organizational effectiveness mg345 organizations & environment tony buono

Organizational EffectivenessOrganizational Effectiveness

MG345

Organizations & Environment

Tony Buono

Universal & Centurion

Jack Harris’ Universal• $600 m sales• 480 employees• Profitability through:

– Effectiveness– Employee Satisfaction

• No organization charts• Cross-training & inter-

departmental collaboration• Control through

commitment / mutual adjustment

Len Semp’s Centurion• $750 m sales

• 550 employees

• Profitability through:– Efficiency

– Process Standardization

• Detailed org charts

• Narrowly defined jobs & functional responsibility

• Control through command / compliance

Management Control & Management Control & Organizational EffectivenessOrganizational Effectiveness

EFFECTIVENESS

High

Low

Command/Compliance

Commitment/Mutual Adjustment

MANAGEMENT CONTROL ORIENTATION

Programmable Non-programmable

Type of Work

Perspectives onOrganizational Effectiveness

InputConversion

ProcessOutput

Organizations as Input-Process-Output Systems

Resource-based(System Resources)

Internal Process• Excellence & Competency• Efficiency

Goal

Strategic Constituencies (Stakeholder Model)

Goal Approach

• Official goals: Formally stated, abstract goals that are often difficult to measure

• Operative goals: reflect the activities the organization is actually performing

profitability growth market shareproduct quality efficiency diversificationemployee welfare financial stability R&Dsocial responsibility management development

• Limitations: (1) multiple goals (2) identification of operative goals(3) subjective indicators of goal attainment

• Examples:

Perspectives onOrganizational Effectiveness

InputConversion

ProcessOutput




Goal


Strategic ConstituenciesApproach (Stakeholder Model)

• Organizational effectiveness as the extent to which key stakeholders are satisfied with the firm’s performance.

StakeholderOwners/investorsEmployeesCustomersCreditorsLocal communitySuppliersGovernment

Example Effectiveness CriteriaFinancial return, shareholder valueJob satisfaction, compensationQuality and cost of goods/servicesCreditworthiness, company ratingContribution to community affairsSatisfactory transactionsAdherence to laws, regulations

The Balanced Scorecard:The Balanced Scorecard: Integrating Goals & StakeholdersIntegrating Goals & Stakeholders

Process-Centric

People-Centric

InternalFocus

ExternalFocus

Organization Results

Investor Results

Employee Results

Customer &Other Relevant

StakeholderResults

Source: Adapted from Ulrich, et al, Results-Based Leadership (2000)

Perspectives on Organizational Effectiveness

InputConversion

ProcessOutput




Goal


Resource-based Approach

• Key assumption: to be effective organizations must obtain scarce and valued resources from its environment

• Indicators:

Bargaining position ~ ability of an organization to capture critical resources at a fair priceAbility to accurately perceive and interpret the external environmentAbility of the organization to respond to changes in its environment

• Limitations: Focus on acquisition of resources ~ use? Towhat end?


InputConversion

ProcessOutput




Goal


Internal Process Approach

• Focus is on internal organizational health (harmony, competency, excellence) and efficiency (use of resources)

Use of time, money, people Team spirit, group loyalty, teamwork Employee-management trust Open communication and information sharing Interdepartmental cooperation and collaboration

• Limitations: (1) Total output not evaluated(2) Closed system orientation(3) Measurement can be highly subjective

• Indicators:


InputConversion

ProcessOutput




Goal Accomplishment


Competing Values Approach to Organizational Effectiveness

Flexibility

Control

Internal External

STRUCTUREF

OC

US

Human RelationsModel

Open-System Model

Rational-Goal ModelInternal-Process

Model

MEANS:MoraleCohesive Work Force

ENDS:Valued HRsSkilled Work Force

MEANS:AdaptabilityFlexibility

ENDS:Resource AcquisitionExternal Support

MEANS:CommunicationAvailability of Information

ENDS:StabilityControl

MEANS:PlanningGoal Setting

ENDS:ProductivityEfficiency

Universal & Centurion

Jack Harris’ Universal• $600 m sales• 480 employees• Profitability through:

– Effectiveness– Employee Satisfaction

• No organization charts• Cross-training & inter-

departmental collaboration• Control through

commitment / mutual adjustment

Len Semp’s Centurion• $750 m sales

• 550 employees

• Profitability through:– Efficiency

– Process Standardization

• Detailed org charts

• Narrowly defined jobs & functional responsibility

• Control through command / compliance

Mapping Organizational Effectiveness

Flexibility

Control

Internal External

STRUCTUREF

OC

US

Human RelationsModel

Open-System Model

Rational-Goal ModelInternal-Process

Model

Universal

Centurion

Factors Influencing Organizational Effectiveness Criteria

• Top Management Influence– Value Judgments & Leader Choices– Organizational Culture & Structure

• Goal Measurability– Routine internal tasks measurable efficiency goals– Non-routine internal tasks output goal criteria (e.g., quality,

growth) & internal processes (e.g., satisfaction, collaboration)

• Environmental Conditions– Uncertainty & Resource Scarcity focus on resource-based

(input) & internal efficiency criteria– Turbulence & Change emphasis on stakeholder satisfaction

& internal processes (e.g., competency, adaptability)

organizational effectiveness mg345 organizations & environment tony buono

Documents