Concept

ORGANISATIONAL EFFECTIVENESS : The concept of organizational effectiveness has been

getting substantial significance in the past few years, chiefly from the social scientists. Organizational
effectiveness is also termed as organizational success, growth, efficiency, productivity or
profitability. These different terms are frequently used interchangeably, although there is
inconsistency in the different terms. Organizational effectiveness has attained significance because of
the subsequent reasons:

 In the day to day current life, man has become more or less reliant on diverse types of
organizations for the contentment of his requirements. The need satisfaction is reliant upon the
organizational effectiveness. Higher the effectiveness, higher would be the satisfaction of needs
derived by the man from the organization. Therefore, this concept is very significant form the
point view of the society at large.
 Organizational effectiveness has also attained significance because it offers a precious central
point for theoretical incorporation of the rising but highly diversified field of organization
theory.

DEFINITIONS:

“Organizational effectiveness is a condition in which an organization attains specific,

desired ends. Barnard distinguished between effectiveness and efficiency, defining
effectiveness in terms of organizational goal attainment and efficiency in terms of
satisfaction and ration of organizational participants.”
- Chester Barnard

“Organizational effectiveness is the ability of an organization to account successfully for

its outputs and operations to its various internal and external constituencies.”
- Gaertner and Ramnarayan
Meaning

An organization is supposed to be effective if it is capable to attain its objectives inside the

constraints of restricted resources as none of the resources given by the organizational environment
are limitless. Organizational effectiveness is the degree to which an organization attains its
objectives with the given resources & means.
 Organizational effectiveness is more inclusive that is reflected by meager good performance, &
productivity of members or the financial achievement of the organization. It reflects how efficiently
an organization can release its obligations with respect to all of its ingredients in its interior &
exterior environment. For instance, shareholders, employees, customers, suppliers, government
agencies & the overall public.

“The growth, expansion, morale, motivation & satisfaction of the members in the system combined
with the good image projection of the organization in the eyes f the general public account for in
turn, for sustained organizational health, vivacity & growth which account for the organizational
effectiveness.”

Thus, organizational effectiveness reflects how well the organization is prepared

 To endure in the modern competitive business world by successful coping

 To grow up and widen in future through inventive adaption strategies.

The concept of organizational effectiveness seems to be easy but it is very tricky to use this concept in
realistic life. It is because of this cause that the organizations & the people who run them repeatedly
have numerous aims or goals which might be in conflict with each other. Even the understanding of
organizational objectives will be subject to diverse view point of owners, society, employees, managers
& some other groups. As it is very hard to attain an accord on the organizational objectives,
measurement of effectiveness in exact term is rendered approximately unfeasible.

1. Effectiveness and Efficiency

Effectiveness and efficiency are usually used very intimately or interchangeably, though both these
terms have very obvious and split meanings. The dissimilarity in these two terms can be elucidated with
the help of the subsequent points:
  Organizational effectiveness is generally referred to as the degree to which prearranged
operational & operative objectives are attained. While the concept of efficiency symbolizes the
cost/benefit rate incurred in the chase of these objectives or in the other words efficiency is
something like the input-output ratio. It illustrates how much inputs are used to create certain
amount of outputs.
 Effectiveness is a multidimensional concept which cannot be calculated by single criteria. But
efficiency can be calculated by the input output ratio. This difference is very significant to
describe why some organizations are effective but extremely inefficient or extremely efficient
but ineffective.
 Efficiency is chiefly a criterion of the inner life of the organization & it is concerned with the
economic & technical aspects of the organization. But effectiveness is extremely wide concept
as it considers the endurance prospects of the organization which are determined exclusively by
the efficiency of the interior system.
 Effectiveness considers organization-environment interface & also takes care of the human side
of the organization. Efficiency on the other side focuses on the technological facet of the
organization.
 An effective organization is not essentially efficient but an efficient organization is not
essentially effective. It is, yet, desirable that an effective organization is also an efficient one.
Efficiency might assist an organization in becoming effective by escalating the possibilities of
energy storage & by assisting in long run growth &survival, but it is not a facet of
organizational effectiveness.
2. Factors affecting Organizational Effectiveness

The diverse approaches embrace diverse standard for assessing organizational effectiveness. That is
why, a very significant & tough job for the manager, who is examining the condition, is to ascertain the
factors underlying organizational effectiveness. The main set of factors or variables that possibly have
their effect on effectiveness are:

 Organizational characteristics
 Environmental characteristics
 Managerial policies and practices
 Employee characteristics

All above mentioned variables are described as below:

 A. Organizational characteristics
Organizational characteristics which affect the effectiveness are of succeeding forms:
(a) Organizational structure

(b) Technology

(a) Organizational Structure:

It affects the effectiveness in the subsequent ways:

a) Structure in terms of functional specialism, size, centralization of decision making &even
formalization is probable to rise productivity &efficiency.
b) Job satisfaction of the employees is also connected to the organizational structure. Impartial
division of work & delegation of authority & responsibility &appropriate direction are probable
to create the feeling of satisfaction amongst employees at work.

