ORGANISATIONAL EFFECTIVENESS

MEANING OF ORGANIZATIONAL EFFECTIVENESS

 

Organizational effectiveness is the extent to which an organization achieves its goals with the given resources and means. means. Thus, organizational effectiveness reflects how well the organization is equipped to: to: Survive in the modern competitive business world by successful coping and Grow and develop in future through creative adaptation strategies. strategies.

EFFECTIVENESS AND EFFICIENCY

Effectiveness and efficiency are generally used very closely or interchangeably, although both these terms have very clear and separate meanings. meanings. Effectiveness is a multidimensional concept which cant be measured by a single criterion generally referred to as the degree to which predetermined operational goals are achieved But efficiency can be measured by the input output ration. ration. This distinction is very important to explain why some organizations are effective but highly inefficient or highly efficient but ineffective. ineffective.

APPROACHES TO EFFECTIVENESS

1.

Goal attainment approach

The goal approach is the traditional new of the concept of effectiveness and widely used by organizational theorists. theorists. (i) The complex organizations have an ultimate goal towards which they are striving and (ii) That the ultimate goal can be identified empirically and progress toward it can be measured. measured. It has noted a general tendency on the part of personal and industrial psychologists to accept as ultimate criterion of organizational success of the following: following: 1. Organizational productivity 2. Net profit. profit. 3. The extent to which the organization accomplishes its various missions. missions. 4. Success of the organization in maintaining or expanding itself. itself.

It has suggested the following variables for measuring the organizational effectiveness: 1. Quality 2. Productivity 3. Readiness 4. Efficiencies 5. Profit or return 6. Utilization of environment 7. Stability 8. Turnover or retention 9. Accidents 10. Morale 11. Motivation 12. Satisfaction 13. Internationalization of organizational goals 14. Conflict-cohesion Conflict15. Flexibility adaptation 16. Evaluation by external entities.

The activities in which an organization must engage to help in determining what the organizational goal might be, therefore, what performance must be and therefore, effectiveness. effectiveness. These activities are: are: 1. Procurement of resources 2. Making efficient use of inputs relative to output 3. Producing services or goods 4. Performing technical and administrative tasks rationally 5. Investing in the organization. organization. 6. Conforming to ethical codes of behaviour 7. Satisfying the varying interests of different groups with whom the organization has interactions. interactions.

2.System resource approach

The system resource approach leads us to different way of thinking which suggests the analysis of relationship between the organization and its environment. environment. It includes the following points in it: it: 1. The first criteria is the adaptability of the organization to the system. How able is the organization in solving its system. problems and reacting with the flexibility to changes is a very important consideration in determining the organizations effectiveness. effectiveness. 2. The next criteria is that whether the employees of the organization have a sense of identify. The employees identify. can identify with the organization if they have knowledge or insight about the goals of the organization. It is also organization. very important to know how the outsiders perceive them. them.

3. The organizational effectiveness will also depend upon the capacity of organization to test reality. This implies reality. ability to search out, accurately perceive and correctly interpret properties of the environment. environment. 4. The last criteria for determining organizational effectiveness is to check the state of integration among the subparts of the total organization such that various parts are not working at cross purposes. purposes.

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3. 4.

An organization should follow the following points in order to be effective. effective. The organization should have favourable relations with the environment to ensure continued availability of inputs and positive acceptance of outputs. outputs. This approach also emphasizes flexibility of response of the organization to changing environment; the environment; efficiency with which the transformation takes place in the organization, the level of employee job satisfaction and the clarity of communication etc. etc. Managers have responsibility to understand the nature of the environment and to set the realistic goals accordingly. accordingly. The organization should be able to successfully adapt structure, technologies and policies with the changing environment to facilitate the achievement of organizational goals. goals.

3.Strategic constituency approach

In strategic constituency approach it is the control of the critical constituencies which will automatically bring about effectiveness in the organization. organization. Owner Managers Employees Customers Suppliers Government This approach integrates both the goal approach and systems approach to effectiveness. In the strategic or the multiple effectiveness. constituency approach, the objectives of all the relevant constituencies are stated and compared with the actual attainment, just like in the case of goal approach. Just like the approach. systems approach, the objectives of the constituencies that supply the necessary organizational resources (customers, suppliers, Government etc.) are dealt with in this approach etc. also. also.

4.Maximization or optimization approach

Maximization and optimization approaches help us to find out to what extent an organization can become effective. effective. MAXIMIZATION OR THE ECONOMIC MAN In business organizations the decisions of the economic man will be directed towards goal achievement which is, generally, profit maximization. The situation of maximization is not always possible because of The situation of maximization is not always possible because Sometimes it may destructive from long run point of view.

