EFFECTIVENESS

Effectiveness Vs Efficiency
Effectiveness

Efficiency

It is a broad concept

It is a narrow concept

It takes into account various factors both Its focus is on internal factors alone
within the organization as well as outside
It is concerned with the degree to which It is concerned with amount of resources
predetermined goals are achieved
used to produce a particular unit of output
Its focus is on the achievements of goals Its focus is on how economically the goaland objectives
oriented activity is performed. i.e. ratio of
output to input
Its thrust is on the human and social facets It concentrates on the economic and
of the enterprise
technical facets of the enterprise
It is organic

It is inorganic

Effectiveness Vs Efficiency
Effectiveness

Efficiency

It is modern and in tune to the It is archaic

contemporary needs of the society
Its thrust is on developing systems and It emphasizes the development of
procedures that do not pout stress on systems and procedures that result in
human beings (human engineering).
maximum efficiency (techno-economic
engineering)
It is complex
quantifiable

and

not

Its focus is on quality of life

easily It is simple and easily quantifiable

It is materialistic growth oriented

It presumes the existence of matrix There is existence of line structure,

structure, democratic leadership style autocratic leadership style and reward
and committed people
oriented people

Organizational Effectiveness

Degree to which an organization realised

its goals

High Goal Attainment

Low Use of Resources

Low Goal Attainment

High Use of Resources

High Goal Attainment

High Use of Resources

High

Low Goal Attainment

Low Use of Resources

Low

EFFICIENCY

Effectiveness and Efficiency in

Organizations

Low

High

EFFECTIVENESS

SNEHA SHARMA P-41

ORGANIZATIONAL
EFFECTIVENESS
Type of
Organization

Major Function

Example

OE criteria

Habit

Replicating standard Factories

uniform product

Number of
products

Problem solving

Creating new ideas

R & D, Design and Number of ideas

Engineering

Indoctrinating

Changing peoples
attitude and
behaviour

Universities,
Number of clients
prisons,
leaving
Psychiatric centers

Service

Distribution of
services

Military,
Government, IT
industry

Extent of services
performed

Result Oriented Approach

Process Oriented Approach

Systems approach

Politically Motivated Approach

Goal attainment apprach

Strategic constituencies approach

Competing values approach

Result Oriented
Approach

Organizations have goals and work towards

achieving them.
These goals are clearly identified and
defined.
These goals are equally understood by
every one in the organization.
All employees must accept and subscribe to
these goals.
Progress towards goal must be measurable.

Process Oriented
Approach

Organizations are made up of a number

of system and subsystems which are in
an independent and inter dependent
relationships with each other.
Organizations must maintain meaningful
relationship with suppliers and other
who have control over input.
Internal allocation of input resources has
to be need based.

It establishes ratios
Input/output
Transformation/Input
Transformation/Output
Change in Input /Input

Systems Approach(Process)
Variables

Business

Hospital

College

O/I

ROI

Total patients
treated

Faculty
Publications

T/I

Inventory
Turnover

Capital
Investment in
medical
technology

Cost of MIS

T/O

Sales Volume

Total no of
patients
discharged

Number of
students
graduated

I/I

Change in WC

Change in
Change in
patients treated student
enrolment

Politically Motivated Approach

Organizations are political entities. They must

respond to the varying needs of its
constituents.

Followed from the above organizations cannot

have a single goal.
many goals as the variety of stake holders.
Goals have to vary according to the
constituents requirements.

Stakeholders
Constituency

Typical OE Criteria

Owners

ROI, growth in earnings

Employees

Compensation, incentives

Customers

Price, quality, Service

Suppliers

Payments, future potential

Creditors

Ability to payback debt

Unions

Competitive wages and benefits, working

conditions

Local Community
Officials

Involvement in local activities, damage to

local environment

Government
Agencies

Compliance with Laws

How can manager apply

this?

14

3 major steps
Asking members to identify the constituents
Evaluate the list
How dependent on it our organization is?
Does it have considerable power over us?
Are there alternatives?
Identifying the expectations
What do they want of it?

MEGHNA RAJPURA P-45

Competing values
approach

The same constituents may have

conflicting interest:

Hence an individual may be a share holder of

an organization and hence may expect larger
dividends.
However he may also be the consumer of the
products of this organization and may expect
better quality and cheaper price. Hence
organizations have to perform a balancing act
to satisfy various demands of the same
stakeholders.

Competing Values Approach

16

The Competing Values Approach is

the criteria you value and use in
assessing an organizations
effectiveness.

SNEHA SHARMA
P-41
MEGHNA RAJPURA P-45

Criteria
17

Return on investment

Market share

New product innovation

Job security

SNEHA SHARMA
P-41
MEGHNA RAJPURA P-45

Assumptions
18

No best criterion for evaluating an

organization effectiveness.

There cannot be one single goal that

everyone can agree upon.

The concept of OE is subjective.

SNEHA SHARMA
P-41
MEGHNA RAJPURA P-45

Problem to the approach

19

This approachs perception is on

how well an organization is doing
on the criteria rather than
clarifying in which criteria the
constituencies are emphasizing

SNEHA SHARMA
P-41
MEGHNA RAJPURA P-45

Flexibility

Mean
s
People

Organizati
on
Ends

Control

Cells

Definition

OFM

Able to adjust well to shifts in external

conditions & demands

OFE

Able to increase external support and

expand size of workforce

OCM

Goals are clear and understood

OCE

Volume of output is high

PCM

Channels of Communication facilittate

informing people about things that effect
their work

PCE

Sense of order, continuity and smooth

functioning of operations

PFM

Employee trust, respect, and work well with

each other

PFE

Employee have training, skill and capacity

to do their work properly

Comparison of Approaches
24

Approach

Definition

When Useful

Goal Attainment

An organization is
effective to the extent
that it accomplishes its
stated goals.

The approach is
preferred when goals
are clear, time bound
and measureable.

Systems

It acquires needed
resources.

A clear connection
exists between inputs
and outputs.

Strategic
Constituencies

Strategic
Constituencies are at
least minimally
satisfied.

Constituencies have
powerful influence on
the organization, and it
must respond to
demands.

Competing Values

The emphasis of the

organization in the four
major areas matches
constituent
preferences.

The organization is
unclear about its own
emphases, or changes
in criteria over time
are of interest.

APPROACHES TO
MEASURING
ORGANIZATIONAL
EFFECTIVENESS

25

Approaches to measuring
organizational effectiveness

External resource approach

Internal systems approach

Technical approach

KAVITA SINGH

P-44

External resource approach

A method managers use to evaluate how

effectively an organization manages and
controls Its external environment

Suppliers
Customers
Competitors
government

KAVITA SINGH

P-44

Internal systems approach

A method that allows managers to

evaluate how effectively an organization
functions and operates

Structure
culture
Flexibility
Co-ordination
Motivation

KAVITA SINGH

P-44

Technical approach

A method managers use to evaluate how

efficiently an organization can convert some fixed
amount of organizational resources into finished
goods and services
Technical effectiveness is measured in terms of
productivity and efficiency (output: input)
Process
technology

KAVITA SINGH

P-44

Goals to be set to measure

effectiveness
External
resource
approach

Lower costs of inputs

Obtain high-quality inputs of raw materials and
employees
Increase market share
Increase stock price
Gain support of stakeholders such as
government or environmentalists

Internal
systems
approach

Cut decision-making time

Increase rate of product innovation
Increase coordination and motivation of
employees
Reduce conflict
Reduce time to market

Technical
approach

Increase product quality

Reduce number of defects
Reduce production costs
Improve customer service