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Change Management Unit 12
Sikkim Manipal University Page No. 252
grow and adapt to new environmental demands, should strike a satisfactory
balance between organisational and societal goals.Organisational effectiveness has constantly measured how productively
organisations achieve their missions through their core strategies.
Organisational effectiveness should achieve the outcomes effectively that
the organisation intends to produce. Organisational effectiveness studies
are concerned with the unique capabilities that organisations develop to
assure their success.
Thus organisational effectiveness reflects how well the organisation is able
to survive in the competitive business world successfully and to grow and
develop in future through various strategies.
Attaining Organisational effectiveness is important because it provides a
valuable focal point for theoretical combination of the emerging and highly
diversified field of organisation theory.
Effective organisation is needed to recognise that our business is unique
and we are dedicated to take the time to know our employees, customers
and business goals. Through Effective organisation we give specific
services to our business need to achieve an economical advantage in the
complex and changing business world.
Self Assessment Questions
1. Organisational effectiveness studies are concerned with the unique
capabilities that organisations develop to assure their success.
(True/False)?
2. Higher the effectiveness, lesser is the satisfaction of needs.
(True/False)?
3. Through _____________ we give specific services to our business need
to achieve an economical advantage in the complex and changing
business world.
Activity 1
Visit an organisation and collect information about how the employees
understand the concept of organisational effectiveness.
(Hint: Refer organisational effectiveness overview)
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12.3 Difference between Effectiveness and Efficiency
In order to be successful, organisations have to be effective and efficient.Effectiveness is to achieve the right things and efficiency is to achieve the
things right.
Effectiveness and efficiency are generally used very closely or
interchangeably, although both these terms have very clear and separate
meanings the difference in these two terms can be explained as follows:
Organisational effectiveness is commonly referred to as the degree to which
predetermined operational and operative goals are achieved, but the
concept of efficiency represents the benefit rate incurred in the search of
these goals or in other words efficiency is the input to output ratio. It tells the
number of inputs that is required to produce certain amount of outputs.
For Example, Take two customer service representatives, the first
representative is very fast with the customer. If the customer tells him
unnecessary information, the first representative tells the customer that is
not important and quickly resolves the issues. The first representative ends
up handling more number of calls. The second representative is slow with
the customer, shows empathy and concern, and resolves the issue, gains
customer satisfaction by the end of the call. Here the first representative is
efficient and the second representative is effective.
There are some major differences between the effectiveness and efficiency.
These are shown in the table 12.1.
Table 12.1: Difference between Effectiveness and Efficiency
Effectiveness Efficiency
Effectiveness is defined as themeasure of actual output meeting therequired output.
Efficiency is defined as the output toinput ratio and focuses on achievingthe maximum output with minimumresources.
It considers in meeting the end goals. It considers the present state and theprocess.
This encourages innovation and
different ways to execute the requiredgoal.
This requires documentation and
repetition of same steps many numberof times.
It is about gaining success. It is about avoiding errors.
This refers to quality. This refers to quantity.
This is to achieve the right things. This is to achieve the things right.
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Creating an effective and efficient organisation leads to the minimum
utilisation of resources. The effective and efficient organisation brings to itscustomers the prize of superior quality and value for money.
Self Assessment Questions
4. In order to be successful organisations have to be ________________
and _________________.
5. Effectiveness is to achieve the right things and efficiency is to achieve
the things right. (True/False)?
6. Efficiency focuses on the end goal and effectiveness focuses on process.
(True/False)?
Activity 2:To know more about the differences between effectiveness and
efficiency, read an article on web.
(Hint: http://geekswithblogs.net/dthakur/archive/2004/06/09/6290.aspx)
12.4 Perspective on Organisational Effectiveness
There is a constant challenge to improve and to achieve higher levels of
organisational effectiveness despite of large or small organisation.
Individuals make a group and a variety of groups make an organisation. The
groups function in synergy. Here synergy happens when people within an
organisation bring together their skills, scheme, idea and creativity, andwork together so that the individual performances amplify each other and
the output of the group taken together exceeds the total of individual
contributions.
The groups function in synergy and attain synchronisation with various
organisational systems and processes. Effectiveness of an organisation
depends on individual and group contributions. The greater cohesiveness
among group members, the better is the organisational effectiveness.
