DEFINITION
“Effectiveness
may be defined as the degree to which an organization realizes its goals.”
“
Effectiveness of an organization can be seen in terms of the survival of the
organization.”
“ An
organization remains effective as long as it uses its resources in an efficient
manner and continues to contribute to the large system “
“ Since an
organization can be effective or ineffective on a number of different facts
that may be relatively independent of one another, OE has no operational
definition .”
APPROACHES TO MEASURE EFFECTIVENESS
We have seen that organizational
effectiveness is defined in different ways and that each way provides a
particular criteri or a set of criteria which may be even contradictory.
However if does not mean that
organizational effectiveness should not be measured: it has to be
measured. It must be measured because of two reasons. First, those who are
responsible for the management of an organization should know whether their
organization is doing things rightly. If not what additional efforts are
required. Second organization is means for satisfying the needs of people in
the society and the satisfaction of such needs is directly linked to
organizational effectiveness, as we have seen earlier. Because of these reasons
, certain approaches have been developed for measuring effectiveness. A
particular approach measures effectiveness in some context and, therefore it
lacks universality. This phenomenon is true for any principle of management.
Therefore, while adopting particular approach in measuring effectiveness, its
inherent limitations should be taken into account. There are four types of
approaches which are commonly used for effectiveness measurement:
1.
goal approach
2.
behavioral
approach
3.
system
resource approach
4.
strategic
constituencies approach.
GOAL APPROACH
Goal approach attempts at
measuring organizational effectiveness in terms of goal achievement by an
organization. The effectiveness of the organization can be measured in terms of
the degree to which goals are achieved.
The goal approach, which itself
has taken many forms, is the most widely used by organization theorists, some
have adopted it only as a part of a broader perspective of organizations;
others have employed it as a major tool in their study of organizations. In
studying effectiveness in terms of goal – achievement, theorists tend,
implicitly or explicitly, to make two assumptions:
1.
that complex
organizations have an ultimate goal toward which they are striving and
2.
that the
ultimate goal can be identified empirically and progress toward it measured.
In fact, the orientation to a
specific goal is taken by many as the defining characteristic of organizations.
Goal approach defines effectiveness as profit – maximization, provides an
efficient service, high productivity or good employee morale etc. Campbell has
suggested several variables which can be used in measuring organizational
effectiveness. He includes in his list such items as quality, productivity,
readiness, efficiency, profit or return, utilization of environment ,
stability, turnover or retention, accidents , morale, motivation, satisfaction,
internalization of organizational goals, conflict cohesion, flexibility
adaptation and evaluation by external entities. Thus many criteria for
organizational effectiveness based on goals have been proposed. However none of
the single criteria has proved to be entirely satisfactory as the sole or
universal measurement of effectiveness.
Another approach in goal method is
to measure organizational effectiveness on the basis of multiple criteria. The
idea is that mangers in the organization follow many goals simultaneously and
the fulfillment of these goals may be taken as the basis for organizational
effectiveness. When goal approach is taken as the basis of measuring
effectiveness, the degree of goal achievement may be compared for the same
organization over a period of time, say ten years or so, or it may be compared
with other organizations at a particular point of time.
BEHAVIOURAL APPROACH
Behavioral approach of measuring
organizational effectiveness takes into account the behavior of people in the
organization which ultimately determines the degree of goal achievement by an
organization. This approach is based on two assumptions:
1.
Organizations
as collectivity of people have one set on goals and people as individuals have
another set of goals.
2.
Degree of
organizational effectiveness depends on the degree of integration of
organizational and individual goals.
The integration of individual and
organizational goals affects organizational effectiveness because each
individual tries to satisfy his needs by working in the organization. Thus he
may try to satisfy his own needs without taking into account the organizational
needs it he is able to do so. Since, the organization puts certain control
mechanism, often he is not able to satisfy only his own needs without regard to
organizational needs. Thus because of the operation of fusion process, as
discussed. However this fusion is not uniform for all individuals and
organizations, but is determined by various individual and organizational
characteristics. Therefore individual and organizational goal relationship may
show a number of alternatives ranging
from totally opposite to perfectly identical. In between these two extreme
points there may be three alternative levels of integration.
1.
Low degree of
goal integration.
2.
Moderate
degree of goal integration and
3.
high degree
of goal integration.
LOW DEGREE OF GOAL INTEGRATION:
In the first case when there is
low degree of goal integration, that is low degree of fusion score. This is the
situation where organizational members are opposed to the organizational
members are opposed to the organizational goals. In this situation, either
organization or individual may be able to satisfy its needs. There is general
disregard for the welfare of the organization. Individuals see their goals can
be fulfilled on the cost of the other. This results in low level of morale and
performance. In some cases, this results often in substantial losses, or
draining off of assets. However this position cannot lost for long because
either the individual will leave the organization or the latter may substitute
the individual, depending upon the circumstances and the external environment
or organization may go out of action.
MODERTAE DEGREE OF GOAL INTEGRATION:
In the second situation, there is
moderate degree of integration of organizational and individual goals, and
consequently there is moderate degree of organizational effectiveness. In this
case the organizational and individual goals are somewhat compatible but they
are not exactly the same. The result of interaction between two sets of goals
is compromise, and actual performance is a combination of both.
