organisation effectiveness and its measurement
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ORGANISATIONAL EFFECTIVENESS
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Effectiveness is a measure of whether or not theorganisational objectives are accomplished.
Efficiency is the relationship between inputs and
outputs. Organisational effectiveness is also called as
organisational success or growth.
Effectiveness is defined as the degree to which the
organisation realises its goals. Effectiveness of an organisation can be seen in
terms of the survival of the organisation.
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An organisation remains effective as long as it
uses its resources in an efficient manner and
continue to contribute to the large system.
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SOME INSIGHTS ON ORGANISATIONAL
EFFECTIVENESS.
No single approach to the evaluation of
effectiveness is aappropriate in all
circumstances or for all organisational types.
To be truly effective,today`s productive
organisations need to strike a generally
acceptable balance between organisational
and societal goals.
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A TIME DIMENSION
The organisation needs to be effective in thenear, intermediate and distant future.
Organisational effectiveness can be defined as
meeting organisational objectives andprevailing societal expectations in the nearfuture , adapting and developing in theintermediate future and surviving in the distantfuture.
Most people think about the near future.
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ORGANISATIONAL DECLINE
Because of unsteady economic
growth,resource
shortages,mismanagement,global competition
etc have resulted in organisational decline.
Ex. GM, IBM.
Strategies such as reengineering can be
applied under such circumstances.
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PERSPECTIVES OF EFFECTIVENESS
Individual effectiveness results in group
effectiveness which results in organisational
effectiveness.
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CAUSES OF INDIVIDUAL
EFFECTIVENESS
Ability
Skill
Knowledge Attitude
Motivation
Stress.
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CAUSES OF GROUP EFFECTIVENESS
Cohesiveness
Leadership
Structure Status
Roles
Norms.
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ORGANISATIONAL EFFECTIVENESS
Environment
Technology
Strategic Choice Structure
Processes
Culture.
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MANAGEMENTS CONTRIBUTION TO
EFFECTIVENESS
Management performs the function of
Planning , Organising, Leading, Controlling.
To Coordinate the
Individuals Groups
Organisations
To Attain
Individual Effectiveness Group Effectiveness
Organizational Effectiveness
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FACTORS CAUSING EFFECTIVENESS
Failure of managers.
Delay in taking decisions
Lack of sufficient efforts Excessive efforts in relation to the need
Wasted efforts.
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FACTORS CAUSING EFFECTIVENESS
ACCORDING TO TOP MANAGEMENT OF INDIAN
COMPANIES Central Govt. regulations
State Govt Regulations
Interference of Political Leaders in the working of
organisations.
Interference of financial institutions in the workingof organisation.
Lack of infrastructure facilities. Lack of Technological Development.
Competition from imports.
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APPROACHES TO EFFECTIVENESS
Goal Approach to effectiveness
Systems theory approach to effectiveness
Contemporary Effectiveness Approach Stakeholders Approach
Competing Values Approach
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GOAL APPROACH TO EFFECTIVENESS
Effectiveness is the accomplishment of recognisedobjectives of cooperative effort. The degree ofaccomplishment indicates the degree of
effectiveness. The idea that organisations as well as individuals
and groups should be evaluated in terms of goalaccomplishment is really practical.
Many management practices are based on goalapproach.
Ex. Management by objectives(MBO)
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PROBLEMS ASSOCIATED WITH GOAL
APPROACH
Goal Achievement is not readily measurable for
organisations that do not produce tangible
products.
Organisations attempt to achieve more than
one goal. But, the achievement of one goal
diminishes their ability to achieve other goals.
Obtaining consensus among managers
regarding their organization's specific goals.
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SYSTEMS THEORY APPROACH OR
SYSTEM RESOURCE APPROACH TO
EFFECTIVENESS. Effectiveness is the ability to acquire scarce and valued
resources from the environment.
The flow of inputs and outputs is the basic starting pointin describing the organisations.
Organization takes the resources(Input) from the largersystem(Environment), processes these resources, andreturns them in changed form(Output)
Systems theory also stresses the organisationsconnectivity to the larger system
Every organization is part of an industry(a largersystem),a society(a yet larger system) and a globaleconomy(the largest system of all)
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Systems theory also describes the behaviour ofindividuals and groups.
The inputs of individual behaviour are causes
that arise from the workplace.
Ex. The cause may be the managers directivesto perform a particular task.
The input is then processed by individual`smental and psychological processes to producea particular outcome.
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INTERNAL PROCESS APPROACH
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Effectiveness is the ability to excel at internal
efficiency, coordination, motivation and
employee satisfaction.
Internal efficiency can be achieved by keeping
the right people for the right job.
Organisational effectiveness can be achieved
by the best utilisation of human resources for
the accomplishment of organisational goals.
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Organizational effectiveness can be achieved
by better co-ordination and co-operation among
the members of the organization for the
accomplishment of organizational goals.
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Contemporary effectiveness Approach
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According to this approach, Organizational
effectiveness depends on
The ability to understand environment.Frequent changes.
