ORGANISATIONAL EFFECTIVENESS

 Effectiveness is a measure of whether or not the

organisational objectives are accomplished.
 Efficiency is the relationship between inputs and outputs.
 Organisational effectiveness is also called as
organisational success or growth.
 Effectiveness is defined as the degree to which the
organisation realises its goals.
 Effectiveness of an organisation can be seen in terms of
the survival of the organisation.
 An organisation remains effective as long as it
uses its resources in an efficient manner and
continue to contribute to the large system.
SOME INSIGHTS ON ORGANISATIONAL EFFECTIVENESS.

 No single approach to the evaluation of

effectiveness is aappropriate in all circumstances
or for all organisational types.
 To be truly effective,today`s productive
organisations need to strike a generally
acceptable balance between organisational and
societal goals.
A TIME DIMENSION
 The organisation needs to be effective in the near,
intermediate and distant future.
 Organisational effectiveness can be defined as
meeting organisational objectives and prevailing
societal expectations in the near future , adapting
and developing in the intermediate future and
surviving in the distant future.
 Most people think about the near future.
ORGANISATIONAL DECLINE
 Because of unsteady economic growth,resource
shortages,mismanagement,global competition etc
have resulted in organisational decline.
 Ex. GM, IBM.
 Strategies such as reengineering can be applied
under such circumstances.
PERSPECTIVES OF EFFECTIVENESS
 Individual effectiveness results in group
effectiveness which results in organisational
effectiveness.
CAUSES OF INDIVIDUAL EFFECTIVENESS
 Ability
 Skill
 Knowledge
 Attitude
 Motivation
 Stress.
CAUSES OF GROUP EFFECTIVENESS
 Cohesiveness
 Leadership
 Structure
 Status
 Roles
 Norms.
ORGANISATIONAL EFFECTIVENESS
 Environment
 Technology
 Strategic Choice
 Structure
 Processes
 Culture.
MANAGEMENTS CONTRIBUTION TO EFFECTIVENESS

 Management performs the function of

 Planning , Organising, Leading, Controlling.
 To Coordinate the
 Individuals
 Groups
 Organisations
 To Attain
 Individual Effectiveness
 Group Effectiveness
 Organizational Effectiveness
FACTORS CAUSING EFFECTIVENESS
 Failure of managers.
 Delay in taking decisions
 Lack of sufficient efforts
 Excessive efforts in relation to the need
 Wasted efforts.
FACTORS CAUSING EFFECTIVENESS ACCORDING TO TOP
MANAGEMENT OF INDIAN COMPANIES

 Central Govt. regulations

 State Govt Regulations
 Interference of Political Leaders in the working of
organisations.
 Interference of financial institutions in the working of
organisation.
 Lack of infrastructure facilities.
 Lack of Technological Development.
 Competition from imports.
APPROACHES TO EFFECTIVENESS
 Goal Approach to effectiveness
 Systems theory approach to effectiveness
 Contemporary Effectiveness Approach
 Stakeholders Approach
 Competing Values Approach
GOAL APPROACH TO EFFECTIVENESS

 Effectiveness is the accomplishment of recognised

objectives of cooperative effort. The degree of
accomplishment indicates the degree of effectiveness.
 The idea that organisations as well as individuals and
groups should be evaluated in terms of goal
accomplishment is really practical.
 Many management practices are based on goal
approach.
 Ex. Management by objectives(MBO)
PROBLEMS ASSOCIATED WITH GOAL APPROACH

 Goal Achievement is not readily measurable for

organisations that do not produce tangible
products.
 Organisations attempt to achieve more than one
goal. But, the achievement of one goal
diminishes their ability to achieve other goals.
 Obtaining consensus among managers regarding
their organization's specific goals.
SYSTEMS THEORY APPROACH OR SYSTEM RESOURCE
APPROACH TO EFFECTIVENESS.

