Organizational Effectiveness

Organizational Effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce. Organizational Effectiveness groups in organizations directly concern themselves with several key areas. They are talent management, leadership development, organization design and structure, design of measurements and scorecards, implementation of change and transformation, deploying smart processes and smart technology to manage the firms' human capital and the formulation of the broader Human Resources agenda.

Organizational Effectiveness Models
Below shows the seven most common perspectives on effectiveness (also known as effectiveness models) and what effectiveness means for each of these.

• The Goal Approach gauges effectiveness by measuring to what degree the organization reaches the goals it set out to achieve. This is the most traditional way of measuring organizational effectiveness. Goals can include product or service quality and quantity, financial goals, shareholder value, societal impact, or all of these. The goal approach is less actionable as it measures output but does not provide information about the input or the process.
• The Internal Process Model looks not at the outcome but at what happens inside of the organization. This approach assesses effectiveness through the smooth functioning of organizational operations. This is achieved through information management, documentation, and continuous consolidation. The best-known example is the lean process approach, focused on continuous improvement and efficiency. The drawback is that the focus is often more on efficiency than on effectiveness and that the focus is more on inward processes than on outward opportunities.
• The Resource-based Model looks at the input as a measure of effectiveness. According to the Resource-Based View (RBV), firms achieve a competitive advantage by exploiting resources that are valuable, rare, and hard to imitate or copy. Examples of such resources include proprietary software like Instagram or Microsoft’s Windows, advanced technology, like Apple’s iPhone, or a strong company brand or reputation like Apple, Coca Cola, or McKinsey. Bundling these resources helps the advantages become more profound. Take, for example, Apple’s technology in combination with the strong Apple brand. Organizations become effective by securing the supply of these resources.

source: AIHR Digital

• The Strategic Constituency Model assesses effectiveness by measuring the degree to which it satisfies those in the environment who can threaten the organization’s survival – i.e., its strategic constituencies or interest groups. Each constituency has a degree of power and pursues different goals. Constituencies can include owners, management, employees, customers, suppliers, government, and customer groups. Here, it is key to identify the relevant strategic constituencies, identify their expectations, and the way to meet these expectations.
• A similar approach is the Stakeholder Approach. This includes strategic constituencies but also those who are indirectly affected by the organization but may not have power over it (e.g., families of workers, activists, and communities).
• The Competing Values Model is based on Cameron and Quinn’s competing values framework. This approach measures effectiveness by the ability of an organization to simultaneously promote competing values. For example, an organization may want to satisfy customers and maximize profits while also taking care of employees, promote internal structure and coordination while also promoting innovation and novel initiatives, and have a clear direction while also providing autonomy to people to help the organization get there. The ability of an organization to reconcile these competing values is key to being effective.

source: AIHR Digital

• The Abundance Model proposes that effectiveness equates to unleashing the highest potential of human systems. This is about bringing forward positive values and virtuousness. To do this effectively, there has to be a balance between positive and negative values. For example, excellence and flourishing cannot exist without difficult challenges and struggle. Both positive and negative elements and emotions are required to push the potential of human systems.

Steps to Organization Effectiveness

• Leadership: The first step in organization effectiveness is ‘Leadership’. In this step, management and project leaders set forth the overall vision of the organization. What goals they hope to accomplish with this project, how to carry them out, and what results they must strive for are in Leadership.
• Communication: Of course, Leadership is only as effective as the group’s overall communication. In the second step, Communication focuses on evenly spreading the goals, guidelines, and aspirations that derive in Leadership. Furthermore, project managers must focus on strategic communication, relation information in the forms that other project members need to complete their tasks.
• Accountability: In the third step, Accountability, project managers and leaders must uphold other employees to their tasks and responsibilities. Typically, project team members receive awards or consequences, based on their performance. As a result, Accountability greatly determines how smoothly and effectively a project performs.
• Delivery: Your products and services are only successful if customers can receive them. At the next step, Delivery focuses on ensuring an effective delivery system is in place. When your organization has long, complex delivery process, errors will occur and efficiency is at risk. With smaller, more concise processes, your end products can be delivered on time to the right people.
• Performance: As a project manager, you must hire the right people for the correct jobs. Of course, not everyone fits in the same position. At the ‘Performance’ step, the goal is to hire, train, and retain the perfect applicants for the processes and tasks you have.
• Measurement: A business process is only effective if you can measure it. At the final stage of organizational effectiveness, you must measure and analyze your project, process, or other systems. Likewise, you must measure your organization with the correct metrics. Failing to do so will result in accurate or non-usable data.

Assessing Organizational Effectiveness<ref>How Can Organizational Effectiveness Be Measured? Jorge Morales Pedraza</ref>
Organizational effectiveness can be defined as the efficiency with which an association is able to meet its objectives. This means an organization that produces a desired effect or an organization that is productive without waste. Organizational effectiveness is about each individual doing everything they know how to do and doing it well; in other words organizational efficiency is the capacity of an organization to produce the desired results with a minimum expenditure of energy, time, money, and human and material resources. The desired effect will depend on the goals of the organization, which could be, for example, making a profit by producing and selling a product. An organization, if it operates efficiently, will produce a product without waste. If the organization has both organizational effectiveness and efficiency, it will achieve its goal of making a profit by producing and selling a product without waste. In economics and the business world, this may be referred to as maximizing profits.

The main measure of organizational effectiveness for a business will generally be expressed in terms of how well its net profitability compares with its target profitability. Additional measures might include growth data and the results of customer satisfaction surveys. Highly effective organizations exhibit strengths across five areas: leadership, decision making and structure, people, work processes and systems, and culture. For an organization to achieve and sustain success, it needs to adapt to its dynamic environment. Evaluating and improving organizational effectiveness and efficiency is one strategy used to help insure the continued growth and development of an organization. Measuring organizational effectiveness can be an inexact science, since each individual entity will have a different list of criteria and priorities to weight and consider through self-assessment. Understanding a company's level of organizational effectiveness is important for several reasons: it serves as a check-in to see how well internal procedures are meeting an initial vision, it provides investors, donors, or employees with an idea of the company's strengths, and it highlights areas of ineffectiveness that can be the focus of improvements. In many cases, a business' success or failure cannot be measured by financial performance as well. Even a company that is currently making a profit may be ineffective if it is failing to meet the core values of its mission statement, attract and retain talented workers, and plan for the next generation of projects.

Organizational effectiveness measures the big-picture performance of a business, across a broad range of criteria. Financial performance, long-term planning, internal structure, and adherence to core values may all be critical components in understanding organizational effectiveness. To get a clear idea of an organization's effectiveness, it is important to create a clear list of criteria to assess. No two organizations will have the same list of criteria, which is why many for-profit and non-profit groups measure effectiveness through self-assessment. Employees and company personnel are often in the best position to intimately understand the needs, goals, and performance of their company. Self-assessment of effectiveness can also help company personnel reconnect with the initial mission of an organization. By working creatively to invent new business strategies for areas of ineffectiveness, workers may develop a stronger sense of loyalty, purpose, and dedication to the job.

Since organizational effectiveness is difficult to express in a concrete formula, a company may choose to state the results of an assessment through specific goals achieved or desired. Turning up areas of ineffectiveness can also be tremendously beneficial to an organization. Areas that need improvement give a company a concrete strategy for the future, and allow workers, shareholders, donors, or customers to get excited about the improvements coming down the pipeline. Treating current weaknesses as a road map for future changes is a great way to increase effectiveness.