organizational effectiveness
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Organizational effectiveness is a concept used to gauge how effective
organization An organization or organisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences) is an legal entity, entity—such as ...
s are at reaching intended outcomes. Organizational effectiveness can be used to evaluate and improve organizational active criticalities, even though it means various things to different individuals. There are other alternative methods for measuring organizational performance. Organizational effectiveness embodies the degree to which firms achieve the goals they have decided upon, a question that draws on several different factors. Among those are
talent management Talent management (TM) is the anticipation of required human capital for an organization and the planning to meet those needs. The field has been growing in significance and gaining interest among practitioners as well as in the scholarly deba ...
,
leadership development Leadership development is the process which helps expand the capacity of individuals to perform in leadership roles within organizations. Leadership roles are those that facilitate execution of an organization's strategy through building alignmen ...
,
organization design Organizational architecture, also known as organizational design, is a field concerned with the creation of roles, processes, and formal reporting relationships in an organization. It refers to architecture metaphorically, as a structure which ...
and
structure A structure is an arrangement and organization of interrelated elements in a material object or system, or the object or system so organized. Material structures include man-made objects such as buildings and machines and natural objects such as ...
, design of measurements and scorecards, implementation of change and transformation, deploying smart processes and smart technology to manage the firm's
human capital Human capital or human assets is a concept used by economists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a subs ...
, and the formulation of the broader Human Resources agenda.


Economic Models of Organizational Effectiveness

In economics, organizational effectiveness is measured by profitability and the minimization of issues related to high employee turnover and absenteeism. As the market for competent employees is subject to supply and demand pressures, firms must offer incentives that are not too low to discourage applicants from applying and not too unnecessarily high as to detract from the firm's
profit maximization In economics, profit maximization is the short run or long run process by which a firm may determine the price, input and output levels that will lead to the highest possible total profit (or just profit in short). In neoclassical economics, ...
capability. As organizational effectiveness translates across a broad array of organizational functions, several different models have been developed to achieve flexibility among organizations with different functions and objectives. # The Goal-Attainment Approach determines organizational effectiveness by determining the degree to which a firm achieves the goals it has established. This model has a broad scope and calls for a
quantitative Quantitative may refer to: * Quantitative research, scientific investigation of quantitative properties * Quantitative analysis (disambiguation) * Quantitative verse, a metrical system in poetry * Statistics, also known as quantitative analysis ...
evaluation of a firm's profit and productivity maximization, its shareholder value, and its social and environmental impact. This approach assumes that organizations are rational, deliberate, and goal driven, and it prioritizes the result over the means of achieving organizational effectiveness. This paradigm presupposes that organizations are effective to the degree that they fulfill their objectives. Objectives, for example, may be seen as subjective and political since they represent the values and priorities of consultation. Furthermore, defining objectives can be difficult (which can impede measurement), and disparities in measuring methods can make comparing organizations difficult. Finally, organizations may be unable to undertake thorough impact evaluations capable of establishing causal attribution. # The Systems Resource Approach views the organization as an interrelation of
subsystems A system is a group of interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by its boundaries, structure and purpose and is exp ...
that function together to affect an organization's desired outcomes. Consequentially, if anyone sub-system performs poorly performs its role, the performance of the entire system is negatively affected. Using this approach, organizational effectiveness is measured with reference to an organization's environmental inputs, the inter-relations among its constituent divisions, the degree of flexibility a firm has to respond to changes in the market, and the level of efficiency an organization has when delivering output. # The Strategic Constituencies Approach establishes that organizational effectiveness is determined by its ability to satisfy the demands imposed by its major shareholders ("constituents") from whom it requires continued support to remain in existence. This model assumes that an organization is composed of several political arenas with vested interests that compete for control over limited resources. As the firm must satisfy the needs of these constituent parts to continue its existence, effectiveness is obtained by ensuring the needs and expectations of the strategic constituencies are fulfilled. This model also accounts for changes in the surrounding environment, whereby an organization must strategically prioritize which constituencies are the most fundamental to its ongoing survival to operate effectively.


Major approaches to Effectiveness

Multidimensional approaches The multidimensional technique measures efficacy in several dimensions at the same time. It is frequently used in conjunction with the goal-attainment approach and the systems resource approach. The Competitive Value Framework is a version on the multidimensional method that covers the three value dimensions that are at the heart of most legitimate definitions: organizational focus, organizational structure, organizational means, and organizational goals. In different situations, these multidimensional methods merely reflect an increasing realisation that, in the words of Starbuck and Nystrom, "organisations contain ambiguous, partially incomparable, and incongruous goals." Reputational approach The reputational method combines validity requirements with voter satisfaction. The effectiveness of reputation measures is often measured based on the self-reported perceptions of consumers, workers, or outside professionals.