Organisational effectiveness is a complex process. It depends on the
strategies the organisation takes for the individual development. This isrelated to the personal growth of an employee exhibiting high level of work
motivation and emotional balance. An organisation is effective when its
contribution is larger than the sum total of individual contribution.
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An organisation must achieve synergy between groups and different
environmental factors. Organisation must achieve satisfaction ofstakeholders, and satisfy public and government requirement. The
organisation should be vibrant and seek at a long-term perspective.
An organisation must successfully respond to environmental factors to be
effective and to attain its goals. Different models of determining
organisational effectiveness exist because organisations face different
environments, produce different products, and the organisation are at
different stages of the development. Every model is very useful to an
organisation, that are having a combination of environmental and
organisation attributes.
Quinn and 2Rohrbaugh discovered individual perceptions of organisational
effectiveness are based on three different dimensions. They are:
Organisations internal focus versus external focus.
Organisations concern for flexibility versus concern for control.
Organisations concern for end versus concern for means. That is focus
on final outcomes and productivity versus focus on planning and goal
setting.
The three dimensions are considered to develop models of organisational
effectiveness. They are:
Rational goal model. Open system model.
Internal process model.
Human relations model.
Rational goal model
The rational goal model of an organisation is effective to the extent that it
accomplishes its stated goals.
This emphasises, control and external focus, and also views planning, goal
setting, productivity and efficiency as effective.
2faculty.fuqua.duke.edu/~willm/.../QuinnCameron1983.pdf
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Example: 3The American League pennant and World Series are the formal
goals to be achieved by the Toronto Blue Jays.
Open system model
According to Open system model of effectiveness, an organisation is
effective to the extent that it acquires inputs from its environment and have
outputs accepted by its environment.
Example: 4 The University of Alberta follow this model when they are
concerned about the quality and number of students applying for admission
and the jobs that students receive on graduation.
Internal process model
The internal process model focuses on the effectiveness of control and
internal transformation process.
Based on hierarchy, this emphasises on measurement, documentation and
information management. These processes bring in stability and control.
Hierarchies always function best when the task to be done is well
understood and here, the time is not an important factor.
Example: 5Stelco Inc focuses on internal process that is it examines its
steelmaking methods to determine price and quality competitiveness.
Human relation model
The human relations model concern is on the development of the
organisations personnel. That is organisation using this model are more
concerned with employee.
Example: A travel agency sends their agent on familiarisation trips to
explore their knowledge on specific hotels, cruises and destinations.
The competing values model requires that an organisation examine the
balance among the above four effectiveness models.
Example: A private hospital focuses on how their patients are treated and
success rate of surgeries (rational goal model). It is also concerned about
the performance of hospital procedures (internal process model) and skills
and ability of the hospital staff (human relations model).Finally to make a
profit to survive, the hospital needs to take an account of number and what
3http://apps.business.ualberta.ca/rfield/Organizational%20Effectiveness,%20Structure,%20and%20Techn
ology.htm4http://apps.business.ualberta.ca/rfield/Organisational%20Effectiveness,%20Structure,%20and%20Techn
ology.htm5http://apps.business.ualberta.ca/rfield/Organisational%20Effectiveness,%20Structure,%20and%20Techn
ology.htm
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To be efficient, the goal attainment model must have goals that are clear to
identify, consensual, measurable and time bounded.The goal attainment approach of organisational effectiveness has some
limitations. They are:
According to 7Hannan and Freeman most of the problems arise because
there is more than one organisational goal to achieve, and most goals
are performance oriented or end state oriented.
Identifying goals and how to measure the extent to which the goals have
been achieved is also one of the limitations. In certain circumstance
goals are measured qualitatively and progress towards them is difficult
to assess, complicating the use of the goal attainment approach. Price
suggests that one way to overcome the problem of goal clarity is tofocus on the organisational decision makers, because their statements
and actions regarding the organisations operation give an idea about its
priorities.
Sequential dimension of goals is also one of the important limitations in
goal attainment approach.
The final problem with goal attainment approach is concerned with
variation in thinking about what are the appropriate organisational goals.
When the goal attainment approach is applied to measure effectiveness,
we have to ask how the goals are measured; the problems faced are
identifying the goals, deciding which are important and measuring
whether they are achieved. 8Bardach and Kann suggest that goals are
dynamic, therefore goals change overtime.
