Organizational Effectiveness – Workshop 1 (Introduction)
The Appleton Greene Corporate Training Program (CTP) for Organizational Effectiveness is provided by Mr. Matthews MBA BA Certified Learning Provider (CLP). Program Specifications: Monthly cost USD$2,500.00; Monthly Workshops 6 hours; Monthly Support 4 hours; Program Duration 24 months; Program orders subject to ongoing availability.
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The executive leadership team and local management will be participants in the introduction of the organizational effectiveness training program. The objectives of this workshop are to gain an overall understanding of organizational effectiveness, for each participant to understand their role in improving their area or department, be introduced to the objectives of this training, how to perform an analysis using specific analytical tools and how the success of this training is determined. To generate an overall understanding of organizational effectiveness, the first section of the workshop will focus on when the world began developing organizational effectiveness all the way to the way it is used today. The participants will be given bespoke examples relating to both, their industry and their function within an organization. This section will end with where organizational effectiveness is trending today and what to expect from the future. The next section of the workshop focuses on the roles each executive manager will play within this training program and what is expected of each of them. This cements the foundation of ownership with each participant of the process and the results of the training. During this section, participants will receive a brief overview of the challenges of change management, work management and management operating systems. Determining the success of any engagement begins with understanding a baseline or starting point. The last section of this workshop focuses on determining the perceived and actual baseline of current performance. The remainder of this section and the workshop is to demonstrate and train participants on how to conduct analysis using some specific tools that will be made available to them. These analysis tools focus on opportunities in work execution, defining the gap to absolute capacity and barriers to reaching absolute capacity from both, the employee and manager’s points of view. The local management team that will be conducting the initial analyses will be trained in how to perform the analysis, what to look for when conducting the analysis and why what they are looking for is meaningful and impactful. The assignment between this workshop and the next will be to complete an initial series of analyses that focus on the work execution (employee and manager day in the life studies), defining the gap to absolute capacity and barriers to reaching absolute capacity. Additionally, they will be asked to complete some initial personal assessments that they will receive feedback on from consultants during the next workshop.
01. Overview: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Examples; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Organizational Goals; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Executive Leadership; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Managerial Effectiveness; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Change Management; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Work Management: departmental SWOT analysis; strategy research & development. 1 Month
08. Job Design: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Systems Evaluation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Performance Baseline: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Resource Assessment: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Improvements: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
01. Overview: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Examples: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Organizational Goals: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Executive Leadership: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Managerial Effectiveness: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Change Management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Work Management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Job Design: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Systems Evaluation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Performance Baseline: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Resource Assessment: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Improvements: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
01. Create a task on your calendar, to be completed within the next month, to analyze Overview.
02. Create a task on your calendar, to be completed within the next month, to analyze Examples.
03. Create a task on your calendar, to be completed within the next month, to analyze Organizational Goals.
04. Create a task on your calendar, to be completed within the next month, to analyze Executive Leadership.
05. Create a task on your calendar, to be completed within the next month, to analyze Managerial Effectiveness.
06. Create a task on your calendar, to be completed within the next month, to analyze Change Management.
07. Create a task on your calendar, to be completed within the next month, to analyze Work Management.
08. Create a task on your calendar, to be completed within the next month, to analyze Job Design.
09. Create a task on your calendar, to be completed within the next month, to analyze Systems Evaluation.
10. Create a task on your calendar, to be completed within the next month, to analyze Performance Baseline.
11. Create a task on your calendar, to be completed within the next month, to analyze Resource Assessment.
12. Create a task on your calendar, to be completed within the next month, to analyze Improvements.
This corporate training program on Organizational Effectiveness is aimed at delivering an overall understanding of what organizational effectiveness is and how it can help organizations improve their business operations. It also aims to define the roles of the executive leadership and management teams within the organization in improving organizational effectiveness to improve their respective business areas. Participants will be taught the objectives of organizational effectiveness, the use of specific analytical tools to analyze various aspects of the business, and the measurement of the success of the organizational effectiveness program.
What is organizational effectiveness?
The term organizational effectiveness can be defined quite literally as the ability of an organization to run smoothly and achieve its goals successfully. An effective organization is not just one that is successful but has to cover other aspects of effectiveness as well. How effective an organization is, depends on the kind of goals and missions that it sets, the level of efficiency within the organization, the positioning of its products and services in the market, and much more.
An effective organization is required to achieve its goals and meet the market demands with minimum wastage. The processes need to be efficient and must be continuously improved to ensure that the efficiency of a business process is maintained over time. Since continuous improvement is an important concept under the Six Sigma methodology followed by organizations, both organizational effectiveness and Six Sigma are closely related.