Competitor strategies.
The ability to be flexible and adaptive.Ability to adapt to the changes.
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THE COMPETING VALUES
APPROACH
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The criteria you value and use in assessing anorganization's effectiveness return oninvestment, market share, new product innovation,
job security-depend on who you are and theinterests you present.
The stockholders,unions,suppliers,
management, or internal specialists in
marketing,personnel,production or accountingmay look at the organization but evaluate itseffectiveness in a different way.
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ASSUMPTIONS
There is no best criterion for evaluating an
organisation`s effectiveness.
There is neither a single goal that everyone can
agree upon.
The concept of OE is subjective.
The goals that an evaluator chooses will
depend upon his or her personal values,
preferences and interests.
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Ex. Xerox.
Financial Analysts may define OE in terms of
high profitability.
Production executives may define OE in terms
of the quality of the equipment manufactured.
Marketing people and competitors may look at
the percentage of market that Xerox`s various
products hold.
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HR- absence of strikes, competency of the
human resource.
R and D-Number of new inventions.
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MAKING COMPETING VALUES
OPERATIVE
The three basic sets of competing values.
1.Flexibility Vs Control.
Flexibility values adaptation, innovation andchange.
Control favours stability, order and
predictability.
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2.Whether emphasis should be placed on the
well being of the people or on the well being of
the organisation.
The concern for the feelings and needs of the
people versus concern for production and task
accomplishment.
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3. Organizational means vs. ends.
The former stressing the internal processes
and the long term and the latter focussing final
outcomes and the short term.
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EIGHT OE CRITERIA CELLS
Cells Description Definition
OFM Flexibility Able to adjust well to shifts in
external conditions and demands.
OFE Acquisition of resources Able to increase external support
and expand size of work force.
OCM Planning Goals are clear and wellunderstood.
OCE Productivity and efficiency. Volume of output is high
PCM Availability of information Channels of communication
facilitates informing people about
things that affect their work.
PCE Stability Sense of order, continuity and
smooth functioning of operations.
PFM Cohesive work force Employee trust,respect and work
well with each other.
PFE Skilled work force Employees have the training,skills
and capacity to do their work
properly
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STAKEHOLDERS APPROACH
Organisations exist because of their ability to
create value and acceptable outcomes for
various groups of stakeholders.
Stakeholders-People who have an interest,
claim or stake in the organisation in what it
does and in how well it performs.
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There are inside stakeholders and outside
stakeholders.
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SHAREHOLDERS
Shareholders are the owners of the
organisation, their claim on organisational
resources is often considered superior to the
claims of other inside stakeholders.
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MANAGERS
Employees who are responsible for
coordinating organisational resources and
ensuring that an organisation`s goals
successfully met.
Top managers are responsible for investing
shareholder money in resources in order to
maximize the future output of goods andservices.
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Managers are in fact,the agents or employees
of shareholders and are appointed directly by
shareholders through an organisation`s Board
of Directors to manage the organisation`s
business.
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THE WORK FORCE
All nonmanagerial employees
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OUTSIDE STAKEHOLDERS
People who do not own the organisation, are
not employed by it,but do have some interest in
it.
Customers
Suppliers
The Government
Trade Unions
Local Communities
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The General Public
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CUSTOMERS
Largest outside stakeholder group.
They are induced to select a product from
alternative products.
The money they pay is their contribution to the
organisation and reflects the value they feel
they receive from the organisation.
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SUPPLIERS
Contribute to the organisation by providing
reliable raw materials and component parts
that allow the organisation to reduce
uncertainty in its technical or production
operations and thus reduce production costs.
High quality inputs result in high quality output.
Reliability of product.
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THE GOVERNMENT
Wants companies to compete in a fair manner
and to obey the rules.
Laws concerning the payment and treatment of
employees, workers` health, workplace
safety,non discriminatory hiring practices and
other social and economic issues about which
legislations are there.
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TRADE UNIONS
Conflict or cooperation.
Nature of relationship has an effect on the
productivity and effectiveness of the
organisation.
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LOCAL COMMUNITIES
Employment, housing and the general
economic well being of a community are
strongly affected by the success or failure of
local business.
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THE GENERAL PUBLIC
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ORGANISATIONAL EFFECTIVENESS-
SATISFYING STAKEHOLDERS`GOALS AND
INTERESTS Shareholders evaluate an organisation by the
return they receive on their investment;
customers by the reliability and value of
products relative to their price and managers
and employees , by their salaries, stock
options, conditions of employment and career
prospects.
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Often these goals conflict.
Organisations are often regarded as alliances
alliances or coalitions of stakeholder groups
that directly bargain with each other and use
their power and influence to alter the balance
of inducements and contributions in their
favour.
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Enron and worldcom collapsed when their
illegal actions become public and their
stakeholdersrefused to contribute.
Shareholders sold their stock,banks refused to
lend money and debtors called in their loans.
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So, the organisation must minimally satisfy the
interest of all the groups that have a stake in
the organisation.
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