A quick review

OB, HRM, OT, OD (2X2 Macro vs Micro,

Theory vs Application)
What is organisation? Organisation Theory?
Its relation to environment
Structure, Culture, Design, Change
Why an organisation, not an individual?
Importance of ODC
Contigencies
Competitive Advantage
Core Competence
Diversity Culture
Speed, Innovation, Efficiency more value
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Organizational Effectiveness

What is OE?
Why is it Important?
Approaches to Study OE

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What is OE?
TCS? Ten by Ten, Largest Market Cap
Reliance? Highest Net Sales, Net profit of
21K Crs
TATA STEEL? Uninterrupted profits/Lowest
Cost Steel Producer, 5th Largest Steel
Company? Value Based Company?
SBI? Highest Total Assets (2.62 Lac
crores)
Bennet Coleman? Profitable for 175
years, Profitability with Social
Responsibility?
Google India? Best place to work in two
years in a row
BCCI? For producing a world beating team

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What is OE? (Contd)

Unique Identification Authority of India?
Most innovative problem solving to create
one of the largest biometric databases in
the world
Goonj?

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Why is it Important?

To
To
To
To
To
To

an aspiring employee?
an investor
an employee?
a Customer?
a Creditor?
the Community?

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What is OE?

It is there, but difficult to define

Structure influences OE
No universal agreement on what OE
means

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What is OE?

No operational definition but true from

Research perspective
Used operationally
Some consensus
emerging
Multiple Criteria
To evaluate different functions
Means and Ends

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The Goal Attainment

Approach
Organizations exist to achieve goals
OE, therefore, must be appraised in
terms of accomplishment of Ends rather
than means
It is the bottom line that counts
Profit Maximization, Victory in Battle,
Winning a Game, Restoring a patients
good health

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The Goal Attainment

Approach
Assumption
s:
Organizations have Ultimate Goals
These Goals are identified and well defined to
be understood
Must be few enough to be manageable
There must be consensus on these goals
Progress towards these Goals must be
measurable

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The Goal Attainment Approach

Objection
s:
Whose Goals? Top Management? Where does Top
Management end? Dominant Coalition?
Official or Actual Goals?
Short Term or Long Term Goals?
Multiple conflicting Goals? Different Interest Groups?
Quality vs Cost?
How to prioritize? What if the structure/hierarchy
changes?
Goals around past accomplishments?
Are Goals created mainly to placate the dominant stake
holder?

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The Systems Approach

Acquire
Input

Engage in
Transformation
Process

Generate
Output

Goal Attainment only a partial measure of

effectiveness
Organization should also be judged on its
ability to acquire inputs, ability to transform,
channel the outputs, maintain balance and
stability
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The Systems Approach

Acquire
Input

Engage in
Transformation
Process

Generate
Output

In the Systems Approach, end goals are not

ignored
End Goals are only one element of a complex
set
Systems Approach emphasize criteria that will
emphasize long term survival
Focuses on means rather than ends

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The Systems
Approach

Assumptions
:
Organizations are made up of inter-related sub
parts
Sub-Parts can affect the whole system
Effectiveness requires awareness and
successful interaction with environmental
constituencies (Suppliers, Customers,
Government)
Survival requires steady replenishment of
resources (R/M, Men, Product Lines, Customers)
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The Systems
Approach
Mining Lease, Campus
Recruitment, Route
Licensing
Design to Market
Time, Product
Development

Making it
Operative:

Factor
s

Relations with Environment (for

replenishment of resources, favorable
receipt of outputs)
Flexibility of Response to
Changes
Efficiency of Input-Output transformation
Clarity of Internal
Communication
Level of
Conflict

ICS Chain

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The Systems
Approach

Problems:
Measurement Measuring Ends is easier
Do Means really matter?
Focus is on Means to OE rather than OE itself
Value to
Managers:
Less prone to look into immediate future
Awareness of interdependency in an
organization
Where the Ends are vague
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The Strategic Constituencies

Approach

An effective oz is one that satisfies the

demands of constituencies in the environment
from whom it requires support for survival
PSU, Private Sector, NGO, Public Utility,
Media
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The Strategic Constituencies Approach

Assumptions:
Political Arena
Vested Interests
Control of Resources
OE = How successful an Organization has
been in satisfying the critical
constituencies, upon whom future depends
Identify Critical Constituencies
Assess their preference pattern
Satisfy those demands
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Integrative Approach

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Another way of Looking at Approaches to Study

OE
Control: external resource approach
Method evaluates how effectively an
organization manages and controls its
external environment
Innovation: internal system approach
Method allows managers to evaluate how
effectively an organization functions and
operates
Efficiency: technical approach
Method evaluates how efficiently an
organization converts a fixed amount of
resources into finished goods and services
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Organisational Effectiveness

Approach

Description

External Resource
Approach

Evaluates the ozs ability to secure,

manage and control scarce and
valued skills and resources

Internal Systems
Approach

Evaluates the Ozs ability to be

innovative and function quickly and
responsively

Technical Approach

Evaluates the ozs ability to convert

skills and resources into goods and
services efficiently

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Organisational Effectiveness

Approach Description
External
Resource
Approach

Evaluates the ozs

ability to secure,
manage and
control scarce and
valued skills and
resources

Internal
Systems
Approach

Evaluates the Ozs

ability to be
innovative and
function quickly
and responsively

Technical
Approach

Evaluates the ozs

ability to convert
skills and
resources into
goods and

Goals to Set to Measure

Effectiveness

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Organisational Effectiveness External

Resources Approach
Approach Description

Goals to Set to Measure

Effectiveness

External
Resource
Approach

Lower input costs

Obtain high quality inputs of
R/M and human resources
Increase market share
Increase stock price
Gain support of stakeholders
such as Govt or
environmentalists

Evaluates the ozs

ability to secure,
manage and
control scarce and
valued skills and
resources

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Organisational Effectiveness Internal

Systems Approach
Approach Description

Goals to Set to Measure

Effectiveness

Internal
Systems
Approach

Cut decision making time

Increase rate of product
innovation
Increase coordination and
innovation of employees
Reduce conflict
Reduce time to market

Evaluates the Ozs

ability to be
innovative and
function quickly
and responsively

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Organisational Effectiveness Technical

Approach
Approach Description

Goals to Set to Measure

Effectiveness

Technical
Approach

Increase product quality

Reduce number of defects
Reduce production costs
Improve customer services
Reduce delivery time to
market

Evaluates the ozs

ability to convert
skills and
resources into
goods and
services efficiently

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