ORGANIZATIONAL EFFECTIVENESS

HISTORICAL OPINIONS ABOUT ORGANIZATIONAL EFFECTIVENESS

1. FREDERICK TAYLOR 2. HENRI FAYOL 3. ELTON MAYO

FREDERICK TAYLOR

EFFECTIVENESS WAS DETERMINED BY FACTORS SUCH AS PRODUCTION MAXIMIZATION, COST MINIMALIZATION, TECHNOLOGICAL EXCELLENCE, Etc.

HENRI FAYOL
EFFECTIVENESS IS A FUNCTION OF CLEAR AUTHORITY AND DISCIPLINE WITHIN AN ORGANIZATION

ELTON MAYO
EFFECTIVENESS IS A FUNCTION OF PRODUCTIVITY RESULTING FROM EMPLOYEE SATISFACTION

TIME DIMENSION

NEAR FUTURE Approx. 1 year

INTERMEDIATE FUTURE

DISTANT FUTURE Approx. 5 years

The organization must be

1. EFFECTIVE in The organization accomplishing its must be purpose(s) EFFICIENT in the 4. ADAPTIVE to new opportunities acquisition and use and obstacles of scarce resources 5. CAPABLE OF A SOURCE OF DEVELOPING SATISFACTION the ability of its to its owners, members and of employees, itself customers and clients, and society.

EFFECTIVENESS CRITERIA

2.

The organization must be

6. CAPABLE OF SURVIVAL in a world of uncertainties.

3.

ORGANIZATIONAL EFFECTIVENESS
MEETING ORGANIZATIONAL OBJECTIVES AND PRVAILING SOCIETAL EXPECTATIONS IN THE NEAR FUTURE, ADAPTING AND DEVELOPING IN THE 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

INPUTS

TRANSFORMATION

OUTPUTS

GOAL APPROACH

Flow Charts of Approaches to Organizational Effectiveness Internal Process Approach

INPUTS

TRANSFORMATION

OUTPUTS

INTERNAL PROCESS APPROACH

Flow Charts of Approaches to Organizational Effectiveness System Resource Approach

INPUTS

TRANSFORMATION

OUTPUTS

SYSTEM RESOURCE APPROACH

Flow Charts of Approaches to Organizational Effectiveness Constituency Approach

INPUTS

TRANSFORMATION

OUTPUTS

STRATEGIC CONSTITUENCIES APPROACH

COMPARISON OF THE FOUR OE APPROACHES

Approach Definition
An organization is effective to the extent that:
Goal attainment it accomplishes its stated goals

When Used
Preferred when:

goals are clear, time bound and measurable

System Resource

it acquires needed resources

a clear connection exists between inputs and outputs

constituencies have powerful influence on the organization, and the organization must respond to demands costs, outputs & satisfaction are easily measurable

Constituencies

all strategic constituencies are at least minimally satisfied

Internal Processes

combines internal efficiency and affective health

OE Criteria for Selected Constituencies

Constituency
Owners Employees Customers Suppliers Creditors Unions

Typical Criteria

Return on Investment; growth in earnings Compensation; fringe benefits; job satisf. Satisf. w/price, quality, service Satisf. w/payments, future sales Satisf. w/debt payments 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 function well 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-being and efficiency of employees. External focus reflects an emphasis on the well-being of the organization itself and its fit with its environment.

Competing Values Dimensions II

Structure: whether stability versus flexibility is the dominant structural consideration.

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

Dimensions of Effectiveness
Structure
Flexibility

I
Focus Internal

II
External

III
Control

IV

Four Models of Effectiveness

Quadrant I : Human Relations Model internal Focus and flexible structure. Management concern is on the development of human resources. Employees are given opportunities for autonomy and development. Management works toward sub-goals of cohesion, morale, and training opportunities. Organizations using this are more concerned with employees than the environment.

Four Models of Effectiveness II

Quadrant II: Open Systems Model Combination of external focus and flexible structure. Managements goals are primarily growth and resource acquisition. Sub-goals are flexibility, readiness, and positive evaluation by the external environment. Dominant value is establishing a good relationship with the external environment to grow and acquire resources. Similar to the Systems Resource Model.

Four Models of Effectiveness III

Quadrant III: Internal Process Model Reflects the values of internal focus and structural control. Seeks a stable organizational setting that maintains itself in an orderly way. Well established in environment and just wish to keep their current position. Sub-goals include mechanisms for efficient communication, information management, and decision-making.

Four Models of Effectiveness IV

Quadrant IV: Rational Goal Model Reflects Management values of structural control and external focus. Primary goals are productivity, efficiency, and profit. Organization wants to achieve output goals in a controlled way. Sub-goals include internal planning and goal-setting, which are rational management tools. Similar to the Goal Approach.

Competing Values
Four different opposing value sets within the organization. Exist simultaneously, and the right balance for the organization is subject to managerial discretion. Emphasis may change over time, especially as the organization evolves through its life cycle.

Examples: hospitals, airlines