ORGANIZATIONAL EFFECTIVENESS

HISTORICAL OPINIONS ABOUT ORGANIZATIONAL EFFECTIVENESS FREDERICK TAYLOR HENRI FAYOL ELTON MAYO

MINIMALIZATION, TECHNOLOGICAL EXCELLENCE, Etc. 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 The organization must be The organization must be NEAR FUTURE INTERMEDIATE FUTURE DISTANT FUTURE Approx. 1 year Approx. 5 years The organization must be 1. EFFECTIVE in accomplishing its purpose(s) EFFICIENT in the acquisition and use of scarce resources A SOURCE OF SATISFACTION to its owners, employees, customers and clients, and society. The organization must be 4. ADAPTIVE to new opportunities and obstacles 5. CAPABLE OF DEVELOPING the ability of its members and of itself EFFECTIVENESS CRITERIA The organization must be 6. CAPABLE OF SURVIVAL in a world of uncertainties.

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 OUTPUTS TRANSFORMATION 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 function well and suggest effectiveness while other aspects of that same organization perform poorly.

Four Central Assumptions of the Contradictions Model 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. Organizations have multiple, conflicting goals. It is impossible to maximize achievement of all goals. 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. 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 II Internal External Focus III IV Control

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. Management’s 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