Chapter 13Chapter 13

Organizational EffectivenessOrganizational Effectiveness

Organizational EffectivenessOrganizational Effectiveness

““An organization is not the sum of its parts An organization is not the sum of its parts or functions. It is possible to assess the or functions. It is possible to assess the effectiveness of a program or the use of effectiveness of a program or the use of service volunteers in an organization; service volunteers in an organization; however, such assessments do not however, such assessments do not necessarily reveal much about overall necessarily reveal much about overall organizational effectiveness.”organizational effectiveness.”

——Herman & Renz, 1999, p. 108Herman & Renz, 1999, p. 108

Effectiveness vs. EfficiencyEffectiveness vs. Efficiency

Effectiveness is the extent to which Effectiveness is the extent to which operative goals can be attained.operative goals can be attained.

Efficiency is the cost/benefit ratio Efficiency is the cost/benefit ratio incurred in the pursuit of those goals.incurred in the pursuit of those goals.

——Steers & Black, 1994, p. 330Steers & Black, 1994, p. 330

Effectiveness and EfficiencyEffectiveness and Efficiencyin Organizationsin Organizations

How Do You View It?How Do You View It?

Which, in your opinion, is more Which, in your opinion, is more important for an organization—important for an organization—efficiency or effectiveness?efficiency or effectiveness?

Models ofModels ofOrganizational EffectivenessOrganizational Effectiveness

Goals modelGoals model

System resource modelSystem resource model

Process modelProcess model

Multiple constituency modelMultiple constituency model

Competing values approachCompeting values approach

Illustration of Models of Illustration of Models of Organizational EffectivenessOrganizational Effectiveness

Goals ModelGoals Model

Effectiveness is the degree to which Effectiveness is the degree to which an organization has achieved its goalsan organization has achieved its goals

Two conditions for this model:Two conditions for this model:– Goal must be identifiableGoal must be identifiable– Organizational performance must be Organizational performance must be

clearly measurableclearly measurable

Conditions may not be valid for all Conditions may not be valid for all types of organizationstypes of organizations

Meaningfulness of Goals ModelMeaningfulness of Goals ModelThe model is meaningful in organizations The model is meaningful in organizations where goals are clearly articulated, where where goals are clearly articulated, where they are stable, and where organizational they are stable, and where organizational performance can be objectively performance can be objectively measured.measured.

The model is not meaningful for The model is not meaningful for organizations that do not possess clearly organizations that do not possess clearly defined goals or whose goal attainment defined goals or whose goal attainment cannot be objectively measured.cannot be objectively measured.

System Resource ModelSystem Resource ModelEffectiveness is the degree to which an Effectiveness is the degree to which an organization is able to exploit its organization is able to exploit its environment in the acquisition of scarce environment in the acquisition of scarce and valued resources.and valued resources.The model quantifies one element (i.e., The model quantifies one element (i.e., inputs, or resources) and uses it as a inputs, or resources) and uses it as a substitute measure for another element substitute measure for another element (i.e., outputs, or goal attainment) that is (i.e., outputs, or goal attainment) that is less easily quantifiable.less easily quantifiable.

Different Forms of CapitalDifferent Forms of Capital

Physical capitalPhysical capital

Human capitalHuman capital

Organizational capitalOrganizational capital

Financial capitalFinancial capital

How Do You View It?How Do You View It?

Which form of capital do you think is Which form of capital do you think is most important for the organization?most important for the organization?

Could the organization survive without Could the organization survive without any one of them?any one of them?

Applicability of theApplicability of theSystem Resource ModelSystem Resource Model

Applicable for professional/human service Applicable for professional/human service organizations whose output cannot be organizations whose output cannot be objectively measuredobjectively measured

Applicable for volunteer, nonprofit Applicable for volunteer, nonprofit organizations because the degree to which organizations because the degree to which they attract financial support is a measure of they attract financial support is a measure of effectivenesseffectiveness

Less applicable for public-sector and third-Less applicable for public-sector and third-sector organizations, whose inputs are sector organizations, whose inputs are underwritten by a superior authorityunderwritten by a superior authority

Process ModelProcess Model

Effectiveness is the degree to which Effectiveness is the degree to which an organization’s processes are an organization’s processes are internally logical, consistent, and internally logical, consistent, and without friction.without friction.

The organization is doing what is The organization is doing what is rational in the context of its goals and rational in the context of its goals and environment.environment.