 Effectiveness is the ability to acquire scarce and valued resources

from the environment.
 The flow of inputs and outputs is the basic starting point in
describing the organisations.
 Organization takes the resources(Input) from the larger
system(Environment), processes these resources, and returns them in
changed form(Output)
 Systems theory also stresses the organisations connectivity to the
larger system
 Every organization is part of an industry(a larger system),a society(a
yet larger system) and a global economy(the largest system of all)
 Systems theory also describes the behaviour of
individuals and groups.
 The inputs of individual behaviour are causes that
arise from the workplace.
 Ex. The cause may be the managers directives to
perform a particular task.
 The input is then processed by individual`s mental
and psychological processes to produce a particular
outcome.
INTERNAL PROCESS APPROACH
 Effectiveness is the ability to excel at internal
efficiency, coordination, motivation and
employee satisfaction.
 Internal efficiency can be achieved by keeping
the right people for the right job.
 Organisational effectiveness can be achieved by
the best utilisation of human resources for the
accomplishment of organisational goals.
 Organizational effectiveness can be achieved by
better co-ordination and co-operation among the
members of the organization for the
accomplishment of organizational goals.
Contemporary effectiveness Approach
 According to this approach, Organizational
effectiveness depends on
The ability to understand environment.
Frequent changes.
Competitor strategies.
The ability to be flexible and adaptive.
Ability to adapt to the changes.
THE COMPETING VALUES APPROACH
 The criteria you value and use in assessing an
organization's effectiveness –return on investment,
market share, new product innovation, job security-
depend on who you are and the interests you present.
 The stockholders,unions,suppliers,
 management, or internal specialists in
marketing,personnel,production or accounting may
look at the organization but evaluate its effectiveness
in a different way.
ASSUMPTIONS
 There is no best criterion for evaluating an
organisation`s effectiveness.
 There is neither a single goal that everyone can
agree upon.
 The concept of OE is subjective.
 The goals that an evaluator chooses will depend
upon his or her personal values, preferences and
interests.
 Ex. Xerox.
 Financial Analysts may define OE in terms of
high profitability.
 Production executives may define OE in terms of
the quality of the equipment manufactured.
 Marketing people and competitors may look at
the percentage of market that Xerox`s various
products hold.
 HR- absence of strikes, competency of the human
resource.
 R and D-Number of new inventions.
MAKING COMPETING VALUES OPERATIVE
 The three basic sets of competing values.
 1.Flexibility Vs Control.
 Flexibility values adaptation, innovation and
change.
 Control favours stability, order and predictability.
 2.Whether emphasis should be placed on the well
being of the people or on the well being of the
organisation.
 The concern for the feelings and needs of the
people versus concern for production and task
accomplishment.
 3. Organizational means vs. ends.
 The former stressing the internal processes and
the long term and the latter focussing final
outcomes and the short term.
EIGHT OE CRITERIA CELLS
Cells Description Definition
OFM Flexibility Able to adjust well to shifts in
external conditions and demands.
OFE Acquisition of resources Able to increase external support and
expand size of work force.
OCM Planning Goals are clear and well understood.
OCE Productivity and efficiency. Volume of output is high
PCM Availability of information Channels of communication
facilitates informing people about
things that affect their work.
PCE Stability Sense of order, continuity and
smooth functioning of operations.
PFM Cohesive work force Employee trust,respect and work well
with each other.
PFE Skilled work force Employees have the training,skills
and capacity to do their work
properly
STAKEHOLDERS APPROACH
 Organisations exist because of their ability to
create value and acceptable outcomes for various
groups of stakeholders.
 Stakeholders-People who have an interest, claim
or stake in the organisation in what it does and in
how well it performs.
 There are inside stakeholders and outside
stakeholders.
SHAREHOLDERS
 Shareholders are the owners of the organisation,
their claim on organisational resources is often
considered superior to the claims of other inside
stakeholders.
MANAGERS
 Employees who are responsible for coordinating
organisational resources and ensuring that an
organisation`s goals successfully met.
 Top managers are responsible for investing
shareholder money in resources in order to
maximize the future output of goods and services.
 Managers are in fact,the agents or employees of
shareholders and are appointed directly by
shareholders through an organisation`s Board of
Directors to manage the organisation`s business.
THE WORK FORCE
 All nonmanagerial employees
OUTSIDE STAKEHOLDERS
 People who do not own the organisation, are not
employed by it,but do have some interest in it.
 Customers
 Suppliers
 The Government
 Trade Unions
 Local Communities
 The General Public
CUSTOMERS
 Largest outside stakeholder group.
 They are induced to select a product from
alternative products.
 The money they pay is their contribution to the
organisation and reflects the value they feel they
receive from the organisation.
SUPPLIERS
 Contribute to the organisation by providing
reliable raw materials and component parts that
allow the organisation to reduce uncertainty in its
technical or production operations and thus
reduce production costs.
 High quality inputs result in high quality output.
 Reliability of product.
THE GOVERNMENT
 Wants companies to compete in a fair manner and
to obey the rules.
 Laws concerning the payment and treatment of
employees, workers` health, workplace
safety,non discriminatory hiring practices and
other social and economic issues about which
legislations are there.
TRADE UNIONS
 Conflict or cooperation.
 Nature of relationship has an effect on the
productivity and effectiveness of the
organisation.
LOCAL COMMUNITIES
 Employment, housing and the general economic
well being of a community are strongly affected
by the success or failure of local business.
THE GENERAL PUBLIC
ORGANISATIONAL EFFECTIVENESS-SATISFYING
STAKEHOLDERS`GOALS AND INTERESTS

 Shareholders evaluate an organisation by the

return they receive on their investment;
customers by the reliability and value of products
relative to their price and managers and
employees , by their salaries, stock options,
conditions of employment and career prospects.
 Often these goals conflict.
 Organisations are often regarded as alliances
alliances or coalitions of stakeholder groups that
directly bargain with each other and use their
power and influence to alter the balance of
inducements and contributions in their favour.
 Enron and worldcom collapsed when their illegal
actions become public and their
stakeholdersrefused to contribute.
 Shareholders sold their stock,banks refused to
lend money and debtors called in their loans.
 So, the organisation must minimally satisfy the
interest of all the groups that have a stake in the
organisation.