ORGANIZATIONAL EFFECTIVENESS

HISTORICAL OPINIONS ABOUT ORGANIZATIONAL

EFFECTIVENESS

1. FREDERICK TAYLOR2. HENRI FAYOL3. ELTON MAYO

FREDERICK TAYLOR

EFFECTIVENESS WAS DETERMINED BY FACTORS SUCH AS PRODUCTION

MAXIMIZATION, COSTMINIMALIZATION, TECHNOLOGICAL

EXCELLENCE, Etc.

HENRI FAYOL

EFFECTIVENESS IS A FUNCTION OF CLEARAUTHORITY AND DISCIPLINE WITHIN AN

ORGANIZATION

ELTON MAYO

EFFECTIVENESS IS A FUNCTION OF PRODUCTIVITY RESULTING FROM

EMPLOYEE SATISFACTION

NEARFUTURE

INTERMEDIATEFUTURE

DISTANTFUTURE

TIME

DIMENSIONApprox.1 year

Approx. 5 years

EFFECTIVENESS

CRITERIA

The organizationmust be1. EFFECTIVE in

accomplishing its purpose(s)

2. EFFICIENT in the acquisition and use of scarce resources

3. A SOURCE OF SATISFACTION

to its owners, employees, customers and clients, and society.

The organization must be4. ADAPTIVE to new opportunities and obstacles5. CAPABLE OF DEVELOPING the ability of its members and of itself

The organizationmust be6. CAPABLE OF SURVIVAL in a world of uncertainties.

ORGANIZATIONAL EFFECTIVENESS

MEETING ORGANIZATIONAL OBJECTIVES ANDPRVAILING SOCIETAL EXPECTATIONS IN THE

NEAR FUTURE, ADAPTING AND DEVELOPING INTHE INTERMEDIATE FUTURE, AND SURVIVING

IN THE DISTANT FUTURE.

APPROACHES TO MEASURING ORGANIZATIONAL EFFECTIVENESS

• Goal Approach: Effectiveness is the ability to excel at one or more output goals.

• Internal Process Approach: Effectiveness is the ability to excel at internal efficiency, coordination, motivation, and employee satisfaction.

• System Resource Approach: Effectiveness is the ability to acquire scarce and valued resources from the environment.

Approaches to Measuring Org. Effectiveness, continued

• Constituency Approach: Effectiveness is the ability to satisfy multiple strategic constituencies both within and outside the organization.

• Domain Approach: Effectiveness is the ability to excel in one or more among several domains as selected by senior managers.

Flow Charts of Approaches to Organizational Effectiveness –

Goal Approach

TRANSFORMATIONINPUTS OUTPUTS

GOAL APPROACH

Flow Charts of Approaches to Organizational Effectiveness –

Internal Process Approach

TRANSFORMATIONINPUTS OUTPUTS

INTERNAL PROCESS APPROACH

Flow Charts of Approaches to Organizational Effectiveness –

System Resource Approach

TRANSFORMATIONINPUTS OUTPUTS

SYSTEM RESOURCE APPROACH

Flow Charts of Approaches to Organizational Effectiveness –

Constituency Approach

TRANSFORMATIONINPUTS OUTPUTS

STRATEGIC CONSTITUENCIES APPROACH

COMPARISON OF THE FOUR OE APPROACHES

Approach Definition When Used

An organization is effective Preferred when: to the extent that:

Goal attainment it accomplishes its stated goals goals are clear, time bound and measurable

System Resource it acquires needed resources a clear connection exists between inputs and outputs

Constituencies all strategic constituencies constituencies have powerful are at least minimally influence on the organization, satisfied and the organization must respond to demands

Internal Processes combines internal efficiency costs, outputs & satisfaction and affective health are easily measurable

OE Criteria for Selected Constituencies

Constituency Typical Criteria

Owners Return on Investment; growth in earnings Employees Compensation; fringe benefits; job satisf. Customers Satisf. w/price, quality, service Suppliers Satisf. w/payments, future sales Creditors Satisf. w/debt payments Unions Satisf. w/competitive wages & benefits; satif. working conditions, fairness in bargaining Local Communities Involvement in local affairs; environmental damage Government Agencies Compliance w/laws, avoidance of penalties

The Contradictions Model of Organizational Effectiveness

The idea of trying to characterize a whole organization as totally effective or ineffective is problematic. In any complex

organization there may be parts of the organization that functionwell and suggest effectiveness while other aspects of that same

organization perform poorly.

Four Central Assumptions of the Contradictions Model

1. Organizations face complex environments that place multiple and conflicting demands and constraints on them. It may not be possible to succeed in meeting all the environmental conditions an organization faces.2. Organizations have multiple, conflicting goals. It is impossible to maximize achievement of all goals.3. Organizations face multiple internal and external stakeholders or constituent groups that make competing or conflicting demands. It may be impossible to satisfy all groups of people who express interest in a company.4. Organizations must manage multiple and conflicting time demands. Satisfying short- or long-term demands at the expense of the other may result in sub-optimal performance.

Competing Values Model

Organizational goals and performance are defined by top and middle management. By

comparing the diverse effectiveness indicators used by managers and researchers, Quinn & Rohrbaugh looked for underlying similarities

and found underlying dimensions of effectiveness criteria that reflected competing management

values in organizations.

Competing Values Dimensions I

Focus: whether dominant values concern issues that are internal to the organization or external to it.

Internal focus reflects management concern for well-beingand efficiency of employees. External focus reflects anemphasis on the well-being of the organization itself and its“fit” with its environment.

Competing Values Dimensions IIStructure: whether stability versus flexibility is the dominant structural consideration.

Stability reflects a management value for efficiencyand top-down control, while flexibility representsa management value for learning and change.

Dimensions of EffectivenessStructureFlexibility

Control

Focus Internal External

I II

III IV

Four Models of Effectiveness

Quadrant I : Human Relations Model – internalFocus and flexible structure. Managementconcern is on the development of humanresources. Employees are given opportunitiesfor autonomy and development. Managementworks toward sub-goals of cohesion, morale, andtraining opportunities. Organizations using thisare more concerned with employees than theenvironment.

Four Models of Effectiveness IIQuadrant II: Open Systems Model – Combinationof external focus and flexible structure. Management’s goals are primarily growth andresource acquisition. Sub-goals are flexibility,readiness, and positive evaluation by the externalenvironment. Dominant value is establishinga good relationship with the external environmentto grow and acquire resources. Similar to theSystems Resource Model.

Four Models of Effectiveness IIIQuadrant III: Internal Process Model – Reflectsthe values of internal focus and structuralcontrol. Seeks a stable organizational setting thatmaintains itself in an orderly way. Wellestablished in environment and just wish to keeptheir current position. Sub-goals includemechanisms for efficient communication,information management, and decision-making.

Four Models of Effectiveness IVQuadrant IV: Rational Goal Model – ReflectsManagement values of structural control andexternal focus. Primary goals are productivity,efficiency, and profit. Organization wants toachieve output goals in a controlled way.Sub-goals include internal planning andgoal-setting, which are rational managementtools. Similar to the Goal Approach.

Competing Values

Four different opposing value sets within theorganization. Exist simultaneously, and the“right” balance for the organization is subjectto managerial discretion.

Emphasis may change over time, especially as theorganization evolves through its life cycle.

Examples: hospitals, airlines