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Mr.Q
mg345-orgeffect_fall_2014.pptOrganizational Effectiveness
MG345
Organizations & Environment
Tony Buono
Universal & Centurion
Jack Harris’ Universal
- $600 m sales
- 480 employees
- Profitability through:
- Effectiveness
- Employee Satisfaction
- No organization charts
- Cross-training & inter-departmental collaboration
- Control through commitment / mutual adjustment
Len Semp’s Centurion
- $750 m sales
- 550 employees
- Profitability through:
- Efficiency
- Process Standardization
- Detailed org charts
- Narrowly defined jobs & functional responsibility
- Control through command / compliance
Management Control & Organizational Effectiveness
EFFECTIVENESS
High
Low
Command/
Compliance
Commitment/
Mutual Adjustment
MANAGEMENT CONTROL
ORIENTATION
Programmable Non-programmable
Type of Work
Perspectives on
Organizational Effectiveness
Input
Conversion
Process
Output
Organizations as Input-Process-Output Systems
Resource-based
(System Resources)
Internal Process
- Excellence &
Competency
- Efficiency
Goal
Strategic Constituencies
(Stakeholder Model)
Goal Approach
- Official goals: Formally stated, abstract goals that are often difficult to measure
- Operative goals: reflect the activities the organization is actually performing
profitability growth market share
product quality efficiency diversification
employee welfare financial stability R&D
social responsibility management development
- Limitations:
- multiple goals
- identification of operative goals
- subjective indicators of goal attainment
- Examples:
Perspectives on
Organizational Effectiveness
Input
Conversion
Process
Output
Organizations as Input-Process-Output Systems
Resource-based
(System Resources)
Internal Process
- Excellence &
Competency
- Efficiency
Goal
Strategic Constituencies
(Stakeholder Model)
Strategic Constituencies
Approach (Stakeholder Model)
- Organizational effectiveness as the extent to which key stakeholders are satisfied with the firm’s performance.
Stakeholder
Owners/investors
Employees
Customers
Creditors
Local community
Suppliers
Government
Example Effectiveness Criteria
Financial return, shareholder value
Job satisfaction, compensation
Quality and cost of goods/services
Creditworthiness, company rating
Contribution to community affairs
Satisfactory transactions
Adherence to laws, regulations
The Balanced Scorecard:
Integrating Goals & Stakeholders
Process-Centric
People-Centric
Internal
Focus
External
Focus
Organization
Results
Investor
Results
Employee
Results
Customer &
Other Relevant
Stakeholder
Results
Source: Adapted from Ulrich, et al, Results-Based Leadership (2000)
Perspectives on Organizational Effectiveness
Input
Conversion
Process
Output
Organizations as Input-Process-Output Systems
Resource-based
(System Resources)
Internal Process
- Excellence &
Competency
- Efficiency
Goal
Strategic Constituencies
(Stakeholder Model)
Resource-based Approach
- Key assumption: to be effective organizations must obtain scarce and valued resources from its environment
- Indicators:
Bargaining position ~ ability of an organization to capture
critical resources at a fair price
Ability to accurately perceive and interpret the external
environment
Ability of the organization to respond to changes in its
environment
- Limitations:
Focus on acquisition of resources ~ use? To
what end?
Perspectives on Organizational Effectiveness
Input
Conversion
Process
Output
Organizations as Input-Process-Output Systems
Resource-based
(System Resources)
Internal Process
- Excellence &
Competency
- Efficiency
Goal
Strategic Constituencies
(Stakeholder Model)
Internal Process Approach
- Focus is on internal organizational health (harmony, competency, excellence) and efficiency (use of resources)
Use of time, money, people
Team spirit, group loyalty, teamwork
Employee-management trust
Open communication and information sharing
Interdepartmental cooperation and collaboration
- Limitations:
(1) Total output not evaluated
(2) Closed system orientation
(3) Measurement can be highly subjective
- Indicators:
Perspectives on Organizational Effectiveness
Input
Conversion
Process
Output
Organizations as Input-Process-Output Systems
Resource-based
(System Resources)
Internal Process
- Excellence &
Competency
- Efficiency
Goal Accomplishment
Strategic Constituencies
(Stakeholder Model)
Competing Values Approach to Organizational Effectiveness
Flexibility
Control
Internal
External
STRUCTURE
FOCUS
Human Relations
Model
Open-System
Model
Rational-Goal
Model
Internal-Process
Model
MEANS:
Morale
Cohesive
Work Force
ENDS:
Valued HRs
Skilled Work Force
MEANS:
Adaptability
Flexibility
ENDS:
Resource
Acquisition
External Support
MEANS:
Communication
Availability of Information
ENDS:
Stability
Control
MEANS:
Planning
Goal Setting
ENDS:
Productivity
Efficiency
Universal & Centurion
Jack Harris’ Universal
- $600 m sales
- 480 employees
- Profitability through:
- Effectiveness
- Employee Satisfaction
- No organization charts
- Cross-training & inter-departmental collaboration
- Control through commitment / mutual adjustment
Len Semp’s Centurion
- $750 m sales
- 550 employees
- Profitability through:
- Efficiency
- Process Standardization
- Detailed org charts
- Narrowly defined jobs & functional responsibility
- Control through command / compliance
Mapping Organizational Effectiveness
Flexibility
Control
Internal
External
STRUCTURE
FOCUS
Human Relations
Model
Open-System
Model
Rational-Goal
Model
Internal-Process
Model
Universal
Centurion
Factors Influencing Organizational Effectiveness Criteria
- Top Management Influence
- Value Judgments & Leader Choices
- Organizational Culture & Structure
- Goal Measurability
- Routine internal tasks measurable efficiency goals
- Non-routine internal tasks output goal criteria (e.g., quality, growth) & internal processes (e.g., satisfaction, collaboration)
- Environmental Conditions
- Uncertainty & Resource Scarcity focus on resource-based (input) & internal efficiency criteria
- Turbulence & Change emphasis on stakeholder satisfaction & internal processes (e.g., competency, adaptability)
