Based Approach
Effectiveness is acquiring and managing scarce and valued resources
Indicators of Effectiveness
Bargaining position: to obtain financial, human, technological and knowledge
The ability to use tangible (supplies, people) and intangible (knowledge, culture) resources in day to day organizational activities to obtain superior performance
Ability to respond to changes in the environment for acquisition of resources

11. Transformation Side of Systems Theory: Internal Process Approach
Effectiveness is measured as organizational health and efficiency
Employees happy and satisfied
Communication between depts. (horizontal and vertical)
Strong corporate culture and work climate
Team spirit and loyalty
Reward for performance

12. Strategic Constituencies (Stakeholders) Approach
Effective Organization is one that satisfies the demands of those constituencies in the environment from whom it requires continued support for existence
Is different from systems view for it seeks to appease only those stake holders who can threaten the organization’s survival
Organizations are political arenas where vested interests compete for control of resources
Successful organizations are those who can satisfy the critical constituencies

13. Competing Values Approach
The criteria used in assessing an organizations effectiveness depend on who you are and the interests you represent
E.g.. Stock holders, employees, suppliers may view the same organization differently
Assumption that there is no best criteria for measuring effectiveness
Depends on ones values, preferences, and interests.

14. Competing Values Approach
Based on three basic sets of competing values
Flexibility (innovation, adaptation, change) vs. control (stability, order, predictability)
People ( well-being and development of people or concern for people) vs. organization (development of organization or concern for productivity and task accomplishment)
Means (stressing on internal processing, long term) vs. ends ( stressing on final outcomes and short comes)

15. Four Models of Effectiveness Values
STRUCTURE
Flexibility
Human Relations Emphasis
Primary Goal: human resource
development
Subgoals: cohesion, morale, training
Open Systems Emphasis
Primary Goal: growth,
resource acquisition
Subgoals: flexibility, readiness,
external evaluation F O C U S
Internal
(people)
External
(organization)
Internal Process Emphasis
Primary Goal: stability, equilibrium
Subgoals: information management,
communication
Rational Goal Emphasis
Primary Goal: productivity, efficiency,
profit
Subgoals: planning, goal setting
Control

16. Effectiveness Values for Two Organizations
STRUCTURE
FLEXIBILITY
Human Relations
Emphasis
Open Systems
Emphasis
ORGANIZATION A
ORGANIZATION B F O C U S
INTERNAL
(People)
EXTERNAL
(Organization)
Internal Process
Emphasis
Rational Goal
Emphasis
CONTROL