Despite the general idea of organizational effectiveness discussed above, defining effectiveness in the organizational context in absolute terms is difficult. Each organization can be effective in its own unique way. While one organization may measure its effectiveness in terms of the revenue it has been able to generate, another may consider the number of users it has gained and yet another may measure effectiveness in terms of its impact on society. Depending on an organization’s purpose and mission, the definition of organizational effectiveness may vary.
Organizational effectiveness may be measured in terms of the degree to which an organization is able to achieve its goals, align its internal process, or secure resources to meet a certain goal. There can be different approaches to organizational effectiveness and this brings us to the different organizational effectiveness models.
Effectiveness in various business areas
Organizational effectiveness may refer to effectiveness in a number of different business areas for different organizations. These business areas may include –
Employee performance – Organizational effectiveness may be determined in terms of how well the employees of the organization perform. Whether employees are motivated and productive enough to work for the growth of the organization. Or whether they are just doing what they have to do without any drive to contribute to the organization’s progress. Employee performance can be a very clear indicator of organizational effectiveness. When there is effectiveness in employee training, employee empowerment, adoption of new tools and technology, work environment, management, and other aspects, employee performance can improve drastically.
Leadership – Another business area that can define organizational effectiveness is the effectiveness of the leadership of the organization. How efficiently the leadership of the organization functions, how well the leaders can motivate the employees, etc. have a huge impact on the organizational effectiveness. The quality of leadership in an organization can affect employee performance, the corporate culture, the productivity of the organization, communication flow, and many other aspects of the business.
Business processes – The quality and efficiency of the business processes also impact organizational effectiveness. Organizational effectiveness can be measured on the basis of how lean, fast, and cost-effective the business processes are. Business processes that use minimum resources, generate minimum wastage, and deliver value faster can make an organization more effective and efficient.
Organizational structure – Organizational effectiveness can also be determined in terms of how effective the organization’s structure is. The organizational structure defines how information flows within the organization, how the hierarchy within the organization is, and whether everyone has the liberty to put forward their views. Organizations with a top-down hierarchical structure where most of the authority lies with the top management are usually found to be less productive and effective. Whereas, organizations that have a flatter, more democratic structure gets inputs from everyone working in them and are found to be more productive.
Alignment between different business areas – Organizational effectiveness is also impacted by how coherent an organization’s different business areas are. The alignment between different areas of business such as leadership, management, organizational culture, employee performance, customer satisfaction, and others is essential for a business functioning efficiently. An effective organization has to ensure that all its business areas and operations work in harmony.
Organizational behavior – How the people within the organization behave and how they view their role in the organization’s growth also play a major role in improving organizational effectiveness. How employees behave determines how they perform on the job, how engaged they are, or how satisfied they are. These factors in turn determine how they can contribute to the organization’s progress. So, the kind of behavior that the organization promotes and encourages impacts its effectiveness.
Importance of organizational effectiveness
So far, we have discussed what organizational effectiveness is and how it is different from the efficiency of an organization. But before we delve deeper into the details of organizational effectiveness, we ought to know why it is important to an organization. Organizational effectiveness plays a crucial role in an organization’s overall growth in many ways.
Some of the crucial benefits that an organization gets from being effective include –
Better management – An effective organization will have better management capabilities. Better management means better training of leaders and managers, better communication between management and employees, better managerial policies, and a better work culture apart from other things.
Better employee engagement – Organizational effectiveness can also lead to more engaged and productive employees. If the business processes are effective, it helps with employee satisfaction and engagement as well. As employees see better outcomes in the business, they are more engaged and willing to contribute to its growth further. More engaged employees mean better performance for the organization as a whole.
Better customer engagement – Customer relationship is a primary concern of most businesses. Organizational effectiveness can help improve customer engagement and maximize customer value for the business. Improving the effectiveness of departments that directly deal with customers, such as customer service, an organization can improve its customer relations and add more value.
Reduced costs – Making a business unit more effective automatically reduces the costs involved in it. Since an effective organization requires its processes to be lean and consume minimum resources, the organization is bound to save more. Lesser wastage and lean processes mean there will be no outdated technology, no unproductive processes, and no inefficient workflows, which all add up to cost saving.
Improved use of technology – An effective organization will usually get rid of all obsolete or inefficient technology and replace them with newer technology. Effective adoption of new digital technology can improve data analytics and aid decision-making, improve workflows, employee training, and help with other aspects of the business.
Better outcomes – Organizational effectiveness comes from achieving the goals set for the organization. When an organization is successful at achieving the goals for itself, it has to have better outcomes. An effective organization knows its strategic priorities and is more capable of fulfilling its long-term vision.
