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Organizational Design Changes :Organizational Effectiveness Chapter

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EffectivenessEffectiveness Vs EfficiencyEffectivenessEfficiencyIt is a broad conceptIt is a narrow conceptIt takes into account various factors both within the organization as well as outsideIts focus is on internal factors aloneIt is concerned with the degree to which predetermined goals are achievedIt is concerned with amount of resources used to produce a particular unit of outputIts focus is on the achievements of goals and objectivesIts focus is on how economically the goal-oriented activity is performed. i.e. ratio of output to inputIts thrust is on the human and social facets of the enterpriseIt concentrates on the economic and technical facets of the enterpriseIt is organicIt is inorganicEffectivenessEfficiencyIt is modern and in tune to the contemporary needs of the societyIt is archaicIts thrust is on developing systems and procedures that do not pout stress on human beings (human engineering).It emphasizes the development of systems and procedures that result in maximum efficiency (techno-economic engineering)It is complex and not easily quantifiableIt is simple and easily quantifiableIts focus is on quality of lifeIt is materialistic growth orientedIt presumes the existence of matrix structure, democratic leadership style and committed peopleThere is existence of line structure, autocratic leadership style and reward oriented peopleEffectiveness Vs EfficiencyOrganizational EffectivenessDegree to which an organization realised its goalsEffectiveness and Efficiency in OrganizationsLow Goal AttainmentLow Use of ResourcesLow Goal AttainmentHigh Use of ResourcesHigh Goal AttainmentHigh Use of ResourcesHigh Goal AttainmentLow Use of ResourcesLow HighEFFECTIVENESSLow HighEFFICIENCYSNEHA SHARMA P-415ORGANIZATIONAL EFFECTIVENESSType of OrganizationMajor FunctionExampleOE criteriaHabitReplicating standard uniform productFactoriesNumber of productsProblem solvingCreating new ideasR & D, Design and EngineeringNumber of ideasIndoctrinatingChanging peoples attitude and behaviourUniversities, prisons, Psychiatric centersNumber of clients leavingServiceDistribution of servicesMilitary, Government, IT industryExtent of services performedResult Oriented Approach Goal attainment apprachProcess Oriented Approach Systems approach Politically Motivated ApproachStrategic constituencies approachCompeting values approachResult Oriented ApproachOrganizations have goals and work towards achieving them. These goals are clearly identified and defined. These goals are equally understood by every one in the organization. All employees must accept and subscribe to these goals. Progress towards goal must be measurable. Process Oriented ApproachOrganizations are made up of a number of system and subsystems which are in an independent and inter dependent relationships with each other. Organizations must maintain meaningful relationship with suppliers and other who have control over input. Internal allocation of input resources has to be need based. It establishes ratiosInput/outputTransformation/InputTransformation/OutputChange in Input /InputSystems Approach(Process)VariablesBusinessHospitalCollegeO/IROITotal patients treatedFaculty PublicationsT/IInventory TurnoverCapital Investment in medical technologyCost of MIST/OSales VolumeTotal no of patients dischargedNumber of students graduatedI/IChange in WCChange in patients treatedChange in student enrolmentPolitically Motivated ApproachOrganizations are political entities. They must respond to the varying needs of its constituents.

Followed from the above organizations cannot have a single goal. many goals as the variety of stake holders. Goals have to vary according to the constituents requirements. StakeholdersConstituencyTypical OE CriteriaOwnersROI, growth in earningsEmployeesCompensation, incentivesCustomersPrice, quality, ServiceSuppliersPayments, future potentialCreditorsAbility to payback debtUnionsCompetitive wages and benefits, working conditionsLocal Community OfficialsInvolvement in local activities, damage to local environmentGovernment AgenciesCompliance with LawsHow can manager apply this?3 major stepsAsking members to identify the constituentsEvaluate the listHow dependent on it our organization is?Does it have considerable power over us?Are there alternatives?Identifying the expectationsWhat do they want of it?14MEGHNA RAJPURA P-45Competing values approachThe same constituents may have conflicting interest: Hence an individual may be a share holder of an organization and hence may expect larger dividends. However he may also be the consumer of the products of this organization and may expect better quality and cheaper price. Hence organizations have to perform a balancing act to satisfy various demands of the same stakeholders.

Competing Values Approach The Competing Values Approach is the criteria you value and use in assessing an organizations effectiveness.16SNEHA SHARMA P-41MEGHNA RAJPURA P-45Criteria Return on investment

Market share

New product innovation

Job security17SNEHA SHARMA P-41MEGHNA RAJPURA P-45Assumptions No best criterion for evaluating an organization effectiveness.

There cannot be one single goal that everyone can agree upon.

The concept of OE is subjective.18SNEHA SHARMA P-41MEGHNA RAJPURA P-45Problem to the approach This approachs perception is on how well an organization is doing on the criteria rather than clarifying in which criteria the constituencies are emphasizing19SNEHA SHARMA P-41MEGHNA RAJPURA P-45FlexibilityOrganizationPeopleControlMeansEndsCellsDefinitionOFMAble to adjust well to shifts in external conditions & demandsOFEAble to increase external support and expand size of workforceOCMGoals are clear and understoodOCEVolume of output is highPCMChannels of Communication facilittate informing people about things that effect their workPCESense of order, continuity and smooth functioning of operationsPFMEmployee trust, respect, and work well with each otherPFEEmployee have training, skill and capacity to do their work properly

Comparison of Approaches24Approach DefinitionWhen UsefulGoal AttainmentAn organization is effective to the extent that it accomplishes its stated goals. The approach is preferred when goals are clear, time bound and measureable.SystemsIt acquires needed resources.A clear connection exists between inputs and outputs.Strategic ConstituenciesStrategic Constituencies are at least minimally satisfied.Constituencies have powerful influence on the organization, and it must respond to demands.Competing ValuesThe emphasis of the organization in the four major areas matches constituent preferences.The organization is unclear about its own emphases, or changes in criteria over time are of interest.Approaches to measuring organizational effectiveness25Approaches to measuring organizational effectivenessExternal resource approach

Internal systems approach

Technical approachKAVITA SINGH P-44External resource approach A method managers use to evaluate how effectively an organization manages and controls Its external environment

SuppliersCustomersCompetitorsgovernmentKAVITA SINGH P-44Internal systems approachA method that allows managers to evaluate how effectively an organization functions and operates

Structure cultureFlexibility Co-ordinationMotivation

KAVITA SINGH P-44Technical approachA method managers use to evaluate how efficiently an organization can convert some fixed amount of organizational resources into finished goods and servicesTechnical effectiveness is measured in terms of productivity and efficiency (output: input)Processtechnology

KAVITA SINGH P-44Goals to be set to measure effectiveness

External resource approachLower costs of inputsObtain high-quality inputs of raw materials and employeesIncrease market shareIncrease stock priceGain support of stakeholders such as government or environmentalists

Internal systems approachCut decision-making timeIncrease rate of product innovationIncrease coordination and motivation of employeesReduce conflictReduce time to marketTechnical approachIncrease product qualityReduce number of defectsReduce production costsImprove customer serviceReduce delivery time to customer