Organization Theory

Structure, Design, and Applications

Third Revised Edition

Stephen P. Robbins and Mary Mathew

PART I INTRODUCTION: WHATS IT ALL ABOUT?

CHAPTER

Organizational Effectiveness
PowerPoint Presentation by Rajeesh Viswanathan

2010 Dorling Kindersley India Pvt. Ltd.

All rights reserved.

Jansons school of Business

After studying this chapter, you should be able to:

Define four approaches to organizational effectiveness
List the assumptions of each OE approach

Describe how managers can operationalize each approach

Identify key problems with each approach
Explain the value of each approach to practicing managers
Compare the conditions under which each is useful for mangers

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Importance of Organizational Effectiveness

Every discipline in the administrative sciences contributes in
some way to helping managers make organizations more
effective.

Marketing Expanding revenues

Production and operations Designing efficient processes
Accounting Information to enhance quality of decision
Organization Theory As a discipline, it clarifies which
organization structure will lead to or improve organizational
effectiveness.

The effectiveness of an organization depends

structure.

on

its

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Organizational Effectiveness Criteria

The 1960s and early 1970s saw a proliferation of OE studies. A review of
these studies identified thirty different criteria, all purporting to measure
organizational effectiveness.

Organizational
effectiveness
Productivity
Efficiency
Profit
Quality
Accidents
Growth
Absenteeism
Turnover
Job satisfaction

Motivation
Morale
Control
Conflict
Flexibility
Planning
Goal consensus
Internalization of org
goals
Role and norm
Managerial
Interpersonal skills

Managerial task skills

Information mgt
Readiness
Environment utilization
External evaluation
Stability
Value of human resources
Participation
Shared influence
Training and development
Achievement

The Goal Attainment Approach

The goal attainment approach states that an organizations effectiveness
must be appraised in terms of the accomplishment of ends rather than
Means.
Popular goal attainment criteria include profit maximization, bringing the
enemy to surrender.

Assumptions
The goal attainment approach assumes that organizations are de liberate,

rational, goal-seeking entities.

Organizations must have ultimate goals.

These goals must be identified and defined well enough to be understood.
These goals must be few enough to be manageable.
There must be general consensus or agreement on these goals.
Progress toward these goals must be measurable.

Making Goals Operative

The goal-attainment approach is probably most explicit in management by
objectives (MBO)

Problems
The goal-attainment approach is fraught with a number of problems that make its
exclusive use highly questionable. And these are related directly to the assumptions.
It is one thing to talk about goals in general, but when you operationalize the goal
attainment approach you have to ask:

Whose goals?
Top managements?
If so, who is included ?
Who is excluded?

Value to Managers
The validity of the identified goals can probably be increased
significantly by:

Ensuring that input is received from all those having a major

influence on formulating the
official goals, even if they are not part of senior management
Including actual goals obtained by observing the behavior of
organization members;
Recognizing that organizations pursue both short- and longterm goals;
Insisting on tangible, verifiable, and measurable goals rather
than relying on vague
statements that merely mirror societal expectations
Viewing goals as dynamic entities that change over time
rather than as rigid or fixed statements of purpose.

The Systems Approach

Organizations acquire inputs, engage in transformation processes, and generate
outputs.

In the systems approach, end goals are not ignored; but they are only one element
in a more complex set of criteria.
Systems models emphasize criteria that will increase the long-term survival of the
organizationsuch as the organizations ability to acquire resources, maintain itself
internally as a social organism, and interact successfully with its external
environment
Assumptions:
A systems approach to OE implies that organizations are made up of interrelated
subparts. If anyone of these subparts performs poorly, it will negatively affect the
performance of the whole sys tem.

Making Systems Operative

The systems view looks at factors such as relations with the environment to
assure continued receipt of inputs and favorable acceptance of outputs,
flexibility of response to environmental changes, the efficiency with which
the organization transforms inputs to outputs, the clarity of internal
communications, the level of conflict among groups, and the degree of
employee job satisfaction.
The systems approach focuses on the means necessary to assure the
organizations continued survival
It has been suggested that the critical systems interrelationships can be
converted into OE variables or ratios.22 These could include output/input
(O/I), transformations/input (T/I), transformations/output (T/O), changes in
input/input (AI/I), and so on

Examples of Effective Measures of Systems for

Different Types of Organizations
System
Variables

Business Firms

O/I

Return on
Investment

T/I

Inventory turnover

T/O

I/I

Hospital
Total Patients

College
treated

Capital investment in
Medical tech

Faculty Publications
Cost of inf system
Students graduated

Sales volumes

Change in working
capital

Total Patients treated

Change in number of
Patients treated

Change in student
enrolment

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Problems:
The problem is that, while the terms may carry a laypersons meaning,
the development of valid and reliable measures for tapping their
quantity or intensity may not be possible.