HIGH DEGREE OF GOAL INTEGRATION
In this third situation, there is
high degree of interaction between organizational and individual goals, and
consequently high degree of organizational effectiveness. In this situation,
individual goals are identified with the organizational goals. The climate of
the organization is such that either of two things may occur. The individuals
in the organization may either perceive their goals being the same as the goals
of the organization or see their won goals being satisfied as a direct result
of working for the goals of the organization. Consequently, closer the individuals
goals with the organizational goals, the greater will be organizational
effectiveness. This approach has led managers to devise organizational
strategy, particularly in regard to management of personnel in the organization
that both sets of goals come nearer. Thus this conceptual approach has given
rise to a very important managerial technique ‘Management by objectives’ which
is both a technique as well as philosophy of the organization.
SYSTEM – RESOURCE APPROACH
System – resource approach of organizational effectiveness is derived from
the open system model as it is applied to a formal social organizations. This
model emphasizes the distinctiveness of the organization as an identifiable
social structure or entity, and it emphasis the interdependency of processes
that relate the organization to its environment. The interdependence between
organization and its environment takes the form of input – output transactions
of various kinds relating to various things. These are scarce and valued
resources. Broadly defined, these resource are generally means or facilities
that are potentially controllable by social organizations and that are
potentially usable – however indirectly – in relationships between the
organization and its environment. The idea of resources here is quite
comprehensive and includes things beyond the concept of resources to physical
or economic objects, such as, human activity. These scarce and valued resources
are the focus of competition between organizations. This competition which may occur
under different social settings and which may take different forms is a
continuous process underlying the emergence of a universal hierarchical
differentiation among social organizations. Such hierarchy may be taken as a
yardstick of organizational effectiveness because it reflects the bargaining
position of organizations in relation to competing social units that share all
or part of the organizations environment. Organizational effectiveness, as such
, is defined in terms of bargaining position as reflected in the ability of the
organization, in either absolute or
relative terms, to exploit it environment in the acquisition of scarce and
valued resources.
The concept of bargaining position
implies the exclusion of any specific goal as the ultimate criterion of
organizations effectiveness. It points to the more general capability of the
organization as a resource getting system. The specific goals, however may be
incorporated in two ways:
1.
as a
specification of the means or strategies employed by members towards enhancing
the bargaining position of the organization.
2.
as a
specification of the personal goals of certain members or classes of members
within the organization.
Thus, better the bargaining
position of the organization, the more capable it is in attaining its varied
and transient goals, and more capable it is in flowing the attainment of
personal goals of its members.
The resources getting ability of
organization is not the only aspect of organizational performance because the
input of the resources is only one of three major cyclic phases in system model
of organization, the other two being throughout and output. From this
viewpoint, the mobilization of resources is a necessary but not sufficient
condition for organizational effectiveness. The concept organizational
effectiveness as defined in the concept of
its bargaining position, however
includes all the three phases of organization behavior – the importation of resources
, their use, and their exportation in some output form that aids in mobilizing
further inputs.
By focusing on the ability of the
organization to exploit its environment in the acquisition of resources in the
are of competition over scarce and valued resources that the performance of
both like and unlike organizations can be assessed and evaluated comparatively.
The comparative aspect of interorganisational relations implies that an
assessment of organizational effectiveness is possible only where some form of
competition takes place. Blau observes that competition promotes hierarchical
differentiation between more or less successful organizations, and exchange
promotes horizontal differentiation between specialized organizations of
diverse sort. The competition may exist even among unlike units because
exchange and competition are extremes of a continuum along which
interorganisational transaction can be described. The comparison is easy when
competition refers to some kind of resources and the assessment variables both
the input and output are measured in like units. Comparisons are also possible,
however in the case of organizations that do not compete directly, but that
compete in environments that are judged to be similar in some relevant
respects. This is so because some resources are of universal relevance and
organizations frequently mobilize their activities in a way that enhances their
power to acquire these resources.
It is, of course very difficult to
determine in absolute terms the organizations maximum bargaining position and
the optimal point of resource procurement that is associated with that
position. Thus in practice, organizational effectiveness must be assessed in
relative terms. If the nature of resources is also taken into account, the
following steps seem necessary for meaningful comparison:
1.
to provide an
inclusive taxonomy of resources;
2.
to identify
the different types of resources that are mutually relevant for the
organization under study.
3.
to determine
their relative positions of the compared organizations on the basis of
information concerning the amount and kinds of resources that are available for
the organization and its efficiency in suing these resources to get further
resources.
STRATEGIC CONSTITUENCIES APPROACH
Strategic constituencies approach
has been derived from system – resource approach with two major differences.
First this approach considers only relevant environment of the organization
under reference and takes into account those factors which have their impact on
the operation of the organization. Second this approach does not only consider
taking inputs from the environment but exporting its outputs to the
environment. The organizational effectiveness depends on the degree to which
the organization is able to satisfy these constituencies. In order to apply
this approach an organization is able to satisfy these constituencies. In order
to apply this approach an organization has to :
1.
identify the
relevant strategic constituencies and their impact on the organization.
2.
identify the
expectations of these constituencies and the way for meeting these
expectations.
These strategic constituencies and
their expectations may differ for different types of organizations based on the
functions performed by them, in the case of business organizations, these may
be owners, management, employees, customers, suppliers, government and
community. These are also known as interest groups.
