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  • A STUDY OF ORGANIZATIONAL EFFECTIVENESS *

    BASIL S. GEORGOPOULOS AND ARNOLD S. TANNENBAUM University of Michigan

    ORGANIZATIONAL effectiveness is one of the most complex and least tackled problems in the study of social organ-

    izations. Many difficulties arise with at- tempts to define the concept of effectiveness adequately. Some stem from the closeness with which the concept becomes associated with the question of values (e.g., "manage- ment" versus "labor" orientations). Other problems arise when researchers choose a priori criteria of effectiveness that seem in- tuitively right, without trying systematically to place them within a consistent and broader framework. In effect, specific criteria that might be proper in one case may be entirely inappropriate to other organizations. The question arises whether it is possible to de- velop a definition of effectiveness and to de- rive criteria that are applicable across organizations and can be meaningfully placed within a general conceptual frame- work.

    The present paper has three objectives: (a) to examine the concept of effectiveness and to provide a definition deriving from the nature of organizations; (b) to develop oper- ational criteria and to measure the concept in a specific industrial setting; and (c) to evaluate these criteria and operations in terms of their organizational character, i.e., the extent to which they represent an organi- zational-level phenomenon, their reliability, and their agreement with independent expert judgment.

    THE CONCEPT

    The concept of organizational effectiveness (sometimes called organizational "success" or organizational "worth") is ordinarily used to refer to goal-attainment. In this sense, it is a functional rather than a structural concept.

    * Expanded version of paper read at the Annual Conference of the American Association for Public Opinion Research, May, 1957. The present study was conducted by the Organizational Behavior and Human Relations Program of the Survey Research Center.

    Furthermore, it is probably most useful in comparative organizational research, i.e., in relational rather than absolute terms, but the concept could also be used developmentally to study the effectiveness of the same organ- ization over time.

    Traditionally, in the study of industrial organizations, effectiveness has been viewed and operationalized mainly in terms of productivity. In this connection, Thorndike has noted a general tendency on the part of personnel and industrial psychologists to accept as "ultimate criteria" of organiza- tional success the following: organizational productivity, net profit, the extent to which the organization accomplishes its various missions, and the success of the organization in maintaining or expanding itself.1 Other variables that have been used in various con- texts as criteria of effectiveness include "morale," commitment to the organization, personnel turnover and absenteeism, and member satisfactions.2

    With the exception of organizational productivity, however, practically all vari- ables used as criteria of organizational effectiveness have been found inadequate and unsatisfactory. For example, previous find-

    1 R. L. Thorndike, Personnel Selection: Test and Measurement Techniques, New York: Wiley, 1949, pp. 121-124.

    2 See, for example, R. L. Kahn, "The Predic- tion of Productivity," Journal of Social Issues, 12 (No. 2, 1956), pp. 41-49; R. L. Kahn and N. C. Morse, "The Relationship of Productivity to Morale," Journal of Social Issues, 7 (No. 3, 1951), pp. 8-17; Daniel Katz and R. L. Kahn, "Human Organization and Worker Motivation," in L. R. Tripp (Ed.), Industrial Productivity, Madison: Industrial Relations Research Association, 1951. See also the following, published at the Institute for Social Research, University of Michigan, Ann Arbor: Daniel Katz, N. Maccoby, and N. C. Morse, Productivity, Supervision, and Morale in an Office Situation, 1950; Daniel Katz, N. Maccoby, G. Gurin, and L. G. Floor, Productivity, Supervision, and Morale Among Railroad Workers, 1951; N. C. Morse, Satisfaction in the White-Collar Job, 1953; S. E. Seashore, Group Cohesiveness in the Indus- trial Work Group, 1955.

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  • A STUDY OF ORGANIZATIONAL EFFECTIVENESS 535

    ings regarding "morale" and member satis- faction in relation to effectiveness (effective- ness measured on the basis of productivity) have frequently been inconsistent, nonsig- nificant, or difficult to evaluate and inter- pret. The case of turnover and absenteeism is similar. A major problem in using these two variables as criteria of effectiveness is their differential sensitivity to such "third" considerations as the nature and volume of work to be processed, organizational level affected, and season of occurrence apart from the degree of such occurrence. Net profit is likewise a poor criterion in view of many unanticipated fluctuations external to the system, e.g., fluctuations in the general econ- omy, markets, sales, and prices.