OPTIMIZATION OR ADMINISTRATIVE MAN APPROACH

Administrative man approach is in contrast to the economic man approach. In contrast to perfect rationality or economic approach. man. man. This approach emphasizes optimization in decision making which satisfies the administrative man. That is why, man. he tries for satisfactory alternatives only. only. Optimization : satisfies rather than maximizes Organization makes his choice first without determining all possible alternative and without ascertaining that these are in fact all the alternatives

Behavioural approach
Behavioural approach assumes that the extent to which individual and organizational goals are integrated affects the degree of effectiveness. effectiveness. The different types of situations based on the degree of compatibility of individual and group goals may be: be: 1. Low Degree of Integration. Integration. 2. High Degree of Integration. Integration. 3. No Integration

FACTORS AFFECTING ORGANIZATIONAL EFFECTIVENESS

The above mentioned approaches adopt different criterion for measuring organizational effectiveness. effectiveness. That is way, a very important and difficult task for the manager, who is analyzing the organization, is to identify the factors underlying organizational effectiveness. effectiveness. The major set of factors or variables that potentially have their influence on effectiveness are: are: 1. Organizational characteristics 2. Environmental characteristics 3. Employee characteristics 4. Managerial policies and practices

1.Organizational Characteristics

Organizational characteristics which affect the effectiveness are of two types: types: 1.1 Organizational structure and 2.2 Technology

1.1 Organizational Structure

Organizational structure influences the effectiveness in the following ways: ways: Structure in terms of functional specialization, size centralization of decision making and even formalization is likely to increase productivity and efficiency. efficiency. Job satisfaction of the employees is also related to the organizational structure, equitable division of work and delegation or authority and responsibility and proper direction are likely to generate the feeling of satisfaction among people at work. work.

1.2 Technology
Technology and organizational structure are interrelated. interrelated. The type of technology determines the nature and structure of organization. organization. Change of technology will require a lot of changes in the organization in the form of: of: a. Change in operation e.g. from labor-intensive to capital laborintensive b. Shifting of employees to either different departments within the same factory or to some other factory of the organization. organization. c. Change in span of control d. Creating of new and winding up of the few departments. departments. e. Change in them materials which are used f. Retraining and provision of more knowledge about the latest technology to the workers. workers. If the organization fails to change the structure according to needs of technology, it will never prove to be effective. effective.

2.Environmental Characteristic
Management should have experts who will suggest adjustments which are to be made in the organizational set up to comply with environmental changes. changes. 1. External environment 2. Internal environment

3.Employee Characteristics
Human factor is the most important factor which influences the goal achievement of organizations. If organizations. there is a close integration among the individual and organizational goals, the organizational will be highly effective as explained in the behavioural approach to the effectiveness. effectiveness. If the organization, without compromising with its fundamental programmes and policies, could readjust to accommodate legitimate aspirations of the employees, it should do so the achieve effectiveness. In effectiveness. case there is a conflict between the individual and the group goals and the issued relate to the very existence of the organization, the organization will have to take a firm stand to deal with the situation. To help in achieving situation. the effectiveness of the organization, the employees should have the following characteristics: characteristics:

a. They should be attracted towards and satisfied with the organization. organization. b. They should be committed to the organization. organization. c. Their motives, goals and needs should not be in conflict with the organizational goals. goals. d. The employees should be able and knowledgeable. knowledgeable. e. They should have their role clarity. clarity. f. The job turnover should be very low, if any. any.

4.Managerial Policies and Practices

1. 2. 3. 4.

Strategic Goal Setting Resource Acquisition and Utilization. Leadership and Decision Making Performance Environment

EFFECTIVENESS THROUGH ADAPTIVE COPING STYLE (EDGER SCHEIN) (EDGER SCHEIN)

1. Sensing of Change. The first basic stage in the cycle is Change. the sensing of change in some part of the internal and external environment. Failure to perceive changes in the environment. environment or incorrectly perceiving the changes is the major factor for the failure of the organization to cope with environment. The organizations should have environment. effective Management Information System for effectively coping with the environment. environment. Importing the Relevant Information. The second stage Information. in the cycle is the import of relevant information about ht e change into those parts of the organization that can act upon it. However, it is very difficult to decide which inputs it. are to be taken from the environment and organizations often fail to perceive the relevant inputs, particularly the information. information.

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Changing Conversion Process: Inputs are taken by the Process: organization from the environment for further processing, this is known as the conversion process. The conversion process. process should be modified according to environmental requirements as indicated by the information. information. Stabilizing Internal Changes: The fourth stage of the Changes: cycle is to stabilize the internal changes while taking care of undesired changes in related systems which have resulted from the desired changes. This is necessary changes. because each sub system in the organization is dependent upon others and change in one may affect others also but this effect may be positive or negative. negative. Exporting New Outputs: When the internal change is Outputs: established, the organization becomes in a position to export new outputs which are in accordance with the environmental requirements. Some different and requirements. additional attempts may be required for exporting the new outputs. outputs. If the organization fails to adopt the new methods, it may become ineffective. ineffective.

6. Obtaining Feedback: The last stage in the cycle is the Feedback: obtaining of feedback on the outcome of the changes for further sensing of the state of the external environment and the degree of integration of the internal environment. This environment. stage is very much related with the first stage because the process of sensing may be the same. same. Failure at any of these stages may result into ineffectiveness. ineffectiveness.