When an organization is more effective, it is more likely to sustain and overcome its struggles to flourish in the long run. It cannot be, however, a one-time event of trying to improve the different business areas to make them more efficient. Organizational effectiveness has to be learned by each member of the organization, particularly the leaders and managers and made a part of the day-to-day working of the business. It has to be continuously monitored, evaluated, and improved. Organizational effectiveness can only be achieved with a thorough behavioral change and an ongoing commitment to sustain this change.
Organizational effectiveness models
There are several ways of looking at organizational effectiveness from one organization to another. Organizations working towards different goals can be equally effective in their operations. This gives rise to a number of different perspectives or approaches to organizational effectiveness. Some of the commonly followed organizational effectiveness models and the meanings of organizational effectiveness under these models are discussed below.
Goal based approach
The goal based approach measures effectiveness in terms of the degree to which an organization achieves the goals it has established for itself. This is usually the conventional way of measuring organizational effectiveness. The goals may, however, be different for different organizations. The goals may be product or service quality, production volumes, revenue generation goals, societal or environmental impact, shareholder value of the organization, or others. An organization may often have more than one of these goals as well. The goal based approach to attaining organizational effectiveness focuses primarily on the output of the organization but does not pay much attention to the inputs required to achieve these goals. It is, therefore, not a very proactive approach and is less actionable than some of the other models.
Internal process based approach
The internal process based approach to attaining organizational effectiveness focuses not on the output of the organization but rather on the internal functioning of the organization. Under this model, an organization gauges the effectiveness through an assessment of how smoothly the business processes are being carried out. An organization that focuses on internal processes achieves organizational effectiveness through proper information management and flow, complete documentation of all processes, and a continuous consolidation of all the available data to make processes more coherent.
The processes in an effective organization are ideally meant to be lean and aiming for continuous improvement. It is, however, important for organizations to understand the difference between efficiency and effectiveness. In this internal process based model, the focus often tends to shift more towards efficiency rather than effectiveness. Though the aim is to eventually make processes more efficient, the primary focus of this model should be on making processes effective. Process engineering guru, Lon Roberts, differentiated between the two terms – efficiency and effectiveness – quite clearly. He defines efficiency as how economically a process consumes resources, particularly time and money. Effectiveness, on the other hand, is defined as how well a process achieves its intended purpose. So, while efficiency is the effort the organization puts in to do things the right way, effectiveness is ensuring that the right thing is being done consistently.
The process based model aims to make the organization’s processes more effective through continuous value addition.
Resource based approach
The resource based model prioritizes exploiting resources that can help the organization gain a competitive advantage. It focuses on gathering resources that are valuable, hard to find, and hard for competitors to copy. These resources could be a proprietary product, a new cutting-edge technology, a robust brand image, or anything else that gives the business an upper hand in the market. Effective organizations focus on securing these resources to maintain a profound competitive advantage that is sustainable.
Strategic constituency based model
The strategic constituencies of an organization are groups that have an impact on the organization’s survival. These can be owners, shareholders, customers, employees, government bodies, or any other interest group that has a certain amount of power and stakes in the organization. The strategic constituency model of organizational effectiveness tries to ensure that the expectations of these groups are met. Under this model, relevant strategic constituencies are chosen and their expectations from the organization are identified. The organization then needs to devise ways to fulfill these expectations and keep these important strategic groups satisfied.
Stakeholder based model
The stakeholder based approach to organizational effectiveness is quite similar to the strategic constituency approach. Stakeholders are groups that have stakes in the organization but may not have any direct powers over it or may not be directly affected by it. These groups may include families of employees, certain communities in society, activists, or others. This model focuses on satisfying these stakeholders through the organization’s operations.
Competing values model
The competing values model of organizational effectiveness is based on the competing values framework designed by Cameron and Quinn. The framework suggests that if an organization is able to sustain several competing values, it can be much more effective. So, the competing values model measures organizational effectiveness in terms of the organization’s ability to promote and sustain certain competing values together.
For instance, an organization may be able to drive profits and customer satisfaction while also ensuring that employee’s interests are taken care of. Or an organization may be able to hold its internal structure while allowing innovation and new ideas. These are usually conflicting values, but if an organization is able to manage these simultaneously, it can be considered to be truly effective.
The abundance model works on the principle that organizational effectiveness is driven by utilizing the highest potential of the organization’s human resources. This potential can be unleashed by promoting positive values and virtues within the organization. Human systems require both positive and negative reinforcements to uncover their full potential. For example, an organization has to ensure that its human resource flourishes and performs at its best but that is not possible unless they are challenged and made to put in enormous efforts. The organization has to, therefore, balance the struggle that the human system has to go through with the rewards that they achieve. This balance between the positive and negative values is the key to effectiveness in an organization under the abundance model.