    In view of these and related inadequacies, the role of other potential criteria of organi- zational effectiveness should be studied. On this point, and in addition to productivity, Kahn and Morse have suggested the vari- ables of organizational flexibility and maxi- mization of member potential,3 but no work has been done in this direction. Elsewhere, Bass has proposed as criteria the extent to which an organization is of value to its mem- bers, and the extent to which the organiza- tion and its members are of value to society.4 For theoretical reasons, however, it is prefer- able to look at the concept of organizational effectiveness from the point of view of the system itself-of the total organization in question rather than from the standpoint of some of its parts or of the larger society. Furthermore, proposed criteria should be system-relevant as well as applicable across organizations. It is most satisfactory, more- over, if such criteria are derived from a common framework to which the concept of organizational effectiveness can be meaning- fully related.

    GENERAL CRITERIA OF EFFECTIVENESS

    A distinguishing characteristic of nearly all variables which have been used as criteria of effectiveness is that, whether directly or indirectly, they tie in with organizational ob- jectives. This relationship, however, is only a necessary condition. Not all criteria that

    3 R. L. Kahn and N. C. Morse, op. cit., p. 16. 4 B. M. Bass, "Ultimate Criteria of Organiza-

    tional Worth," Personnel Psychology, 5 (Autumn, 1952), pp. 157-173.

    fulfill this requirement are appropriate. Many cannot be applied across organizations (e.g., some organizations have no problems of turnover and absenteeism or may even be overstaffed), and many do not logically conform to a generally accepted conception of organizations.

    It is our assumption that all organizations attempt to achieve certain objectives nad to develop group products through the ma- nipulation of given animate and inanimate facilities. Accordingly, definitions of organi- zational effectiveness must take into con- sideration these two aspects: the objectives of organizations and the means through which they sustain themselves and attain their ob- jectives, particularly those means that usually become functionally autonomous (i.e., that come to assume the character of and function as organizational goals). In short, the study of organizational effective- ness must contend with the question of organizational means and ends.

    Assuming that the organizational system maintains itself, the most general and most important common objectives of organiza- tions are: (a) high output in the sense of achieving the end results for which the organization is designed, whether quanti- tatively or qualitatively; (b) ability to ab- sorb and assimilate relevant endogenous and exogenous changes, or the ability of the organization to keep up with the times with- out jeopardizing its integrity; and (c) the preservation of organizational resources, of human and material facilities.5 It should be both feasible and fruitful to study organiza- tional effectiveness by gearing our criterion variables to these general aspects of organi- zation.

    We define organizational effectiveness as the extent to which an organization as a social system, given certain resources and means, fulfills its objectives without in- capacitating its means and resources and without placing undue strain upon its mem-

    5 Satisfaction of member needs beyond some minimum critical level, and the maintenance of sufficient member motivation and of an effort- reward balance constitute important problems for all organizations. And, it is under this concept of preservation (or incapacitation) of resources that such variables as turnover, absenteeism, morale, and satisfaction could be viewed as "criteria" or correlates of effectiveness.

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  • 536 AMERICAN SOCIOLOGICAL REVIEW

    bers. This conception of effectiveness sub- sumes the following general criteria: (1) organizational productivity; (2) organiza- tional flexibility in the form of successful adjustment to internal organizational changes and successful adaptation to exter- nally induced change; and (3) absence of intraorganizational strain, or tension, and of conflict between organizational subgroups. These three criteria both relate to the means- ends dimension of organizations and, poten- tially, apply to nearly all organizations. The first relates to the movement of the organi- zation toward its goals (locomotion); the others relate to the requirements of organi- zational survival in the face of external and internal variability, and to the dimension of preservation (or incapacitation) of organiza- tional means. In an attempt to evaluate the present approach, we have used these cri- ter

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