ORGANIZATIONAL EFFECTIVENESS UNIT V ORGANIZATIONAL EFFECTIVENESS

DEFINITION Organizational effectiveness can be defined as the efficiency with which an association is able to meet its objectives. This means anorganization that produces a desired effect or an organization that is productive without waste. According to Paul.E. Mott, “Effectiveness is the ability of an organization to mobilise its centres of power fir action production and adaptation” According to Hannan and Freeman,” Organizational effectiveness is the degree of congruence between organizational goals and observable outcome”

Levels of organizational effectiveness Achievement of organizational objectives efficiently is the outcome of organizational effectiveness. But it depends on the contribution of the individuals, employees,groups and the total organization 1)Individual effectiveness: Individual effectiveness depends upon the employee’s positive attitude, commitment to and involvement in organizational activities. Individual’s contribution to organizational effectiveness depends on individual’s skills, abilities, aptitude,emotions, knowledge, attitude, motivation and stress 2) Group Effectiveness: Employees today prefer to work along with others in order to satisfy their individual needs and achieve organizational goals through the impact of synergy. Consequently, groups and employees in a group contribute much to the organizational success.Group contribution to organizational effectiveness depends upon group cohesiveness, leadership, group structure,status, rules and norms. 3)Organizational Effectiveness: Effective contributions of individual employees and groups results in organizational effectiveness. Organizational effectiveness depends upon individual’s contribution, group contribution in addition to environment,technology,strategic choice,organization structure,process and organizational culture

INDICATORS OF ORGANIZATIONAL EFFECTIVENESS Some of the major organizational indicators or performance indicators are as follows: 1)Innovation: The term ‘Innovation’ refers to making meaningful change to improve products, processes or organizational effectiveness and to create new value for stakeholders. Innovation involves the adoption of an idea, process,technology,product or business model that is either new to its proposed application. The outcome of innovation is a discontinuous or breakthrough change in results, products or processes. Innovation is also an indicator of organizational effectiveness. For eg: it helps in determining whether organization has introduced any new product or service or technology being adopted by the company is up to date or not etc 2) Results: It refers to outputs and outcomes achieved by an organization. Results are evaluated on the basis of current performance. Performance relative to appropriate comparisons, the rate, breadth and importance of performance improvement and the relationship of results measures to key organizational performance requirement. This ultimately reflects organizational effectiveness

INDICATORS OF ORGANIZATIONAL EFFECTIVENESS 3)Productivity: It refers to measures of the efficiency of resource use. It also indicate organizational effectiveness. Although the term often is applied to single factors, such as the workforce, machines, materials, energy and capital, the productivity concept applies as well to the total resources used in producing outputs. The use of an aggregate measure of overall productivity allows a determination of whether the net effect of overall changes in a process possibly involving resource trade off is beneficial. 4) Absence: If staff is absent form work they are unable to contribute to the performance of the organization making absence rates a fairly valid indicator of effectiveness. 5) Fiscal Indicators: Profit, financial turnover of organization and other financial indicators(Eg: return on investment, market share etc) are indicators of organizational effectiveness.

INDICATORS OF ORGANIZATIONAL EFFECTIVENESS According to Eccles, “The leading indicators of business performance cannot be found in financial data alone. Differences in economic conditions, competition in different sectors, rates of exchange, mergers and acquisition and accounting procedures can also have impact on financial performance of an organization. It may be possible to control for some of these external factors by ensuring that financial data are directly comparable from organization to organization 6) Perception of Corporate Performance: Perception of corporate performance by top management teams are highly correlated with actual financial performance data. This suggests that it may be possible to obtain subjective perceptual data on corporate effectiveness with some confidence, if this information can be obtained from a trusted and reliable(Eg: Senior Management) 7)Balance Scorecard: Balance scorecard approach of assessing performance see a variety of measures including bottom line indicators such as return on investment or market share as well as more subjective criteria such as

INDICATORS OF ORGANIZATIONAL EFFECTIVENESS perceptions of customers/shareholders of service quality,employee views of the culture of the company and ratings of the effectiveness of organizational processes being used in combination to provide a broad overviews of organizational effectiveness.

Achieving organizational effectiveness Organizational effectiveness cannot be measured by a single criteria, as it is a multidimensional concepts. It can be measured and achieved by the following approaches: 1)Goal Approach: The Goal Approach is also called rational-goal or goal-attainment approach, it has its origins in the mechanistic view of the organization. This approach assumes that organisations are planned, logical, goal-seeking entities and they are meant to accomplish one or more predetermined goals. Goal approach is worried with the output side and whether or not the organization attains its goals with respect to preferred levels of output. It sees effectiveness with respect to its internal organisational objectives and performance. Typical goal-attainment factors include profit and efficiency maximization. 2) System Resource Approach: The System Resource Approach sees an organisation as an open system. The organisation obtains inputs, participates in transformation processes, and generates outputs. This approach emphasizes inputs over output.

Achieving organizational effectiveness It sees most organizations as entities which function in order to survive, at the same time rivaling for scarce and valued resources. It assumes that the organisation consists of interrelated subsystems. If any sub-system functions inefficiently, it is going to influence the performance of the whole system. 3) Internal-Process Approach: It looks at the internal activities. Organizational effectiveness is assessed as internal organizational health and effectiveness. According to Internal-Process Approach effectiveness is the capability to get better at internal efficiency, co-ordination, commitment and staff satisfaction. This approach assesses effort as opposed to the attained effect. 4) Strategic Constituencies Approach: This approach suggests that an efficient organisation is one which fulfills the demands of those constituencies in its environment from whom it needs support for its survival. It assesses the effectiveness to satisfy multiple strategic constituencies both internal and external to the organization.

Achieving organizational effectiveness Strategic Constituencies Approach is ideal for organizations which rely highly on response to demands. The Strategic-constituencies approach takes explicitly into consideration that organizations fulfill multiple goals: each kind of organizational constituency (like proprietors, workers, consumers, the local community, etc.) is supposed to have distinct interests vis-à-vis the corporation, and will thus use different evaluation criteria