An all-encompassing approach
For an organization that wants to be truly effective, it is not a question of which approach it should pick out of all the different models suggested. An effective organization should look at all these different aspects simultaneously instead of simply picking one model. Eventually, all these different approaches to attain organizational effectiveness are interrelated. An organization that strives to achieve its goals (goal based), has to obtain the critical resources (resource based) to achieve the goals, improve its internal processes (internal process based), take care of stakeholder satisfaction (strategic constituency/ stakeholder based), and manage conflicting opportunities (competing values/ abundance based). Only when all of these aspects are taken care of, can an organization flourish and be considered effective in the true sense.
An organization needs to take into account six very crucial aspects in its journey to achieve organizational effectiveness. Any complex organization that has several demands and customer expectations to manage should build organizational effectiveness through these six systems that form the six pillars of the organization.
The first and one of the most important aspects of an organization that impacts its effectiveness is the leadership. The leadership establishes the vision of an organization. Whether it is the vision for the organization as a whole or the goals for a new project, the executive leadership and management are responsible for determining what they aim to achieve. The leadership has to create a plan of action to achieve these goals.
The leadership of the organization has to understand what unique value their products or services are offering to the customer that sets them apart from other businesses. They need to know whether their existing processes are helping them deliver this value and satisfy customers’ needs, thus increasing organizational effectiveness. The leadership will also need to determine whether the organizational structure and culture are designed in a way that helps them achieve their goals and improve organizational effectiveness.
Once the leadership has the answers to these basic queries, it can establish better ways to improve organizational effectiveness. That is why an organization must first focus on empowering its leadership and enabling them to better understand the organization in its current state.
The second most important aspect that an organization has to focus on to improve effectiveness, is communication. The overall communication within the organization, between the leadership and teams, within the teams, or with other stakeholders, is the key to better management and organizational effectiveness. Good communication within the organization means that every person working in it should be aware of the goal, plans, and vision of the organization. It is not just the leadership that will work towards achieving those goals, but it has to be a joint effort of everyone involved. The leadership should, therefore, be able to clearly communicate what they have planned for the organization to the employees at all levels. Communication within teams is also very crucial. Project managers need to relay all the information necessary for team members to complete their tasks effectively. An effective organization has to understand that every interaction within the organization takes it one step closer to achieving its objectives.
Accountability is a very important factor that decides the success or failure of an organization. Every employee working towards making an organization more effective must be fully aware of his or her responsibilities and should be accountable for the work they do. The leadership should be able to hold people accountable and reward or penalize them according to how well they perform their duties. Having a certain level of accountability in the organization determines how smoothly it functions and how seriously everyone takes their assigned duties.
Bringing accountability to the organization is also the job of the leadership. The leadership has to bring about a sense of discipline in the way people work in the organization. They should be able to clearly define the roles and responsibilities of everyone involved in a project. Thus, communication is crucial in building accountability too. An organization where people are accountable for their work automatically becomes more effective.
An organization can only be said to be successful in achieving its goals if it can deliver on the promises it makes to its customers. Delivering value to the customer is a priority in every organization and an effective delivery system is a must to make an effective organization. The organization needs to have a simple and short delivery process that ensures their products, and thus value, is delivered to the customers in minimum time. A complex delivery process increases the chances of errors and reduces the efficiency of the process as well. Without an effective delivery process in place, an organization cannot be considered to be effective entirely.
The next important aspect that an organization must look into to ensure effectiveness is the performance of its employees. Not everyone can perform the same job with equal efficiency. Every organization needs people with different skill sets, qualifications, and experience for different roles. It is the job of the project managers and talent acquisition team to find the right people for the right job. The organization has to hire, train and deploy the right candidates for every job. Just bringing talent on board is not enough either. The organization also has to pay attention to employee retention. Finding and retaining the best talents for different roles makes a huge impact on the organization’s effectiveness.
Lastly, for an organization to know how effective it is, measurement and analysis are extremely important. An organization should continuously monitor its progress in terms of projects, processes, and operations. The output of each project needs to be thoroughly analyzed and success needs to be measured against the right metrics that give the correct picture. The organization needs enough actionable data to tell how it is performing and how it can further improve its processes. If the organization fails to use the right metrics, the data that it gathers may end up being inaccurate and unusable. An effective organization is one that knows where it stands and what it needs to improve in order to achieve more.
Measuring organizational effectiveness
Depending on the type of organizational effectiveness model that an organization chooses, it can create its own Organizational Effectiveness scorecard. A systematic process of evaluating how effective the organization is and tracking the progress of the initiatives undertaken to improve organizational effectiveness can be used to identify where further improvement is required.
