organizational effectiveness mg345 organizations & environment tony buono
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Organizational EffectivenessOrganizational Effectiveness
MG345
Organizations & Environment
Tony Buono
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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
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Management Control & Management Control & Organizational EffectivenessOrganizational Effectiveness
EFFECTIVENESS
High
Low
Command/Compliance
Commitment/Mutual Adjustment
MANAGEMENT CONTROL ORIENTATION
Programmable Non-programmable
Type of Work
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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)
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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:
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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)
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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
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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)
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Perspectives on Organizational Effectiveness
InputConversion
ProcessOutput
Organizations as Input-Process-Output Systems
Resource-based(System Resources)
Internal Process• Excellence & Competency• Efficiency
Goal
Strategic Constituencies (Stakeholder Model)
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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?
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Perspectives on Organizational Effectiveness
InputConversion
ProcessOutput
Organizations as Input-Process-Output Systems
Resource-based(System Resources)
Internal Process• Excellence & Competency• Efficiency
Goal
Strategic Constituencies (Stakeholder Model)
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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:
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Perspectives on Organizational Effectiveness
InputConversion
ProcessOutput
Organizations as Input-Process-Output Systems
Resource-based(System Resources)
Internal Process• Excellence & Competency• Efficiency
Goal Accomplishment
Strategic Constituencies (Stakeholder Model)
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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
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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
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Mapping Organizational Effectiveness
Flexibility
Control
Internal External
STRUCTUREF
OC
US
Human RelationsModel
Open-System Model
Rational-Goal ModelInternal-Process
Model
Universal
Centurion
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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)