Potential Problem withPotential Problem withthe Process Modelthe Process Model

Danger lies in treating a process as Danger lies in treating a process as the one best way to do something, the one best way to do something, thus making it an end in itself.thus making it an end in itself.

Multidimensionality of Multidimensionality of Organizational EffectivenessOrganizational Effectiveness

To appraise the effectiveness of an To appraise the effectiveness of an organization completely, it may be organization completely, it may be necessary to use all three models.necessary to use all three models.

Different programs within an Different programs within an organization may be evaluated with organization may be evaluated with different models.different models.

How Do You View It?How Do You View It?

Do you believe sport organizations, Do you believe sport organizations, such as the NCAA, NFL, NBA, or such as the NCAA, NFL, NBA, or International Olympic Committee, are International Olympic Committee, are effective?effective?

Multiple-Constituency ModelMultiple-Constituency Model

Different constituents of an organization Different constituents of an organization have different goals and processes.have different goals and processes.

Multiple perspectives and Multiple perspectives and multidimensionality of effectiveness.multidimensionality of effectiveness.

ConstituentsConstituents

OwnersOwners

ManagersManagers

EmployeesEmployees

ClientsClients

SuppliersSuppliers

Other stakeholdersOther stakeholders

Illustration of the Multiple-Constituency ModelIllustration of the Multiple-Constituency Model

Competing Values ModelCompeting Values Model

Multiple perspectives and subjective Multiple perspectives and subjective goals mean that issues surrounding goals mean that issues surrounding effectiveness can be framed as a set of effectiveness can be framed as a set of competing values:competing values:– Internal vs. externalInternal vs. external– Flexibility vs. stabilityFlexibility vs. stability– Ends vs. meansEnds vs. means

Emphasis of Three DimensionsEmphasis of Three Dimensionsof Competing Valuesof Competing Values

Attention orientation—is orientation Attention orientation—is orientation internal or external?internal or external?

Structural preferences—are preferences Structural preferences—are preferences for flexibility or control; for centralization for flexibility or control; for centralization or decentralization?or decentralization?

MeansMeans–ends dichotomy–ends dichotomy

Four Models of EffectivenessFour Models of Effectiveness

Human relations model:Human relations model:– Flexibility and internal focusFlexibility and internal focus

Internal process model:Internal process model:– Control and internal focusControl and internal focus

Open system model:Open system model:– Flexibility and external focusFlexibility and external focus

Rational goal model:Rational goal model:– Control and external focusControl and external focus

Illustration of the Competing Values ModelIllustration of the Competing Values Model

Competing Values Model DefinedCompeting Values Model Defined

““It is not so much a theory of It is not so much a theory of organizational effectiveness but more organizational effectiveness but more an account of where managers put their an account of where managers put their major emphasis in conducting the major emphasis in conducting the affairs of an organization, which by affairs of an organization, which by implication tells us something about implication tells us something about how they evaluate its effectiveness.”how they evaluate its effectiveness.”

——Rollinson, 2002, p. 474Rollinson, 2002, p. 474

Paradoxical Nature of Paradoxical Nature of Organizational EffectivenessOrganizational Effectiveness

Organizational paradoxOrganizational paradox

An effective organization addresses An effective organization addresses the different perspectives of its the different perspectives of its various constituents and engages in various constituents and engages in contradictory activitiescontradictory activities

Primacy AmongPrimacy AmongMultiple PerspectivesMultiple Perspectives

Relativistic perspectiveRelativistic perspective

Power perspectivePower perspective

Social justice perspectiveSocial justice perspective

Evolutionary perspectiveEvolutionary perspective

Prime Beneficiary ApproachPrime Beneficiary Approach

When debating the primacy of multiple When debating the primacy of multiple perspectives and multiple constituencies, perspectives and multiple constituencies, focus on the prime beneficiary of the focus on the prime beneficiary of the organization.organization.

An effective organization attempts to An effective organization attempts to satisfy contradictory expectations only satisfy contradictory expectations only with a view to increase payoffs to its with a view to increase payoffs to its prime beneficiary.prime beneficiary.

Overview ofOverview ofOrganizational EffectivenessOrganizational Effectiveness

In choosing the criteria of effectiveness for In choosing the criteria of effectiveness for their organization, managers should focus their organization, managers should focus on on closeness to the final payoffcloseness to the final payoff..

A criterion that is more closely related to A criterion that is more closely related to the goal should be selected over those the goal should be selected over those more remotely connected.more remotely connected.