There are five basic factors that an organization can focus on when scoring itself for measuring organizational effectiveness. These five factors are –
This refers to the domain of activities that the organization has undertaken to improve organizational effectiveness. These domains are nothing but the model that the organization has chosen. It could be achieving the goals, financial gains, customer or stakeholder satisfaction, product leadership in the market, and so on. The domain is basically the aspect on which the organization focuses to assess its effectiveness.
The second thing that the organization needs to determine when measuring organizational effectiveness, is from whose perspective the effectiveness is being assessed. There could different ways of looking at organizational effectiveness. There could be both internal and external perspectives. Internal perspectives could include employee perspective, owner perspective, leadership perspective, and so on. External perspectives, on the other hand, could include customer perspectives, shareholder perspectives, or societal perspectives. Depending on whose view is being considered the measure of effectiveness could be different.
Level of analysis
The analysis can be applied to an individual, a group, the entire organization, the industry, or on a global scale as well. The organization assessing effectiveness needs to determine at what level the analysis is being conducted.
The organization also needs to determine whether the assessment is being carried out over a span of the past few years, the current state of the organization, or over the long term to study the changes in trends. The time frame that the organization chooses will also have a tremendous impact on the results obtained.
Frame of reference
The frame of reference determines what the organization is being compared with. It may be compared with another benchmark organization, with industry standards, with a competing organization, with its own past versions, or with the vision that it has created for itself. Having a frame of reference is very important to determine where the organization stands.
Determining all of these five factors gives an organization a sense of clarity as to what it is assessing and from which angle. Once the organization has decided on each of these factors, it can then measure the effectiveness in terms of the chosen factors.
Say the activity domain is financial gains, the perspective chosen is internal or leadership perspective, the level of analysis chosen is organizational, the time frame is annual and the frame of reference is the past version of the organization itself.
So to measure the effectiveness, the organization will have to compare its annual financial gains over the past few years. There may be different ways in which these financial gains can be measured and once a comparison is drawn, it becomes visible how the organization has fared year over year, giving a measure of its effectiveness.
There can be other similar KPIs that can be tracked to determine how effective an organization is. Organizations can use external benchmarking to see how effective they are in maintaining their competitive advantage or how their products are faring in comparison to competitors’, for example.
Achieving long-term organizational effectiveness
As mentioned earlier, organizational effectiveness is not achieved through a one-time initiative but requires an ongoing commitment from everyone in the organization. For long-term organizational effectiveness, there are certain key areas where most successful companies make adjustments and improvements to sustain their effectiveness.
These key areas are –
For long-term change that can be sustained, a business to change at its core. The strategy of an organization is its root from where all its goals and purpose take shape. The strategy is what defines the business both internally and externally. That is why it is important to include organization effectiveness in the core business strategy itself. Once the strategy of the organization supports effectiveness and efficiency, both internal and external stakeholders will start working to uphold these values. Employees become more committed to achieving effectiveness through every new project or goal. Customers start to the business as one that shows promise.
An effective organization in the long term is one that has its objectives and goals clearly laid out at the strategic level itself. These objectives have to be simple, long-term, and easy to convey to all employees at all levels and across departments.
Successful organizations understand the importance of continuous monitoring and measurement for a sustainable, long-term improvement in effectiveness. And for measuring organizational effectiveness, we have already seen how important it is to choose the right metrics. Measuring organizational effectiveness with the right metrics not only gives the organization an accurate picture but also helps it stay accountable. But apart from choosing the right kind of data for measuring its effectiveness, a successful organization also knows when to value human judgment and opinions over hard facts and figures. There may be instances where human opinions differ from what analytics show and an organization have to be able to strike a balance between the two if it wants to see long-term effectiveness.
The evaluation of the organizational effectiveness initiatives should be regular and well-planned. It should be honest and reveal insights that can help the organization to continuously improve.
Another very important area where an organization needs to focus on for long-term organizational effectiveness is the amount of commitment it shows towards the cause. The senior leadership of the organization has to show enough commitment to the policies that are undertaken to improve organizational effectiveness. These may be policies pertaining to hiring, managing the annual budget, communication across departments, or any other major or minor company operation. It is only when the top management and leadership of the organization are committed to making it more effective, that the same commitment will seep through to the lower levels of the organization. This commitment has to reflect across the entire organization for sustainable change.
Since long-term organizational effectiveness needs to be sustained over time, it has to become a part of organizational behavior. The most difficult part in bringing about and sustaining change is turning the efforts into recurring behavior. This is where most organizations fail in the long run. The organization needs to make organizational effectiveness a part of its day-to-day routine. Employees need to bring about a change in behavior to accommodate these changes and maintain them over the long term. To encourage employees to adopt these behavioral changes, the organization may also have to offer certain incentives initially. For example, early adopters may be rewarded in some way, or employees who are able to make these behavioral changes a part of their routine for a given period may be acknowledged in order to encourage others to do the same.
