Organisational effectiveness

 Organizational Effectiveness

Organizational effectiveness measures how well an organization achieves its objectives with the resources available, without placing undue strain on its members. It is crucial for organizations to differentiate between efficiency and effectiveness. While both are important, they represent different aspects of organizational performance:

• Effectiveness: Refers to the degree to which predetermined goals are achieved. It considers a wide range of internal and external factors, focusing more on human values and activities within the organization.
• Efficiency: Pertains to the internal workings of an organization and is measured as the ratio of inputs to outputs. It is more concerned with the technological side of operations.

Approaches to Organizational Effectiveness

• Goal Approach:
  • Concept: Effectiveness is measured by the attainment of organizational goals, such as profitability, productivity, quality, employee morale, and satisfaction.
  • Variables: Includes quality, productivity, efficiency, profit, turnover, accidents, morale, motivation, and satisfaction.
  • Limitations: Difficulty in identifying real goals versus ideal goals, and the approach's narrow focus on goal attainment.
• Functional Approach:
  • Concept: This approach views organizational effectiveness in terms of how well the organization serves the larger society or system it is part of.
  • Focus: Aims to align organizational goals with societal benefits, emphasizing the organization’s contributions to the broader system.
  • Limitations: Assumes organizations always serve societal goals, which may not be true, especially when organizations have the autonomy to pursue independent actions.
• System Resource Approach:
  • Concept: Emphasizes the interdependence between the organization and its environment, focusing on acquiring and utilizing valuable resources like physical, economic, and human resources.
  • Process: Involves input-output transactions with the environment, highlighting the organization's ability to secure necessary resources.
  • Limitations: Similar to the goal approach, as resource acquisition is ultimately tied to achieving organizational goals.

Organizational Effectiveness Model

To enhance organizational effectiveness, it is helpful to consider three levels:

• Individual Level: Effective individuals are crucial as they directly contribute to organizational goals. Personal goals should align with organizational objectives to maximize effectiveness.
• Group Level: Teams and groups within the organization need to function cohesively, with collective efforts directed towards achieving organizational goals.
• Organizational Level: The overall structure, strategy, and culture of the organization should support the achievement of its objectives.

Factors Affecting Organizational Effectiveness

Rensis Likert identified three main variables influencing organizational effectiveness:

• Causal Variables:
  • Definition: Independent variables that can be altered by the organization and its management, directly influencing organizational outcomes.
  • Examples: Policies, management decisions, leadership strategies, and organizational behaviors.
• Intervening Variables:
  • Definition: Reflect the internal state and health of the organization, mediating the relationship between causal variables and outcomes.
  • Examples: Employee attitudes, motivations, performance goals, and the overall capacity for effective interaction and decision-making.
• End-Result Variables:
  • Definition: Dependent variables that indicate the achievements of the organization.
  • Examples: Productivity, costs, losses, and earnings.

Inter-Relationship of Variables

The causal, intervening, and end-result variables are interrelated in a complex network. Improving causal variables (like management strategies and policies) positively impacts intervening variables (such as employee attitudes and motivations), which in turn enhances end-result variables (like productivity and earnings). Therefore, focusing on improving causal variables is key to achieving overall organizational effectiveness.