(b) Technology:

Technology & organizational structure are interconnected. The kind of technology defines the nature
& structure of organization. Alteration of technology will need many changes in the organization in
the method of :
  Alteration in the operation such as from labor intensive to capital intensive.
 Shifting of employees to either diverse sections inside the similar factory or to other
factory of the organization.
 Modification in span of control.
 Forming of new & winding up of few departments.
 Alteration in the materials which are used.
 Reeducation& provision of more knowledge about the newest technology to the
employees.

If the organization flops to alter the structure as per the needs of technology, it will never prove to be
effective.

B. Environmental characteristics

Each organization needs an appropriate management information system which will observe such
variations in the environmental setting which have a bearing on organizational structure. There are set of
factors which decide the appropriateness of organizational reaction to environmental changes. These
factors are below mentioned:

i) The correctness with which environmental conditions are projected.

ii) Precise perception of environmental states.
iii) Practicality enshrined in the organization system.

Management can obtain information about the environmental changes from its economic research
division, research & development department, management advisors or legal advisor. These are
specialists who will recommend any amendment which are to be made in the organizational set up to
conform to environmental changes.

The environmental factors which effect the organization are of two forms:

(a) External Environment: it entails of the largely market, legal, & technical facets which have a
straight bearing on supply of materials & other factors of production as well as the distribution of
finished goods. The external environment is considered by intricacy, uncertainty &ambiguity.
(b) Internal Environment: the internal environment of the organization is intensely influenced by
psycho-sociological factors which decide individual reactions to organizational expectations. If the
employees give suitable & proper reaction to the programmes &policies undertaken by the
organization, the organization would be effective otherwise not. The reactions of the employees
would depend upon the synchronization prevailing amongst the members & the consistency in
perception of individuals & the organization.

C. Employee Characteristics

Human factor is the utmost vital factor which effects the goal attainment of the organization. If there is a
close amalgamation amongst the individual & organizational goals, the organization would be extremely
effective as elucidated in the behavioral approach to the effectiveness. If the organization, without
compromising with its essential programmes & policies, might readapt to accommodate valid ambitions
of the employees, it should to do so to attain effectiveness. In case there is a fight amid the individual &
the group goals & the issues relays to the very presence of the organization, the organization would have
to take strong stand to deal with the condition. To aid in attaining the effectiveness of the organization,
the employees should have the succeeding features:

 They should be fascinated towards &pleased with the organization.

 They should be dedicated towards the organization.
 Their motives, aims& needs should not be in conflict with the organizational aims.
 The employees should be capable &conversant.
 They should have their role lucidity.
 The job turnover should be very low, if any.
D. Managerial Policies & Practices

Managerial policies & practices are the furthermost significant factors influencing the organizational
effectiveness. These policies & practices comprise:

 Strategic goal setting: goal setting is very tough course. Goals should be so designed that
they carry employees’ sustenance. While setting the goals, the management should
understand the work connecting to the accomplishment of the goal so planned. If goals are
set which are easily attainable that will create laziness amongst the employees and they will
take the work for granted. And on the other side, if goals are set in a way which are too hard
to attain then in this case employees will find themselves in stressful situations which will
demotivate them to proceed further. So, such goals should not be fixed which are
unachievable. Unachievable goals dishearten the employees & effortlessly achievable goals
make them idle& over confident. So, such goals should be set which develop the capability
of the employees to the best level.
 Resource acquisition & utilization: the efficiency of the organization rests on the
acquisition & utilization of resources. The main tasks of the manager is to use the resources
optimally. There should not be any wastage of resources. A capable manager would guess
the necessities of resources & put them to practice in diverse departments in such a means
that every rupee & every human hour are effectively used. Efficiency in resource
 acquisition & utilization is linked to an appropriate control & feedback system which has to
be arranged& designed by the management. This system would offer policy rules to
regulate their action relay them to organizational goals & also to themselves in the event of
deviance from the set course of action.
 Leadership & decision making:

Decision making is task of dynamic leadership. Leadership & decision making could go a
long way in making the organization effective. An effective leader is the one whose
decisions are focused towards attaining such organizational goals which are acknowledged
&executed by the organizational employees. The success of leader will rest on his style, his
capability& the behavior of the subordinates.
 Performance environment: such practices should be executed by the management which
outcomes in enhancing the quality of the performance of individuals which would
eventually be reflected in organizational effectiveness. A few of practices might be:
 Appropriate employee selection & placement process.
 Employee training & development.
 Planning of jobs for employees keeping in view the resources obtainable& the
training needed by the employees.
 Performance management & award system.