Lastly, but quite importantly, one factor that has a significant impact on an organization’s effectiveness in the long term is the organization’s culture. The organizational culture determines how satisfied employees will be working in the organization, how change is received by the organization, and so on. An organizational culture that values effectiveness is sure to keep its employees engaged and happy in their roles. Better employee engagement and satisfaction increase their productivity and makes the organization more effective. Employees who don’t feel engaged and motivated in the organizational culture they are working in, not only lead to a lack of productivity but are also costing a lot more for the organization.
That is why it is essential to have a company culture that includes employees in most decision-making activities, gives them enough autonomy to put forward their ideas and views, and allows them to maintain a work-life balance. Organizations that focus on employee engagement and satisfaction and have a culture conducive to change are the ones that have organizational effectiveness embedded in their roots.
Variables affecting organizational effectiveness
According to Likert, the factors that affect organizational effectiveness can be divided into three groups of variables – Casual variables, intervening variables, and end result variables.
Casual variables are usually those variables that are independent and determine the course of developments within the organization as well as the objectives that the organization has achieved. Casual variables include only those variables that can be changed by the organization or its management. These generally include variables like the organization’s managerial policies, business decisions, strategies, skills, technology, and organizational behavior. These factors can usually be changed according to the need of the hour and in line with changes in the organization’s environment. The management has the liberty to change these casual variables whenever the need arises.
Intervening variables are those variables that are indicative of the internal state and the health of the organization. These variables help the organization determine whether it is capable of achieving its end goals. Intervening variables are further divided into three categories, that are –
Product-related – These include variables like product quality, performance, cost of production, price of products, and innovations in product.
Customer-related – Customer related variables include factors like customer service, customer satisfaction, and customer loyalty.
Personnel-related – Personnel related variables include factors like acquiring talent and retaining it, personnel skills and capabilities, motivation of employees, and their attitudes towards their work.
End result variables
Unlike the intervening variables that are internally focused and look into internal factors, end result variables are externally focused. The external stakeholders of the organization include all customers, vendors, suppliers, shareholders, investors, and communities at large. These are the people who are interested in the end result variables. The end result variables reflect how successful the organization has been in achieving its goals. End result variables can also be divided into four sub-categories which are the rate of growth, profitability, shareholder value, and social performance.
Achieving organizational effectiveness through Adaptive Coping Cycle
Change management is an important part of achieving organizational effectiveness. An organization has to have a mechanism in place to adapt and cope with the changes in the environment that are brought about when it is trying to make effectiveness a part of its day-to-day functioning. This is where the organization can make use of the Adaptive Coping Cycle suggested by Edgar H Schein. The Adaptive Coping Cycle has a set of activities that can help the organization deal with the changing dynamics of the environment better.
The Adaptive Coping Cycle has six stages and is a continuous cycle that organizations have to be able to sustain. The six stages of the Adaptive Coping Cycle include –
The first step in the Adaptive Coping cycle is the sensing of change in the organization’s environment. This change can be either in the internal or external environment. One of the major reasons why organizations fail to achieve organizational effectiveness is their inability to perceive change or perceiving the changes taking place incorrectly. To understand the changes in the environment and to cope with them effectively, most organizations have an adaptive sub-system that studies trends and changes in the environment. This sub-system could be marketing research, research, and development, or any other system that studies change.
Importing relevant information from the environment
Under the systems approach, an organization works as an input-output-based system. Under such a system, the organization takes input in the form of energy, material, and information from the environment. But there is a tremendous amount of information available in the environment. The decision about which information to import from the environment has to be taken very carefully by the organization. Only that information that is relevant to the organization will be of any use.
Conversion of imported information
The information that the organization imports from the environment will usually be in the form of raw data. That data needs to be processed in order to be usable for the organization. This is known as the conversion process, where the information obtained from the environment is further processed.
Stabilizing internal changes
The internal environment of the organization is affected by the changes in the external environment. The Adaptive Coping Cycle requires the organization to stabilize the internal sub-system. Changes in the environment may be positive or negative. So, the organization needs to ensure that the internal environment is not heavily affected by any negative changes in the external environment.
Delivering new outputs
Once the organization is able to stabilize its internal sub-systems, it is ready to deliver new outputs on the basis of the information it has gained from the environment. The organization can work on the information available and begin to change the way they function to deliver new outputs aligned with the environmental requirements.
The last stage in the Adaptive Coping Cycle is taking feedback on how the changes have affected the organization and what outcomes they have brought along. This feedback is crucial to keep track of where the organization stands with respect to the external environment. This helps in sensing further changes in the external environment and accordingly changing the internal environment to cope with it. So, the coping cycle is repeated.
