ORGANIZATIONAL

EFFECTIVENESS

HISTORICAL OPINIONS
ABOUT ORGANIZATIONAL
EFFECTIVENESS
1. FREDERICK TAYLOR
2. HENRI FAYOL
3. ELTON MAYO

FREDERICK TAYLOR

EFFECTIVENESS WAS DETERMINED BY

FACTORS SUCH AS PRODUCTION
MAXIMIZATION, COST
MINIMALIZATION, TECHNOLOGICAL
EXCELLENCE, Etc.

HENRI FAYOL
EFFECTIVENESS IS A FUNCTION OF CLEAR
AUTHORITY AND DISCIPLINE WITHIN AN
ORGANIZATION

ELTON MAYO
EFFECTIVENESS IS A FUNCTION OF
PRODUCTIVITY RESULTING FROM
EMPLOYEE SATISFACTION

NEAR
FUTURE

TIME
DIMENSION

INTERMEDIATE
FUTURE

Approx.
1 year

DISTANT
FUTURE
Approx.
5 years

The organization
must be
1.

EFFECTIVENESS
CRITERIA

2.

3.

EFFECTIVE in
The organization
accomplishing its
must be
purpose(s)
EFFICIENT in the 4. ADAPTIVE to
new opportunities
acquisition and use
and obstacles
of scarce resources
5. CAPABLE OF
A SOURCE OF
DEVELOPING
SATISFACTION
the ability of its
to its owners,
members and of
employees,
itself
customers and
clients, and
society.

The organization
must be
6. CAPABLE OF
SURVIVAL in
a world of
uncertainties.

ORGANIZATIONAL
EFFECTIVENESS
MEETING ORGANIZATIONAL OBJECTIVES AND
PRVAILING SOCIETAL EXPECTATIONS IN THE
NEAR FUTURE, ADAPTING AND DEVELOPING IN
THE INTERMEDIATE FUTURE, AND SURVIVING
IN THE DISTANT FUTURE.

APPROACHES TO MEASURING
ORGANIZATIONAL EFFECTIVENESS
Goal Approach: Effectiveness is the ability to
excel at one or more output goals.
Internal Process Approach: Effectiveness is the
ability to excel at internal efficiency, coordination,
motivation, and employee satisfaction.
System Resource Approach: Effectiveness is the
ability to acquire scarce and valued resources from
the environment.

Approaches to Measuring Org.

Effectiveness, continued
Constituency Approach: Effectiveness is
the ability to satisfy multiple strategic
constituencies both within and outside the
organization.
Domain Approach: Effectiveness is the
ability to excel in one or more among
several domains as selected by senior
managers.

Flow Charts of Approaches to

Organizational Effectiveness
Goal Approach

INPUTS

TRANSFORMATION

OUTPUTS

GOAL APPROACH

Flow Charts of Approaches to

Organizational Effectiveness
Internal Process Approach

INPUTS

TRANSFORMATION

INTERNAL PROCESS APPROACH

OUTPUTS

Flow Charts of Approaches to

Organizational Effectiveness
System Resource Approach

INPUTS

TRANSFORMATION

SYSTEM RESOURCE APPROACH

OUTPUTS

Flow Charts of Approaches to

Organizational Effectiveness
Constituency Approach

INPUTS

TRANSFORMATION

STRATEGIC CONSTITUENCIES APPROACH

OUTPUTS

COMPARISON OF THE FOUR OE APPROACHES

Approach

Definition
An organization is effective
to the extent that:

When Used
Preferred when:

Goal attainment

it accomplishes its stated goals

goals are clear, time

bound and measurable

System Resource

it acquires needed resources

a clear connection exists

between inputs and outputs

Constituencies

all strategic constituencies

are at least minimally
satisfied

constituencies have powerful

influence on the organization,
and the organization must
respond to demands

Internal Processes

combines internal efficiency

and affective health

costs, outputs & satisfaction

are easily measurable

OE Criteria for Selected

Constituencies
Constituency
Owners
Employees
Customers
Suppliers
Creditors
Unions

Typical Criteria

Return on Investment; growth in earnings

Compensation; fringe benefits; job satisf.
Satisf. w/price, quality, service
Satisf. w/payments, future sales
Satisf. w/debt payments
Satisf. w/competitive wages & benefits;
satif. working conditions, fairness in
bargaining
Local Communities Involvement in local affairs; environmental
damage
Government Agencies
Compliance w/laws, avoidance of penalties

The Contradictions Model of

Organizational Effectiveness
The idea of trying to characterize a whole organization as
totally effective or ineffective is problematic. In any complex
organization there may be parts of the organization that function
well and suggest effectiveness while other aspects of that same
organization perform poorly.

Four Central Assumptions of

the Contradictions Model
1.

Organizations face complex environments that place multiple and

conflicting demands and constraints on them. It may not be possible
to succeed in meeting all the environmental conditions an organization
faces.
2. Organizations have multiple, conflicting goals. It is impossible to
maximize achievement of all goals.
3. Organizations face multiple internal and external stakeholders or
constituent groups that make competing or conflicting demands. It
may be impossible to satisfy all groups of people who express interest
in a company.
4. Organizations must manage multiple and conflicting time demands.
Satisfying short- or long-term demands at the expense of the other may
result in sub-optimal performance.

Competing Values Model

Organizational goals and performance are
defined by top and middle management. By
comparing the diverse effectiveness indicators
used by managers and researchers, Quinn &
Rohrbaugh looked for underlying similarities
and found underlying dimensions of effectiveness
criteria that reflected competing management
values in organizations.

Competing Values Dimensions I

Focus: whether dominant values concern issues that are
internal to the organization or external to it.

Internal focus reflects management concern for well-being

and efficiency of employees. External focus reflects an
emphasis on the well-being of the organization itself and its
fit with its environment.

Competing Values Dimensions II

Structure: whether stability versus flexibility is the
dominant structural consideration.

Stability reflects a management value for efficiency

and top-down control, while flexibility represents
a management value for learning and change.

Dimensions of Effectiveness
Structure
Flexibility

II

Focus Internal

External

III

IV
Control

Four Models of Effectiveness

Quadrant I : Human Relations Model internal
Focus and flexible structure. Management
concern is on the development of human
resources. Employees are given opportunities
for autonomy and development. Management
works toward sub-goals of cohesion, morale, and
training opportunities. Organizations using this
are more concerned with employees than the
environment.

Four Models of Effectiveness II

Quadrant II: Open Systems Model Combination
of external focus and flexible structure.
Managements goals are primarily growth and
resource acquisition. Sub-goals are flexibility,
readiness, and positive evaluation by the external
environment. Dominant value is establishing
a good relationship with the external environment
to grow and acquire resources. Similar to the
Systems Resource Model.

Four Models of Effectiveness III

Quadrant III: Internal Process Model Reflects
the values of internal focus and structural
control. Seeks a stable organizational setting that
maintains itself in an orderly way. Well
established in environment and just wish to keep
their current position. Sub-goals include
mechanisms for efficient communication,
information management, and decision-making.

Four Models of Effectiveness IV

Quadrant IV: Rational Goal Model Reflects
Management values of structural control and
external focus. Primary goals are productivity,
efficiency, and profit. Organization wants to
achieve output goals in a controlled way.
Sub-goals include internal planning and
goal-setting, which are rational management
tools. Similar to the Goal Approach.

Competing Values
Four different opposing value sets within the
organization. Exist simultaneously, and the
right balance for the organization is subject
to managerial discretion.
Emphasis may change over time, especially as the
organization evolves through its life cycle.

Examples: hospitals, airlines