Social Science Disciplines

Rapid advances in social sciences and technology aided by clever experimentation and observation are bringing several truths to the light of society. There are several disciplines of social sciences that help the OE Practitioner be successful. Four of them are outlined below: *
Decision Making In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either ra ...
- Ways in which real people make decisions, enabling them real time to make good decisions, improving the quality of decisions by leveraging adjacent disciplines (for example-
Behavioral economics Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economi ...
) and replicating relevant experiments, creating new ones and implementing their results to make organizations effective. *Change & Learning – Ways in which real people learn, change, adapt and align, get "affected" by dynamics in the environment and leverage this knowledge to create effective organizations that are pioneers of change and learning. * Group Effectiveness – Ways in which real people work well together, especially in bringing new ideas and innovation, working of people-to-people protocols, the impact of digitization and virtualization in organizations on these protocols. *Self-Organizing & Adaptive Systems– Ways in which self-organizing systems and highly networked systems work, learnings from them and the tangible ways by which they can be put to play to make organizations more effective.


Application

The broader idea of organizational effectiveness is applied to
non-profit organization A nonprofit organization (NPO), also known as a nonbusiness entity, nonprofit institution, not-for-profit organization, or simply a nonprofit, is a non-governmental (private) legal entity organized and operated for a collective, public, or so ...
s in making funding decisions.
Foundations Foundation(s) or The Foundation(s) may refer to: Common uses * Foundation (cosmetics), a skin-coloured makeup cream applied to the face * Foundation (engineering), the element of a structure which connects it to the ground, and transfers loads f ...
and other sources of
grants Grant or Grants may refer to: People * Grant (given name), including a list of people and fictional characters * Grant (surname), including a list of people and fictional characters ** Ulysses S. Grant (1822–1885), the 18th president of the U ...
and other types of funds are interested in the organizational effectiveness of those people who seek funds from the foundations. Foundations always have more requests for funds or funding
proposals Proposal(s) or The Proposal may refer to: * Proposal (business) * Research proposal * Marriage proposal * Proposition, a proposal in logic and philosophy Arts, entertainment, and media * ''The Proposal'' (album), an album by Ransom & Statik Se ...
and treat funding as an
investment Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...
using the same care as a
venture capital Venture capital (VC) is a form of private equity financing provided by firms or funds to start-up company, startup, early-stage, and emerging companies, that have been deemed to have high growth potential or that have demonstrated high growth in ...
ist would in picking a company in which to invest. According to Richard et al. (2009) organizational effectiveness captures
organizational performance Business performance management (BPM) (also known as corporate performance management (CPM) enterprise performance management (EPM),) is a management approach which encompasses a set of processes and analytical tools to ensure that a business o ...
plus the myriad internal performance outcomes normally associated with more efficient or effective operations and other external measures that relate to considerations that are broader than those simply associated with economic valuation (either by shareholders, managers, or customers), such as
corporate social responsibility Corporate social responsibility (CSR) or corporate social impact is a form of international private business industry self-regulation, self-regulation which aims to contribute to societal goals of a philanthropy, philanthropic, activist, or chari ...
.


Multiple dimensions

Scholars of nonprofit organizational effectiveness acknowledge that the concept has multiple dimensions and multiple definitions. For example, while most nonprofit leaders define organizational effectiveness as 'outcome accountability,' or the extent to which an organization achieves specified levels of progress toward its own goals, a minority of nonprofit leaders define effectiveness as 'overhead minimization,' or the minimization of fundraising and administrative costs. Organizational effectiveness is evaluated within nonprofit organizations using logic models. Logic models are a management tool widely used in the nonprofit sector in program evaluation. Logic models are created for specific programs to link specific, measurable inputs to specific, measurable impacts. Typically, logic models specify how program inputs production activities and outputs, such as services delivered, which in turn lead to impacts, such as improved beneficiary health.


See also

*
Management Management (or managing) is the administration of organizations, whether businesses, nonprofit organizations, or a Government agency, government bodies through business administration, Nonprofit studies, nonprofit management, or the political s ...
*
Organization An organization or organisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences) is an legal entity, entity—such as ...
*
Theory of the firm The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in eco ...
* Workplace listening


References

{{DEFAULTSORT:Organizational Effectiveness Organizational theory