9Warner suggested that goals are difficult to verify as they are multiple,
transitional, and indefinable goals. Generally short term goal differ from
long term goal in an organisation. Multiple goals always create problems
in an organisation. Multiple goals and varied interests within an
organisation cannot reach an agreement unless they are stated in a
favourable way.
7http://books.google.co.in/books?id=6bs9-
i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approches%20on%20organisational%20effectiveness&pg=PA42#v=onepage&q&f=false8
http://eprints.qut.edu.au/archive/000045249
http://books.google.co.in/books?id=6bs9-i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approches%20on%20organisational%20effectiveness&pg=PA42#v=onepage&q&f=false
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12.5.2 System resource approach
The system resource approach to effectiveness is based on open systemmodel. To determine organisation effectiveness, system resource approach
considers the interaction between the organisation and environment within
the organisation, here the organisation gets input, undergoes changes and
gives the output. An organisation is composed of several interconnected
subsystem (Kast and Rosenzweig). If any of the subsystem performance is
not good then there is going to be a direct effect on the whole system. The
organisation must be in good terms with its constituencies as they can
interrupt the operation of the organisation.
The diagram for system resource approach is shown in Figure 12.3.
Figure 12.3: System Resource Approach to Organisational Effectiveness
The system resources approach are concerned to the importance of specific
goals, they enquire the strengths of the goals selected and the measures
used for achieving the progress towards the goals. According to 10Yutchman
and Seashore system resource approach of organisational effectiveness
views end goals as a set of criteria that would increase the existence of the
organisation for a long period.
10http://books.google.co.in/books?id=6bs9-
i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approches%20on%20organisational%20effectiveness&pg=PA42#v=onepage&q&f=false
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Yutchman and Seashore gave five benefits for system research approach.
They are: The system resource approach considers the organisation as a frame of
reference.
In system resource approach the relation between organisations is a
component within the environment.
The organisations of different types can use the general framework.
The system resource approach allows comparative evaluation for
variability of measurement techniques.
For selecting empirical measures of effectiveness guidelines are
provided.
System resource approach have some limitations, goals of an organisation
are different. Usually organisations have operative goals that differ from
organisational goals. The critics of system resource approach are that it
focuses on means to achieve effectiveness but not on the organisation
effectiveness.
12.5.3 Internal process approach
Internal process approach determines the organisational effectiveness.
According to internal process approach effective organisations have no
internal damage, internal functioning is smooth. Internal process approach
focuses on the throughputs or transformation processes within an
organisation. The comparison is shown in the above figure 12.1.
Throughputs are the internal actions and processes of the organisation by
which inputs are converted into outputs. According to 11Daft an effective
organisation includes supervisors interest and concern for their employees,
team spirit, group faithfulness, teamwork; effective communications, good
managers, development of subordinates, and creating effective working
group. The diagram for internal process approach is shown in Figure 12.4.
11http://books.google.co.in/books?id=6bs9-
i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approches%20on%20organisational%20effectiveness&pg=PA42#v=onepage&q&f=false
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Figure 12.4 Internal Process Approach to Organisational Effectiveness
Sharing information among employees in an organisation and focuses on
employee welfare and happiness are the indicators of internal process
approach to effective organisation. Some researchers have suggested that
economic efficiency should be the focus, when evaluating the internal
processes of an organisation. 12Evan developed a quantitative method for
the economic efficiency of an organisation and suggested that the variables
input, output and throughput can examined as a ratio to estimate the
performance of the organisation.
Example: The throughput to input for the local basketball association or the
faculty of kinesiology as an indicator of economic effectiveness. There are
three possible results. Organisation is ineffective if the cost of the operation
is higher than the annual budget then the ratio is X: 1, here X is greater then
one. If the cost of the operation is equal to the annual budget then the ratio
remains the same. The cost of the operation is less then the annual budget
then the ratio is Y: 1, here Y is less then one. The organisation is effective
for the last two conditions because the cost of operation is within the
planned budget.
12http://books.google.co.in/books?id=6bs9-
i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approches%20on%20organisational%20effectiveness&pg=PA42#v=onepage&q&f=false
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An organisation should consider the government policies and should be
responsive towards the society. Strategic constituencies integrates bothgoal and system approach to effectiveness.
The diagram for strategic constituencies approach is shown in Figure 12.5
Figure 12.5: Strategic Constituencies Approach to Organisational
Effectiveness
The strategic-constituency approach is similar to the systems approach.
