ASSIGNMENT 01

WAJEEHA AHMED
REG NO: 10840

PROGRAM: BBA-(H)
COURSE: ORGANIZATIONAL BEHAVIOR
DATE: 16-04-2023
Q: Describe the 4 Perspectives of Organizational effectiveness with one example for
each.
Ans: ORGANIZATIONAL EFFECTIVENESS
Organizational effectiveness can be defined as,

“The capacity of an organization to produce the desired results with a given amount of human
and material resources to achieve its objectives”.

EXPLANATION

Organizational effectiveness is an idea about how well an organization carries out its tasks in
a systematic manner in terms of achieving its overall goals. It usually refers to the company’s
ability to achieve full self-awareness in several major functions such as

 Setting well-defined goals for employees and highlighting ways to execute those
goals effectively.
 Implementing clear decision-making processes and communication channels at all
management levels and engaging employees and workers who are fairly selected and
compensated for increasing production.

The effectiveness of an organization depends on its mission & goals, internal efficiency, and
strategic positioning.

Organizational effectiveness is important as it helps companies flourish in their both long and
short-term goals. It allows organizations to increase productivity and strengthens employee
engagement by setting clear goals or objectives and monitoring their progress. It also helps in
optimizing budgets and maximizing customer value and retention.

E.g., A Chinese company that manufactures electronic parts for several large automobile
manufacturers, has a goal to become the most widely used parts company in the world. They
become known and productive due to their following USPs (unique selling points) such as:

. High-quality products and their effective supply chain networks.

. Implementation of new and upgraded standards for sustainability in manufacturing.

. Categorization of products based on price i.e., manufacturing products in different

categories such as high-to-medium and medium-to-low quality products for reaching every
customer segment that is directly linked with high customer retention and satisfaction.
. High employee satisfaction and retention.

Increasing employee satisfaction and retention, forming strategies that help in the
categorization of products based on price, and developing or maintaining the supply
chain networks are the major areas through which companies can make their organizational
functions effective and efficient.

APPROACHES TO ORGANIZATIONAL EFFECTIVENESS

These are as follows:

Goal Approach: The goal approach or goal-attainment approach is logical as it consists of

identifying the overall output goals of an organization and assessing how well an
organization can attain these goals. It is used to measure effectiveness by considering
different factors such as quality, efficiency, risk, productivity, profits, turnover, accidents
morale, motivation, and satisfaction.

This approach is important because organizations have to attain a certain level of profit,
output, or client satisfaction.

Functional Approach: Functional approach solve the problems of identification of

organizational goals by presupposing that firm is focused on a single goal. This approach is
used to analyze the functional areas such as production/operation, marketing, finance, human
resource, and accounting and evaluate them for identifying the strength and weaknesses of
the organization.

Systematic Resource Approach: This approach focuses on inputs rather than outputs. It
treats the organization and its environment as an open system i.e., monitors the organization’s
performance in obtaining inputs, participates in transformational processes, and generates
outputs. The purpose of this approach is to identify the most efficient means of generating
consistent and optimum results.

PERSPECTIVES OF ORGANIZATIONAL EFFECTIVENESS

To improve organizational performance, companies should focus on working four main

perspectives which are:
Return On Value (ROV): It is a financial metric used to measure the profitability of an
investment that depends on the value it generates for the business. ROV (return on value)
plays an important role in measuring organizational effectiveness as it reflects both tangible
and non-tangible benefits. The return on value can easily be measured by

ROV = (Revenue – Cost) / Value

ROV can be used to value investments from various perspectives such as business, services,
strategic, people, operational, and processes.

For example: If a clothing business invests in a new marketing campaign, the ROV would
be calculated by looking at the revenue generated by the campaign minus the cost of the
campaign. In other words, if the campaign can generate $1 million in revenue and the cost is
$500,000 then the return on value (ROV) will be 2. This means that for every dollar invested
in the campaign, the business generated two dollars in value.

Another example is Apple which is a multinational company. The company charges a

premium price for all of its products and for the most part, this price is accompanied by great
product value. Here, the company provides the best user experience through its incredible
product design and operating system which directly increases the chances of high ROI
(return on investment).

Concerning ROV (return on value), Apple invests in the value of its product development,
and this directly increases its sales success before spending any dollar on advertising or
marketing.

Customer Satisfaction & Employee Satisfaction

Customer and employee satisfaction are the most important perspectives that help companies
to monitor the effectiveness and productivity of both the production and employee
coordination levels. Customer satisfaction is important as it demonstrates whether the
customer base shows interest or preferences about what the company is doing.

According to the research, high satisfaction leads to greater customer retention, stronger
brand reputation, and higher lifetime value whereas employee satisfaction is important as it
provides assistance to organizations in strengthening workforce retention and engagement by
providing basic facilities such as a hygienic workplace environment, including pay, perks,
and benefits and job security. These facilities are boosted by motivational factors such as
finding meaning and recognition in work. In simple words, achieving high employee
satisfaction is important as it is directly linked with strong customer satisfaction and
organizational effectiveness.

For example, A customer makes a negative response by using a social media platform about
the product or services of any company such as Daraz or any clothing brand will cause them
to lose customers in the future. To resolve this situation, the company will respond to the
customer as quickly as possible apologize for the error, and ask them to direct message you
so you can get more information and remedy the situation. In terms of employee satisfaction,
the company will investigate the issues related to employees and solve them to sustain the
performance and efficiency of the organization.

Culture

Organizational culture is the set of rules, norms, or principles that provide proper guidelines
about how to behave within the organization. It consists of shared beliefs and values
established by leaders and these are communicated and reinforced through different methods
that help in shaping employees’ behaviors, understanding, and perceptions.

A strong organizational culture is important as it brings benefits such as enhanced

cooperation and trust, fewer disagreements between employees and workers, and helps in
making more effective decisions. A developed culture provides a strong sense of identity and
shared understanding among employees which is necessary to develop an informal control
mechanism that leads to productivity and hence, also improves organizational effectiveness.
There are several indicators of organizational culture but the most important indicator that
affect both the effectiveness and performance of the organization is the level of work-life
balance.

An ineffective or toxic culture can lead to high turnover, employee and customer
dissatisfaction, and ultimately low profits.

Example:

The impact of having a healthy work-life balance on organizational culture can be easily

understood through Japanese working culture. The country has a very poor work-life balance
from a global perspective. Employees are forced to work overtime due to continuously high
demands. Although employees are entitled to get 10-20 days of paid holidays annually most
of the employees do not even apply for them because of the harsh working culture. Healthy
employees are the assets of the organization. They can focus on work and complete the task
without compromising on quality and efficiency which directly increase productivity on the
organizational level. Therefore, it is the responsibility of the company to create a healthy
work environment and support employees in finding the right work-life balance to increase
organizational effectiveness.