Value to Managers
Managers who use a systems approach to OE are less prone to look for
immediate results

THE STRATEGIC-CONSTITUENCIES APPROACH

The strategic-constituencies approachproposes that an effective organization is
one that satisfies the demands of those constituencies in its environment from whom
it requires support for its continued existence.
It seeks to appease only those in the environment who can threaten the
organizations survival
Assumptions
The goal-attainment approach views organizations as deliberate, rational, and goalseeking entities. The strategic-constituencies approach views organizations very
differently. They are assumed to be political arenas where vested interests compete
for control over resources
The strategic-constituencies approach assumes that managers pursue a number of
goals and that the goals selected represent a response to those interest groups that
control the re sources necessary for the organization to survive

Making Strategic Constituencies Operative

The manager wishing to apply this perspective might begin by asking members of
the dominant coalition to identify the constituencies they consider to be critical to
the organizations survival. This input can be combined and synthesized to arrive at
a list of strategic constituencies.
Problems
The task of separating the strategic constituencies from the larger environment is
easy to say but difficult to do in practice.
Because the environment changes rapidly, what was critical to the organization
yesterday may not be so today

THE COMPETING-VALUES APPROACH

Competing-values approach is that the criteria you value and use in assessing an
organizations
effectivenessreturn on investment, market share, new-product
innovation, job securitydepend on who you are and the interests you represent
Assumptions
There is neither a single goal that everyone can agree upon nor a consensus on
which goals take precedence over others.
Therefore, the concept of OE, itself, is subjective, and the goals that an evaluator
chooses are based on his or her personal values, preferences, and interests.
Making Competing Values operative:
The first set is flexibility versus control
The second set deals with whether emphasis should be placed on the well-being and
development of the people in the organization or the well-being and development of
the organization itself.
The third set of values relates to organizational means versus ends; the former
stressing internal processes and the long term, the latter emphasizing final outcomes
and the short term

Eight OE Criteria Cells

Cells

Description

Definition

OFM

Flexibility

Able to adjust well to shifts in external conditions & demands

OFE

Acquisition of
Resource

Increase external support and expand size

OCM

Planning

Goals are clear and well understood

OCE

Productivity &
Efficiency

Volume of output is high; ratio of output to input is high

PCM

Availability of
Information

Channels of communication facilitate informing people about

things that affect their work

PCE

Stability

Sense of order, continuity & smooth operations

PEM

Cohesive
workforce

Employee trust, respect and work well with each other

PPE

Skilled work force

Employee have the training skills & capacity to do their work

properly

Making Competing Values Operative

The human-relations model would define OE in terms of a
cohesive (as means) and skilled (as ends) work force.
The open systems model encompasses the OFM and OFE
cells.
Effectiveness in this model is defined in terms
of flexibility (as means) and the ability to acquire
resources (as ends).
The rational-goal model includes the OCM and OCE cells.
The existence of specific plans and goals (as means) and
high productivity and efficiency (as ends) is used as
evidence of effectiveness.
Finally, the PCM and PCE cells form the internal-process
model

Problems
The competing-values model encompasses both ends and means, it overcomes the
problems of using merely the goal-attainment or systems approaches.
Competing values include strategic constituencies but do nothing to alleviate the
problems we pointed out with this approach.
Value to Managers:
By reducing a large number of effectiveness criteria into four conceptually clear
organizational models, the competing-values approach can guide the manager in
identifying the appropriateness of different criteria to different constituencies and in
different life-cycle stages.

OE is conceptually complex, and, therefore, so must

its definition.
Organizational effectiveness can be defined as the
degree to which an organization attains its short(ends) and long-term (means) goals, the selection of
which reflects strategic constituencies, the selfinterest of the evaluator, and the life stage of the
organization.

Workplace Violence
Witnessed yelling and other verbal abuse
Yelled at coworkers themselves
Cried over work-related issues
Seen someone purposely damage machines
or furniture
Seen physical violence in the workplace
Struck a coworker

Prentice Hall, 2002

42%
29%
23%
14%
10%
2%

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