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Organization Effectiveness

Organization Effectiveness. 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

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Organization Effectiveness

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  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 Organization Internal activities and processes Resource Inputs 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 ofEffectiveness 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 External (organization) Internal (people) 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. ORGANIZATION A ORGANIZATION B Effectiveness Valuesfor Two Organizations STRUCTURE FLEXIBILITY Human Relations Emphasis Open Systems Emphasis F O C U S INTERNAL (People) EXTERNAL (Organization) Internal Process Emphasis RationalGoal Emphasis CONTROL

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