If the managers in the organization are adaptive & inventive & welcome new thoughts the
organizational adaptableness to the fluctuating environment would be higher. Healthy collaboration can
be there with the environment & the organization & sometimes, the inner change could also be made to
encounter the necessities of the environment. All this would improve the effectiveness of the
organization.

In addition to above mentioned factors which affect the organizational effectiveness, RENSIS LIKERT
has recognized three variables which are valuable in defining effectiveness over a period of time. These
variables are as expounded as below:

 Causal variables: these factors affect the course of developments inside the organization. These
variables are the autonomous variables which are in the control of the organization & its
management. These contain management strategies, policies, structure, style skill, procedures
etc.
  Intervening variables: causal variables such as leadership style & behavior affect the
intervening variables which are those variables which characterize the inner state of the
organization. Intervening variables comprise facets like commitment to the organizational aims,
morale & motivation of employees, decision making & problem resolving skills,
communication, group cohesiveness etc.
 End result (or output) variables: these variables replicate the end result of the organization
which could be accomplishments: failures or success. Output could be assessed in terms of
production, sales, profit etc.

The above mentioned set of variables are interconnected with each other. The causal variables affect
the intervening variables that in turn affect the output variables. The organizations which are
anxious with the short terms outcomes only, sometimes tend to oversee intervening variables. But
organization with a long term standpoint give importance &appreciation to develop & build the
intervening variables. If the intervening variables are overlooked, there will be a negative impact on
the output, but this impact would not be instant, there would be a time lag before the effect is
reflected in the output.

3. Effectiveness through Adaptive Coping Style

The more effective organizations are those which magnificently adjust structure, technology & policies
with the fluctuating environment to ease the goal achievement. EDGAR SCHEIN recommended that
upkeep of effectiveness made thinkable through the adaptive coping style. According to him, “the
sequence of activities process which begins with some change in some part of the internal or external
environment and end with more adaptive, dynamic equilibrium for dealing with change.”

Adaptive coping cycle is incessant process. There are six phases in this adaptive coping cycle stage:

1. Sensing of change: the first elementary stage in the cycle is the sensing of change in some part
of the interior & exterior environment. Failure to recognize changes in the environment or
wrongly recognizing the changes is the main factor for the failure of the organization to handle
with environment. The organizations should have efficient management information system for
effectively managing with environment.
2. Importing the relevant information: the second stage in the cycle is the import of pertinent
information about the change into those portions of the organization that could act upon it.
Though, it is very tough to decide which inputs are to be taken from the environment &
organizations fail to identify the pertinent inputs, mostly the information.
3. Changing conversion process: inputs are taken by the organization for the environment for
further handling; this is termed as the conversion process. The conversion process should be
adapted as per the environmental necessities as specified by the information.
4. Stabilizing internal changes: the fourth stage of cycle is to soothe the internal changes whereas
taking care of undesired variations in connected systems which have resulted from the desired
changes. This is essential because each subsystem in the organization is reliant on others &
change in one might affect others also put this effect might be positive or negative.
5. Exporting new outputs: when the interior change is recognized, the organization becomes in a
situation to export new outputs which are in accord with the environmental requirements. Some
 diverse& additional attempts might be essential for exporting the new outputs. If the
organization fails to embrace the new approaches, it might become unproductive.
6. Obtaining feedback: the final stage in the cycle is the gaining of feedback on the results of
the changes for further detecting of the state of the exterior environment & the degree of
incorporation of the interior environment. This stage is very much linked with the first stage
because the process of sensing might be the same.
Failures at any of these stages might result into ineffectiveness. An efficacious coping
recommends that all of the stages must be successfully negotiated. Next are the main
organizational conditions for effective coping:
 The organization must have an appropriate communication system through which
consistent& valid information might be passed.
 Sufficient inner flexibility should be there so that changes could be brought
&engrossedby the organization.
 Successful coping needs amalgamation& commitment to the organizational goals
whichoffers readiness for change.
 There should be helpful interior climate which could upkeep good communication,
decrease in inflexibility, &stimulation of self-protection.
Summary
Organizational effectiveness is the degree to which an organization has encountered its specified
aims& objectives &how well it did in the whole process. There are numerous factors that play into
the organizational effectiveness. Organizational effectiveness largely depends on four factors namely:
Organizational Characteristics, Environmental Characteristics, Employees Characteristics,
Managerial policies & practices. No single factor works all the time, there is an underlying theme to
all of the factors that contribute the wholesome effectiveness and efficiency of the organization.
These factors can be modified to meet the specific needs of the employees and particular
organization. The first essential step is to determine what motivational tools would really be effective
in each specific condition. Some tools might work for some organizations, but not for others & vice
versa. Apart for the above mentioned factors EDGAR SCHEIN recommended that upkeep of
effectiveness made thinkable through the adaptive coping style. According to him, “the sequence of
activities process which begins with some change in some part of the internal or external environment
and end with more adaptive, dynamic equilibrium for dealing with change.”