Managers have to identify various constituencies that are considered for
organisation effectiveness. For an organisation to be successful critical
factors are identified. It is a process of management that achieve
organisation effectiveness.
Managers show particular attention for an organisation to be effective they
are to:
Identify critical constituencies.
Arrange the order of priority for constituencies because there are
constituencies that are critical.
Identify the potential of various challenging groups.
Regularly scan the environment to identify the changes that take place.
Satisfy all the constituencies that are critical for effecting a change.
According to 14 Cameron, for a variety of constituencies strategic
constituencies approach is viewed as a summary for the measure of
14http://books.google.co.in/books?id=6bs9-
i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approches%20on%20organisational%20effectiveness&pg=PA42#v=onepage&q&f=false
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organisational goals or as a series of different weightings for specific goals.
For an organisation to survive effectively a particular interest groups isnecessary to control the resource of organisation that pursue specific goals.
Researchers implementing this perspective should request the members of
the main association to recognise the constituencies that are critical to
organisations survival. The most important constituencies that affect the
organisation's survival should be identified if survival is important for an
organisation.
According to Quinn and Rohr Baugh by implementing strategic
constituencies approach, the impact that strategic constituent have on the
organisation's operations are minimised.
It is difficult and problematic task to separate the strategic constituencies
from their environment within which they operate.
12.5.5 Competing values approach
The competing values approach is the best criteria that is valued and used
in assessing the organisational effectiveness. According to 15 Robin the
Competing values approach consists people in an organisation having
different goals and hence cannot make an agreement and goals take
precedence over others. Usually goals are based on preferences, personal
values and interests.
16 Quinn and Rohrbaugh recognised certain variables and are joinedtogether to form three fundamental set of values they are:
Comparing flexibility with control, here flexibility favours innovation
variation and change. Control favours stability order and predictability.
Comparing people with organisation, here both gives importance to the
development of people in the organisation, but organisation is
concerned with its own development.
Comparing means with ends they indicate a relation between internal
process and final results. The mean is considered as long term variable
and the end is considered as short term variable,
Each of the above competing values are defined and combined into
organisational effectiveness model. The competing values approach is used
15 http://eprints.qut.edu.au/archive/0000452416
http://eprints.qut.edu.au/archive/00004524
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to identify the changes that take place in the stages of organisational life
cycle. It is concluded that the effective organisation do not give importanceto one model but they balance all the models.
Self Assessment Questions
11. Goal attainment approach focuses on the effectiveness in terms
of_____________ organisational objectives and performance.
12. To be efficient, the goal attainment model must have goals that are
clear to identify, consensual, measurable ________________.
13. The system resource approach to effectiveness is based on
___________ system model.
14. Strategic constituencies integrates both ___________ and
____________ approach to effectiveness.15. The competing values approach is the best criteria that is valued and
used in _____________ the organisational effectiveness.
16. Comparing means with ends they indicate a relation between internal
process and _______________.
Activity 4:
Visit an organisation and collect information on how the organisations
would control and bring effectiveness within an organisation.
(Hint: Strategic constituencies approach)
12.6 Achieving Organisational Effectiveness
To achieve a goal, each constituent must take responsibility to constantly
strive for continuous improvement, and management must take
responsibility for leading the effort.
17Witmer suggested four keys to achieve performance excellence in an
organisation they are:
Culture and values.
Tools.
Leadership. Alignment.
17www.polyphonic.org/harmony/9/Role_Directors_Judy.pdf
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Culture and values
An organisation that achieves performance excellence displays a culturethat genuinely values and empowers all constituency members and that
represent mutual caring and trust. The successful organisations are guided
by values that describe the organisations behaviours. The values include
giving excellent service, provides internal and external quality all over the
organisation and an environment that supports and encourages teamwork
and individual growth.
Tools
To achieve performance excellence, an organisation must have the right
tools. These organisational attributes include:
Functions and constituencies of teams that are authorised to workdiagonally.
Definite quality improvement processes.
Strategic planning techniques.
Partnerships with respective customers and suppliers.
Use of definite performance and quality assessment measures.
Leadership
To achieve performance excellence in an effective organisation,
organisations have leaders in each area to ensure improvement, by all the
members in the organisation and to encourage empowerment, mutual
respect, and trust within an organisation. The leaders make sure that if the
function and processes of an organisation are in place and if the
organisation as developed a focus on customer satisfaction. The leadership
encourages continuous learning, development and coaching for those within
the organisation and highlights continuous communication to all constituents.
