Organizational effectiveness

Organizational effectiveness is critical to success in any economy. In order to achieve increased and sustainable business results, organizations need to execute strategy and engage employees. However, our research indicates that most organizations are struggling to get it right. FREDERICK TAYLOR: EFFECTIVENESS WAS DETERMINED BY FACTORS SUCH AS PRODUCTION MAXIMIZATION, COST MINIMALIZATION, TECHNOLOGICAL EXCELLENCE, Etc HENRI FAYOL: EFFECTIVENESS IS A FUNCTION OF CLEAR AUTHORITY AND DISCIPLINE WITHIN AN ORGANIZATION ELTON MAYO: EFFECTIVENESS IS A FUNCTION OF PRODUCTIVITY RESULTING FROM EMPLOYEE SATISFACTION APPROACHES TO MEASURING ORGANIZATIONAL EFFECTIVENESS:

•Goal Approach: Effectiveness is the ability to excel at one or more output goals. •Internal Process Approach: Effectiveness is the ability to excel at internal efficiency, coordination, motivation, and employee satisfaction. •System Resource Approach: Effectiveness is the ability to acquire scarce and valued resources from the environment. •Constituency Approach: Effectiveness is the ability to satisfy multiple strategic constituencies both within and outside the organization. •Domain Approach: Effectiveness is the ability to excel in one or more among several domains as selected by senior managers.

Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce.[1] The idea of organizational effectiveness is especially important for non-profit organizations as most people who donate money to nonprofit organizations and charities are interested in knowing whether the organization is effective in accomplishing its goals. However, scholars of nonprofit organizational effectiveness acknowledge that the concept has multiple dimensions [2] and multiple definitions. [3] For example, while most nonprofit leaders define organizational effectiveness as ‘outcome accountability,’ or the extent to which an organization achieves specified levels of progress toward its own goals, a minority of nonprofit leaders define effectiveness as ‘overhead minimization,’ or the minimization of fundraising and administrative costs.

According to Richard et al. (2009) organizational effectiveness captures organizational performance plus the myriad internal performance outcomes normally associated with more efficient or effective operations and other external measures that relate to considerations that are broader than those simply associated with economic valuation (either by shareholders, managers, or customers), such as corporate social responsibility.[4] An organization’s effectiveness is also dependent on its communicative competence and ethics. The relationship between these three are simultaneous. Ethics is a foundation found within organizational effectiveness. An organization must exemplify respect, honesty, integrity and equity to allow communicative competence with the participating members. Along with ethics and communicative competence, members in that particular group can finally achieve their intended goals. Foundations and other sources of grants and other types of funds are interested in organizational effectiveness of those people who seek funds from the foundations.

Foundations always have more requests for funds or funding proposals and treat funding as an investment using the same care as a venture capitalist would in picking a company in which to invest. Organizational effectiveness is an abstract concept and is difficult for many organizations to directly measure. Instead of measuring organizational effectiveness directly, the organization selects proxy measures to represent effectiveness. Proxy measures may include such things as number of people served, types and sizes of population segments served, and the demand within those segments for the services the organization supplies. For instance, a non-profit organization which supplies meals to house bound people may collect statistics such as the number of meals cooked and served, the number of volunteers delivering meals, the turnover and retention rates of volunteers, the demographics of the people served, the turnover and retention of consumers, the number of requests for meals turned down due to lack of capacity (amount of food, capacity of meal preparation facilities, and number of delivery volunteers), and amount of wastage.

Since the organization has as its goal the preparation of meals and the delivery of those meals to house bound people, it measures its organizational effectiveness by trying to determine what actual activities the people in the organization do in order to generate the outcomes the organization wants to create. Organizational effectiveness is typically evaluated within nonprofit organizations using logic models. Logic models are a management tool widely used in the nonprofit sector in program evaluation. Logic models are created for specific programs to link specific, measurable inputs to specific, measurable impacts.[5] Typically, logic models specify how program inputs, such as money and staff time, produce activities and outputs, such as services delivered, which in turn lead to impacts, such as improved beneficiary health.

Activities such as administration, fundraising, and volunteer training are important inputs into organizational effectiveness because although they do not directly result in programmatic results, they provide the essential support functions needed for the organization to successfully finance and administer its programs. These other activities are overhead activities that indirectly assist the organization in achieving its desired outcomes. However, some nonprofit watchdog agencies regard overhead spending not as indirect program spending but as in indication of organizational ineffectiveness or inefficiency since funds are not being spent directly on programs. Cost ratios such as overhead are much simpler to measure than actual programmatic results and can be easily calculated from publicly available information disclosed on nonprofit organizations’ IRS Forms 990. Several nonprofit watchdog agencies provide ratings of nonprofit organizations using these data.

However, this practice is widely criticized by scholars and practitioners.[6][7] A nonprofit with low overhead may have ineffective programs that have no impact, while a nonprofit with relatively higher overhead may be significantly more effective in terms of achieving meaningful results.[8][9] Some studies suggest that low overhead may actually reduce organizational effectiveness.[10] Moreover, an organization with higher overhead is more efficient than one with lower overhead if the organization with higher overhead achieves the same results at a lower total cost. The term Organizational Effectiveness is often used interchangeably with Organization Development, especially when used as the name of a department or a part of the Human Resources function within an organization. How do you increase organisational effectiveness and the productivity of your workforce?

