EFFECTIVENESS

Effectiveness Vs Efficiency
Effectiveness
It is a broad concept

Efficiency
It is a narrow concept

It takes into account various factors both Its focus is on internal factors alone within the organization as well as outside It is concerned with the degree to which It is concerned with amount of resources predetermined goals are achieved used to produce a particular unit of output Its focus is on the achievements of goals Its focus is on how economically the goaland objectives oriented activity is performed. i.e. ratio of output to input Its thrust is on the human and social facets It concentrates on the economic and of the enterprise technical facets of the enterprise It is organic It is inorganic

Effectiveness Vs Efficiency
Effectiveness Efficiency
It is modern and in tune to the It is archaic contemporary needs of the society Its thrust is on developing systems and It emphasizes the development of procedures that do not pout stress on systems and procedures that result in human beings (human engineering). maximum efficiency (techno-economic engineering) It is complex quantifiable and not easily It is simple and easily quantifiable It is materialistic growth oriented

Its focus is on quality of life

It presumes the existence of matrix There is existence of line structure, structure, democratic leadership style autocratic leadership style and reward and committed people oriented people

Organizational Effectiveness

Degree to which an organization realised its goals

Effectiveness and Efficiency in Organizations

High

EFFICIENCY

Low Goal Attainment Low Use of Resources

High Goal Attainment Low Use of Resources

Low Goal Attainment High Use of Resources

Low

High Goal Attainment High Use of Resources

Low

High

EFFECTIVENESS

SNEHA SHARMA P-41

ORGANIZATIONAL EFFECTIVENESS
Type of Organization Habit Major Function Example OE criteria Replicating standard Factories uniform product Creating new ideas Number of products

Problem solving

R & D, Design and Number of ideas Engineering Universities, Number of clients prisons, leaving Psychiatric centers Military, Government, IT industry Extent of services performed

Indoctrinating

Changing peoples attitude and behaviour Distribution of services

Service

Result Oriented Approach

Goal

attainment apprach
approach constituencies approach

Process Oriented Approach

Systems

Politically Motivated Approach

Strategic

Competing values approach

Result Oriented Approach

Organizations have goals and work towards achieving them. These goals are clearly identified and defined. These goals are equally understood by every one in the organization. All employees must accept and subscribe to these goals. Progress towards goal must be measurable.

Process Oriented Approach

Organizations are made up of a number of system and subsystems which are in an independent and inter dependent relationships with each other. Organizations must maintain meaningful relationship with suppliers and other who have control over input. Internal allocation of input resources has to be need based.

It establishes ratios Input/output Transformation/Input Transformation/Output Change in Input /Input

Systems Approach(Process)
Variables O/I T/I Business ROI Inventory Turnover Hospital Total patients treated Capital Investment in medical technology Total no of patients discharged Change in patients treated College Faculty Publications Cost of MIS

T/O

Sales Volume

Number of students graduated Change in student enrolment

I/I

Change in WC

Politically Motivated Approach

Organizations are political entities. They must respond to the varying needs of its constituents. Followed from the above organizations cannot have a single goal. many goals as the variety of stake holders. Goals have to vary according to the constituents requirements.

Stakeholders
Constituency Owners Employees Customers Suppliers Creditors Unions Local Community Officials Typical OE Criteria ROI, growth in earnings Compensation, incentives Price, quality, Service Payments, future potential Ability to payback debt Competitive wages and benefits, working conditions Involvement in local activities, damage to local environment

Government Agencies

Compliance with Laws

How can manager apply this?

14

3 major steps Asking members to identify the constituents Evaluate the list How dependent on it our organization is? Does it have considerable power over us? Are there alternatives? Identifying the expectations What do they want of it?

MEGHNA RAJPURA P-45

Competing values approach

The same constituents may have conflicting interest:

Hence an individual may be a share holder of an organization and hence may expect larger dividends. However he may also be the consumer of the products of this organization and may expect better quality and cheaper price. Hence organizations have to perform a balancing act to satisfy various demands of the same stakeholders.

Competing Values Approach

16

The Competing Values Approach is the criteria you value and use in assessing an organizations effectiveness.

SNEHA SHARMA P-41 MEGHNA RAJPURA P-45

Criteria
17

Return on investment
Market share New product innovation

Job security

SNEHA SHARMA P-41 MEGHNA RAJPURA P-45

Assumptions
18

No best criterion for evaluating an organization effectiveness. There cannot be one single goal that everyone can agree upon. The concept of OE is subjective.
SNEHA SHARMA P-41 MEGHNA RAJPURA P-45

Problem to the approach

19

This approachs perception is on how well an organization is doing on the criteria rather than clarifying in which criteria the constituencies are emphasizing

SNEHA SHARMA P-41 MEGHNA RAJPURA P-45

Flexibility

Means

People

Organizatio n

Ends

Control

Cells OFM OFE OCM OCE PCM PCE PFM PFE

Definition Able to adjust well to shifts in external conditions & demands Able to increase external support and expand size of workforce Goals are clear and understood Volume of output is high Channels of Communication facilittate informing people about things that effect their work Sense of order, continuity and smooth functioning of operations Employee trust, respect, and work well with each other Employee have training, skill and capacity to do their work properly

Comparison of Approaches
24

Approach Goal Attainment

Definition An organization is effective to the extent that it accomplishes its stated goals. It acquires needed resources. Strategic Constituencies are at least minimally satisfied. The emphasis of the organization in the four major areas matches constituent preferences.

When Useful The approach is preferred when goals are clear, time bound and measureable. A clear connection exists between inputs and outputs. Constituencies have powerful influence on the organization, and it must respond to demands. The organization is unclear about its own emphases, or changes in criteria over time are of interest.

Systems

Strategic Constituencies

Competing Values

APPROACHES TO MEASURING ORGANIZATIONAL EFFECTIVENESS

25

Approaches to measuring organizational effectiveness

External resource approach

Internal systems approach Technical approach

KAVITA SINGH

P-44

External resource approach

A method managers use to evaluate how effectively an organization manages and controls Its external environment

Suppliers Customers Competitors government

P-44

KAVITA SINGH

Internal systems approach

A method that allows managers to evaluate how effectively an organization functions and operates

Structure culture Flexibility Co-ordination Motivation

P-44

KAVITA SINGH

Technical approach

A method managers use to evaluate how efficiently an organization can convert some fixed amount of organizational resources into finished goods and services Technical effectiveness is measured in terms of productivity and efficiency (output: input) Process technology

KAVITA SINGH

P-44

Goals to be set to measure effectiveness

External resource approach Lower costs of inputs Obtain high-quality inputs of raw materials and employees Increase market share Increase stock price Gain support of stakeholders such as government or environmentalists

Internal systems approach

Cut decision-making time Increase rate of product innovation Increase coordination and motivation of employees Reduce conflict Reduce time to market Increase product quality Reduce number of defects Reduce production costs Improve customer service Reduce delivery time to customer

Technical approach