For implementing the Adaptive coping cycle effectively, it is important to have an effective communication system within the organization for passing on information reliably. There should be enough flexibility within the organization so that changes can be implemented and accepted without any friction. The role of the leadership in motivating people to cope with the change is also very crucial to the successful application of the Adaptive Coping Cycle.
Successful coping will also require a commitment to achieve the organizational goals and a willingness to change. The more an organization resists change, the harder it is to cope with external environment changes and become effective. The internal ecosystem of the organization should be supportive of change and encourage good communication.
The top management of the organization should also be actively involved and invested in the implementation of the Adaptive Coping Cycle. Bringing about organizational effectiveness will require additional efforts, particularly when major organizational changes are required.
Role of leadership in organizational effectiveness
We have already emphasized the importance of effective leadership in organizational effectiveness. However, as this corporate training program focuses on enabling the executive leadership and management of an organization, it is important to understand in-depth the role that leadership plays in achieving organizational effectiveness. The leadership style of an organization has a major influence on the growth and economic prosperity of the business. Research suggests that most failures in an organization arise from leadership making wrong decisions or taking an incorrect course of action to achieve the organization’s objectives.
The leadership of an organization is responsible for influencing people to put all their efforts into achieving the organization’s goals. Successful leadership has to be visionary, painting a clear picture of what the organization aims to be in the future. But having a vision alone is not enough to make an organization effective either. Good leaders should have the ability to turn their vision into achievements. Such leaders not only put forth a clear and complete understanding of the goals but can also determine the course of action needed to achieve those goals.
For an organization to be truly effective, individuals working in the organization have to function together. An individual alone may be able to achieve simple tasks with ease, but to complete the more complex tasks in an organization, the combined effort of everyone involved is necessary. When human efforts are coordinated and organized effectively, it results in increased productivity and profitability. This is what the leadership does for an organization. The leadership turns an unorganized group of individuals into synchronized teams that work together to achieve the common goals.
Apart from managing human resources, good leaders should also be able to manage other resources effectively, be it time or money. An effective organization requires optimum use of resources and minimum wastage. An efficient leader has the capability of getting work done for the amount of resources invested in a task. Even if excessive funds are invested in a project, an efficient leader knows how to utilize these funds to their best so that they get either work or profits in exchange for the investment. Organizational effectiveness is about choosing the right goals as well as the means to achieve them. This requires doing the right thing at the right time, which is exactly what is expected of good leadership.
Another very important quality of a good leader that plays a significant role in ensuring organizational effectiveness is good communication. It is seen that most organizations have a top-down communication model which is effective when sending out instructions, communicating company policies, and so on. This kind of communication is usually initiated by the highest levels of the company and passed on to the lower levels. However, this kind of communication being the only communication in an organization is not a healthy or productive culture. A good leader needs to encourage communication both ways, top-down as well as bottom-to-top. Bottom-to-top communication is initiated by employees working on the front line and can help the organization gain some very valuable insights on its performance and effectiveness. Such communication helps employees convey customer feedback, present innovative ideas for better solutions, and bring to light the problems that employees face every day at work.
However, the leadership has to face a few challenges to ensure better communication with the organization to make it more effective. Barriers to communication exist in nearly every organization. One of these barriers may be the difficulty in changing one’s perception. For instance, an employee only takes back the part of the message that interests them or the management is unwilling to change its perception of a matter despite the employees putting forward their views. Another common barrier arises from the difference in cultures and prejudice. For instance, two people working in an organization coming from different cultures may have difficulty accepting each other’s views due to a level of prejudice that is usually present. It is possible that they perceive a message differently than what is meant by the other person, due to this prejudice. The leadership has to find ways of overcoming these barriers to communication, as effective communication is essential for organizational effectiveness.
Leaders need to understand the needs of employees and help meet these needs as far as possible within the organization’s capabilities.
Role of Human Resources in organizational effectiveness
The human resource of an organization is one of the most important components of an organization. An organization can only be successful when it has a productive, engaged, and committed workforce. The human resource managers in an organization play a crucial role in strategically managing people as a resource for the business. Most organizations still look at HR as an administrative department rather than a strategic one. But the truth is that the human resource department takes a number of crucial strategic decisions in its daily functioning. From hiring the right talent to managing employee benefits to identifying opportunities for employee training and development, human resources have to do a great deal of tactical work.
In achieving organizational effectiveness too, human resource management works as a strategic business partner that drives high performance and brings real value to the organization. According to experts on organizational effectiveness studies, human resource departments are an integral part of discussions on organizational design, company culture, change management, people management, reward systems, and more. Organizational effectiveness initiatives that are driven by the company’s human resource department, can help improve the company’s overall environment by making work enjoyable for the employees. When employees are happier, results are obtained much faster and the productivity attained is much more sustainable.
