Chapter 13

Organizational Effectiveness
Organizational Effectiveness
“An organization is not the sum of its parts
or functions. It is possible to assess the
effectiveness of a program or the use of
service volunteers in an organization;
however, such assessments do not
necessarily reveal much about overall
organizational effectiveness.”
—Herman & Renz, 1999, p. 108
Effectiveness vs. Efficiency
Effectiveness is the extent to which
operative goals can be attained.
Efficiency is the cost/benefit ratio
incurred in the pursuit of those goals.
—Steers & Black, 1994, p. 330
Effectiveness and Efficiency
in Organizations
 How Do You View It?
Which, in your opinion, is more
important for an organization—
efficiency or effectiveness?
 Models of
Organizational Effectiveness

Goals model
System resource model
Process model
Multiple constituency model
Competing values approach
 Illustration of Models of
Organizational Effectiveness
 Goals Model
Effectiveness is the degree to which
an organization has achieved its goals
Two conditions for this model:
– Goal must be identifiable
– Organizational performance must be
clearly measurable
Conditions may not be valid for all
types of organizations
Meaningfulness of Goals Model
The model is meaningful in organizations
where goals are clearly articulated, where
they are stable, and where organizational
performance can be objectively
measured.
The model is not meaningful for
organizations that do not possess clearly
defined goals or whose goal attainment
cannot be objectively measured.
 System Resource Model
Effectiveness is the degree to which an
organization is able to exploit its
environment in the acquisition of scarce
and valued resources.
The model quantifies one element (i.e.,
inputs, or resources) and uses it as a
substitute measure for another element
(i.e., outputs, or goal attainment) that is
less easily quantifiable.
Different Forms of Capital
Physical capital
Human capital
Organizational capital
Financial capital
 How Do You View It?
Which form of capital do you think is
most important for the organization?
Could the organization survive without
any one of them?
 Applicability of the
System Resource Model
Applicable for professional/human service
organizations whose output cannot be
objectively measured
Applicable for volunteer, nonprofit
organizations because the degree to which
they attract financial support is a measure of
effectiveness
Less applicable for public-sector and third-
sector organizations, whose inputs are
underwritten by a superior authority
 Process Model
Effectiveness is the degree to which
an organization’s processes are
internally logical, consistent, and
without friction.
The organization is doing what is
rational in the context of its goals and
environment.
 Potential Problem with
the Process Model

Danger lies in treating a process as

the one best way to do something,
thus making it an end in itself.
 Multidimensionality of
Organizational Effectiveness
To appraise the effectiveness of an
organization completely, it may be
necessary to use all three models.
Different programs within an
organization may be evaluated with
different models.
 How Do You View It?
Do you believe sport organizations,
such as the NCAA, NFL, NBA, or
International Olympic Committee, are
effective?
Multiple-Constituency Model
Different constituents of an organization
have different goals and processes.
Multiple perspectives and
multidimensionality of effectiveness.
Constituents
Owners
Managers
Employees
Clients
Suppliers
Other stakeholders
Illustration of the Multiple-Constituency Model
 Competing Values Model
Multiple perspectives and subjective
goals mean that issues surrounding
effectiveness can be framed as a set of
competing values:
– Internal vs. external
– Flexibility vs. stability
– Ends vs. means
Emphasis of Three Dimensions
of Competing Values
Attention orientation—is orientation
internal or external?
Structural preferences—are preferences
for flexibility or control; for centralization
or decentralization?
Means–ends dichotomy
Four Models of Effectiveness
Human relations model:
– Flexibility and internal focus
Internal process model:
– Control and internal focus
Open system model:
– Flexibility and external focus
Rational goal model:
– Control and external focus
Illustration of the Competing Values Model
Competing Values Model Defined
“It is not so much a theory of
organizational effectiveness but more
an account of where managers put their
major emphasis in conducting the
affairs of an organization, which by
implication tells us something about
how they evaluate its effectiveness.”
—Rollinson, 2002, p. 474
 Paradoxical Nature of
Organizational Effectiveness
Organizational paradox
An effective organization addresses
the different perspectives of its
various constituents and engages in
contradictory activities
 Primacy Among
Multiple Perspectives

Relativistic perspective
Power perspective
Social justice perspective
Evolutionary perspective
Prime Beneficiary Approach
When debating the primacy of multiple
perspectives and multiple constituencies,
focus on the prime beneficiary of the
organization.
An effective organization attempts to
satisfy contradictory expectations only
with a view to increase payoffs to its
prime beneficiary.
 Overview of
Organizational Effectiveness
In choosing the criteria of effectiveness for
their organization, managers should focus
on closeness to the final payoff.
A criterion that is more closely related to
the goal should be selected over those
more remotely connected.