To increase organisational effectiveness, winning companies create sustainable competitive advantage by aligning their talent and business strategies. Mergers or acquisitions, restructurings or shifts in business strategy are examples of fundamental organisational change that create strong demand for processes and systems to bring focus and restore the organisation’s capability to function effectively. Our organisational effectiveness capability brings value to our clients’ organisations by facilitating the integration and alignment of the business strategy with a workable talent management strategy. At the heart of Right Management’s organisational effectiveness capabilities, is our holistic approach to helping companies build and align the capabilities, processes, attitudes and talent needed to more effectively implement their chosen strategy. Organisational Effectiveness Solutions

•Strategy Implementation
Right Management’s Strategy Implementation consulting services improve an organisation’s ability to successfully execute strategy. This is achieved by focusing on structure, people systems and processes and exists to deliver great customer experiences.

•Strategic Workforce Alignment

Strategic Workforce Alignment is a unique interactive process for executives to quickly assess and prioritise various workforce strategies, employee needs and investments. Based on proven Six-Sigma methodologies, individuals use a specially designed diagnostic process called RightNavigator™ to prioritise (based on importance and satisfaction) a comprehensive set of organisational workforce strategies.

•Change Management

Right Management’s Change Management offerings are designed to support change at all levels of the organisation. Our change management programmes assist executives to drive organisational change, empower managers to lead through change and enable employees to navigate and respond to change appropriately.

Obstacles to Organizational
Effectiveness
Key findings:

THE LEADERS ROLE
Fewer than half of all employees work in an organization that is perceived as having capable leaders and people systems that drive the right behaviors. Leaders play a key role in creating a culture of engagement by directly or indirectly impacting all factors of engagement. They can directly influence engagement by valuing employees and providing career developing opportunities. Leaders also indirectly impact engagement by ensuring employees have the resources needed to be successful in their roles. create “fit for purpose”

Only marginally higher numbers of employees reported they worked in organizations that promote a positive culture, with capable people performing the right work with clearly defined role accountabilities and relationships through a “fit for purpose” structure. Individual and team assessments can help a company assess high-performing talent, and identify needed competencies and skills gaps, allowing the organization to develop the right talent and the right skills needed to meet business objectives.

EM PLOYEE Engagement is tied to financial performance
Findings from Right Management’s global study on employee engagement drivers revealed that higher financial performance, greater customer satisfaction, and increased retention are linked to engagement. Our study found that high-performing organizations have engagement levels that are 6.6 times higher than below-average performers (53% versus 8%). Our study also found that the key engagement drivers impacting financial performance were:

• Senior leaders effectively implement the organization’s strategy. • Customers think highly of products and services.
• Senior leaders have the capability to make the organization successful. • The organization invests in people’s learning and development. • Pay is competitive with similar jobs in other organizations. ACHIEVE HIGHER LEVELS OF CUSTOMER SATISFACTION

Engaged employees report significantly higher levels of customer satisfaction than employees who are disengaged. Customer service and satisfaction are critical success factors for any organization. Creating a culture of engaged employees who are committed to delivering high-quality services and products is a top priority.

RETAIN YOUR TALENT
Engaged employees across levels are 7 times less likely to leave in the next year and 1.5 times more likely to stay for at least 5 years. Turnover can hurt an organization’s ability to meet business objectives, resulting in lost business opportunities, increased hiring and training costs, decreased customer service quality, and lower productivity. INDUSTRY DIFFERENCE

Engagement levels vary by industry. Our results showed that those working in the transportation, storage & communication industry are significantly less engaged that those in mining & quarrying.

Organisational Effectiveness elements:
•Strategy : The role, purpose and strategic direction that summarises the work of the organisation and/or division being clear and appropriate. •Structure, Roles and Capability: Capable people doing the right work through a “fit for purpose” structure and clearly described role accountabilities and relationships. •Leadership : Leaders having the capability and capacity to drive sustainable business success. •People Management Systems and Processes: Leaders need to be supported by good people systems and processes. These systems and processes work in organisations to send messages, share information and make well informed decisions across the business.

Organisational processes and systems are an extension of leadership, creating consistency and trust. •Culture and Values : A set of shared, basic assumptions about how to behave and carry out work within the organisation that is aligned to business strategy. The systems, symbols and behaviours that leaders and other employees are exposed to within an organisation must align to the desired culture to achieve the business strategy. •Employee Engagement: High numbers of engaged employees whose hearts and minds are aligned to both the job that they do and the organisation that they work for. Engaged employees are:

•Satisfied with their current job and their organisation as an employer
•Committed to making the job and organisation successful
•Proud of their organisation and the work they do
•Willing to positively talk about their job and the organisation
•Customer Experience: High levels of customer satisfaction and loyalty achieved through employees being aware of customer needs, acting on customer feedback and being supported to deliver what customers require. Organisations are environmentally responsible and support the community.