Though many organizations are slowly realizing the importance of including human resource departments in their organizational effectiveness initiatives, there is still quite some time before HR is recognized by companies as a strategic partner and not just an administrative unit. In most organizations HR is still seen as the administrative, policing arm of executive management. The human resource professionals in these organizations are held back by these traditional views and legacy company policies and overburdened with their daily administrative tasks, keeping them from being the strategic players that they can be.
Organizations need to understand that organizational effectiveness is not just about the company’s performance. Though it is definitely one of the most important aspects of effectiveness, simply increasing sales or earning more profits or market share does not make an organization truly effective. These are just a part of the outcome that you would expect from an effective organization. An efficient organization is, however, one that can achieve these same outcomes but with minimum use of resources.
Organizational effectiveness needs effective people management
Organizational effectiveness has much more to do with people management within the organization as well. For an organization to be effective, responsibility has to be strategically distributed by handing over certain tasks to the lower levels of the organization. It also requires making processes smoother and more efficient so the people working on these processes can perform faster and better. Managers in the organization need to empower employees, giving them the liberty to take risks and make decisions that lead to innovative solutions. All of these factors have a tremendous impact on the efficiency, performance, and speed of the organization. And all of this can be achieved by effective human resource management.
Human resources can identify the gaps in these aspects of an organization and help address these shortcomings to significantly change a company’s overall performance and results. For instance, if a company’s employees are unable to take on new responsibilities due to a lack of learning and development initiatives, HR can emphasize the need for employee training. Human resources can be an organization’s productivity managers, enabling people to get work done at a much faster pace and with dedication by encouraging them to keep an open mind. It can make strategic decisions for the organization in terms of redesigning its processes and reorganizing its teams to make them more productive and efficient.
Human resource as a strategic partner
Human resource is already well-equipped to help an organization assess, prepare, execute, and follow through on its effectiveness initiatives. It can assess employees’ and the organization’s readiness to change and accept change. It can help in preparing the organization for the change by doing the groundwork and preparing the workforce. It can oversee the implementation of the change and monitor the developments that it brings about. Lastly, it can gather feedback on whether the change has been effective and if sustaining it long-term would be beneficial for the organization.
In order to change how organizations see human resource professionals, HR leaders need to overcome these barriers that are holding them back from becoming strategic members of the organizational effectiveness initiatives. HR leaders need to be more assertive of their value as true strategic partners for the business. Their tactical role in the organization so far has to be acknowledged. Business leaders are bound to see HR as the man management and people-issue fixing unit of the business as that is what HR has been found to do historically. That is why HR leaders need to discuss their ability to help with strategic decisions with other business leaders.
HR needs to put out what they can contribute to the organization. Human resources are usually equipped with tremendous knowledge of the ongoing and upcoming trends in the industry that may impact the business, particularly on the people management front. This knowledge is extremely important for a business and can be used in crucial decisions for the future of the organization. But the lack of these discussions in an organization is what clouds the leadership’s perception of HR as a strategic partner. Apart from knowledge regarding man management, HR leaders also need to gather knowledge on other aspects of business outside their jurisdiction as well. They need to dig into issues that business leaders are dealing with and find out an angle in which HR can help address those issues.
The HR leaders need to be clear about what the future of human resources in the company should be like. Along with a clear vision for HR itself, they should also help business leaders see where the company can be in a few years with the HR acting as strategic partners in business. Organizational effectiveness requires this vision and this preparedness is what can transform HR into a proactive department rather than the reactive unit that they act as currently.
HR is already making strategic changes to the organization but without much credit. Talent acquisition, training, retention, everything is done with the aim of meeting business goals and not just as a necessity. Which skills are required in the organization, how many people are needed, where the people can be deployed, all of these strategies are being taken care of by human resources. When the people are ready, the activities are ready to take shape as well. That way, HR is already working as strategic partners in the company’s growth, increasing the organizational effectiveness.
Role of employee trust and engagement in organizational effectiveness
Leadership and management may be crucial parts of the organizational effectiveness initiatives in a company but the people doing the actual groundwork are the front-line employees. Employees that are satisfied, engaged, and dedicated to the organization can be the main driving force in making an organization more effective. Strong work relationships are known to make an organization more productive.
Employee trust is the key to this. Employees should be able to trust the management and leadership enough to share their insights, ask more questions and present new ideas without hesitation or fear. This requires mutual respect and transparency in the system so that employee trust can be built. The management and leadership of an organization have to be able to keep lines of communication open to all so that employees feel supported and valued. When the organization shows enough care, employee trust increases and so does engagement, well-b