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Module IV Chapter:7Organizing-i) Organizational Effectiveness



Learning Objectiveness: 1.Define four approaches to organizational effectiveness (OE). 2. List the assumptions of each OE approach. 3. Describe how managers can operationalize each approach. 4. Identify key problems in each approach. 5. Explain the value of each approach to practicing managers. 6. Compare the conditions under which each is useful to managers.



1.Introduction: Are you sure you know what effectiveness is? It is difficult to define and measure. Yet the researchers acknowledge that the term OE is the central theme of the organization. It is difficult to conceive theory of organization without the concept of effectiveness.



2.Importance of Organizational effectiveness: Importance of Organizational effectiveness lies in finding proper Organization structure. The way we put people and jobs together and define their roles and relationships is an important determinant in finding whether an organization is successful.DG GIT MBA I 4

Every discipline in administrative sciences contributes in some way to helping managers make organization more effective. 3. Definition of Organizational effectiveness: There is no universal agreement on precisely what organizational effectiveness means.DG GIT MBA I 5

-Early approach to definition of effectiveness 1950s: Effectiveness was defined as the degree to which an organization realized its goals. The definition is innocently simple but with many ambiguities. -The 1960 and early 1970 approach to the definition of effectiveness:DG GIT MBA I 6

A review of these studies identified thirty different criteria to measure Organizational effectiveness Reference: Text Book-Robbins Features: Multiple criteria are used. Some criteria are general measures whereas some criteria are specific measures. Some of the items are even contradictory



This leads to conclusion that organizational effectiveness means different things to different people. This is because diversity of organizations being evaluated. It also reflects the different interests of the evaluators. - A Best- sellers Definition of Organizational effectiveness: Authors are Peters and Robert Waterman Books name: In search of excellence. Sale: more than five million copies.DG GIT MBA I 8

Study of forty two companies was made which include firms like IBM, Du Pont, 3M,Mc Donald, Procter & Gamble and they were described as well-managed, highly effective or excellent having following eight common characteristics: 1. They had a bias for action and getting things accomplished.DG GIT MBA I 9

2. They stayed close to their customers in order to fully understand their customers needs. 3. They allowed employees a high degree of autonomy and fostered the entrepreneurial spirit. 4. They sought to increase productivity through employee participation.DG GIT MBA I 10

5. The employees know what the company stands for, and their managers were actively involved in problems at all levels. 6. They stay close to the businesses they knew and understood. 7. They had organizational structures that were elegantly simple, with a minimal number of people in staff support activities.DG GIT MBA I 11

8.They blended tight, centralized control on core values with loose controls in other areas to encourage risk-taking and innovation. The methods and conclusions of this definition have also their share of criticism. In the recent times, there is movement towards agreement on the part of OE researchers. From practical stand point of view, all of us have and use some operational definition of OE on a regular basis in spite some problems in this regard by the researchers.DG GIT MBA I 12

4. Approaches to Organizational effectiveness: 1.Goal Attainment Approach: states that an organizations effectiveness must be appraised in terms of the accomplishment of ends rather than means. It is bottom line that counts. Goal attainment is probably most widely used criterion of effectiveness.DG GIT MBA I 13

Assumptions: The goal attainment approach assumes that organizations are deliberate, rational, goal-setting entities. Then goal accomplishment becomes an appropriate measure of effectiveness. For this purpose, followings are pre-requisite. -Organizations must have ultimate goals. - These goals must be identified and defined well enough to be understood.DG GIT MBA I 14

- Goals must be few enough to be manageable. - There must be general consensus or agreement on these goals. - Progress towards goals must be measurable. Making Goals operative: The Goal attainment approach is most explicit in management by objectives (MBO).



MBO is a well known philosophy of management that assesses an Organization and its members by how well they achieve specific goals that superiors and subordinates have jointly established. Problems: Many of the problems of Goalattainment approach relate directly to assumptions stated above. These are summarized below:DG GIT MBA I 16

1.Operationalization of Goal attainment approach poses problems such as whose goals, if top-managements goals then who is to be included and who is to be excluded from goals setting. 2. What an organization states officially as its goals does not always reflect the organizations actual goals. 3. An organization short term goals are different from its long term goals. 4. Organizations have multiple goals also creates difficulties. 5. In many organizations goals do not have direct behavior.



Value to Managers: This approach has merits for managers if problems of Goal setting approach are adequately addressed to by the managers. Organizations exit to achieve goals but problems lie in their identification and measurement which must be considered by the managers to help them to recognize value of the Goal-setting approach.DG GIT MBA I 18

2. The Systems Approach: Organizational effectiveness should not only be judged solely in terms of goalattainment results which is only partial measure of effectiveness. Goals focus on outputs. In the systems approach end goals are not ignored, but they are only one element in a more complex set of criteria.DG GIT MBA I 19

Systems approach provides that organization should be judged on its ability to acquire inputs, process these inputs, channel the outputs, and maintain stability and balance Systems approach focuses not so much on specific ends as on the means needed for achievement of these ends.DG GIT MBA I 20

3. The strategic-constituencies approach: The strategic-constituencies approach proposes that an effective organization is one which satisfies the demands of those constituents in its environment from whom it requires support for its continued existence. This approach is similar to systems view, yet it has different emphasis.DG GIT MBA I 21

Both consider interdependencies but the strategicconstituencies view is not concerned with all of the organizations environment. It seeks to appease only those in the environment who can threaten the organizations survival. Assumptions: 1. Strategic-constituencies approach assumes organizations very differently as political arenas where vested interests compete for control over resources. 2. It also assumes that organizations has a number of constituencies with different degrees of power, each trying to satisfy its demands.



The strategic-constituencies approach assumes that managers pursue a number of goals and that the goals selected represent a response to the interest groups that control the resources necessary for the organization to survive. Making Strategic Constituencies Operative: 1. The manager must have input from dominant coalition to identify the constituencies they consider to be critical to the organizations survival.DG GIT MBA I 23

2. The list could then be evaluated to determine relative power of each. 3. Identify the expectations that these constituencies hold for the organization. Problems: - The task of separating the strategic constituencies from the larger environment is easy to say but difficult to do practice.DG GIT MBA I 24

- The interests of each member in the dominant coalition strongly affect what he or she perceives as strategic. - To tap accurate information as to expectations that the strategic constituencies hold for each other presents a problem.



Value to Managers: If survival is important for an organization, then it is incumbent upon managers to understand just who it is in terms of constituencies that survival is contingent upon.



4. The Competing-value approach: The comprehensive understanding of OE warrants identification of all of key variables in the domain of effectiveness and then determine how the variables are related. Assumptions: 1. There is no best criterion for evaluating an organizations effectiveness. The concept of OE is subjective and the goals that an evaluator chooses are based on his personal values, preferences and interests.DG GIT MBA I 27

2. It assumes that these diverse preferences can be consolidated and organized. Making Competing Values operative: 1.Managers must understand three basic sets of competing values. The first set is flexibility versus control. The second set is well- being of the people in the organization or well-being of the organization itself.DG GIT MBA I 28

3. The third set of values relate to organizational means versus ends. Three sets of values can be depicted as a three dimensional diagram. Each model represents a particular set of values and has a polar opposite with competing values. The following four models


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