Strong and successful leadership develop and achieves effective
organisation.
Alignment
According to Witmer alignment is a factor of performance excellence, it is an
essential agreement on strategic and operational across the constituencies.There must be good understanding, open communication for an
organisation to be effective. Successful alignment results in ownership and
encourages individual motivation a key factor to empowerment.
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Witmer suggested the possibilities of achieving greater effectiveness in
organisations, they are: Organisations are required to improve continuously.
Non-profit organisations need help to become more organisationally
effective as they lag behind when compared to profit organisations.
Large resources are available to board members and management that
are unused; management leadership should focus on the resources that
are not used.
Every constituent should contribute to organisation and the directors in
the organisation should proactively help the organisation.
Action aids organisation effectiveness team provides continuous productive
learning and helps in bringing out the creative potential of employees.
Generally achieving organisational effectiveness includes:
Impact evaluation and shared learning.
Human resources and organisational development.
Information technology and information system.
Developing effective organisation leads to achieve effective organisation, to
decide what to achieve is easy, when compared to achieving the goal.
Leadership skills are the key to high performance, development to motivate
and self managed teams that constantly make the organisation more
effective.
Improvement process and tools is another key feature to achieve
organisational effectiveness. Three sets of process are required for the
Improvement process, the first includes quality delivery process; this helps
the employees to identify the customers need and to find if they are meeting
the customers requirement. The second process includes structured
problem solving that helps in guiding towards the best solution. The third
process includes continuous improvement. Along with the process the
employees use tools that enable them to operate the process effectively.
The process and tools are best in practice; they help in fast structured and
challenging approach to reduce the cost reductions within the organisation.
However the employees are trained on the tools and are motivated to make
the best use of it. For an organisation to be effective to achieve its goals it
requires to energise and sharpen the creativity of the employees in the
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organisation. An organisation is more effective and achieves the gaols, if the
employees understand and bring the value to the organisation and meet theorganisational needs as individuals.
Self Assessment Questions
17. To achieve effectiveness, Action aids organisation effectiveness team
provides continuous ____________ and helps in bringing out the
creative potential of employees.
18. Leadership skills are the key to high performance, development to
motivate and self managed teams that constantly make the
organisation more effective. (True/False)?
Activity 5:
To have a clearer picture about achieving organisational excellence, read
few articles on web.
(Hint: http://www.vta.vic.edu.au/docs/strategic/New%20Mandate%20
Ulrich%201998.pdf)
12.7 Summary
So far, we have learnt about the effectiveness of the organisation. It is
considered as the measure to attain goals of the organisation with the givenresources. Evaluating organisational effectiveness helps to determine how
productive the organisation is and how well the organisation is able to stay
in this competitive business market.
In this unit, we have also discussed how effectiveness and efficiency differ
from each other. Effectiveness evaluates if the actual output meets the
desired output whereas efficiency aims to gain maximum output with
minimum resources. The perspective on organisational effectiveness is
based on individual and group contributions. It is based on three basic
models, which include rational goal model, open system model, internal
process model and human relations model.
We have also discussed the five main approaches to attain organisation
effectiveness, which include goal attainment approach, system resource
http://www.vta.vic.edu.au/docs/strategic/New%20Mandatehttp://www.vta.vic.edu.au/docs/strategic/New%20Mandate7/27/2019 MU0018-SLM-Unit-12
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approach, internal process approach, strategic constituencies approach and
competing approach.
Finally we have learnt about developing effective organisation, leadership
skills, improving process and tools which are the key to the success for
achieving the organisational effectiveness.
12.8 Glossary
Term Description
Familiarisation To know a particular skill or a thing.
Framework Structure supporting or containing something.
Perspective To view.
Strategies To plan an action to achieve the specified goal.
12.9 Terminal Questions
1. Explain effectiveness and efficiency and how do they differ from each
other
2. Explain briefly the four models of effective organisation
3. Explain in brief about goal attainment approach and system resource
approach and give two limitations for any one approach
4. Discuss in brief about Strategic constituencies approach and
competing values approach
5. Explain in brief about achieving organisational effectiveness
12.10 Answers
Answers to Self Assessment Questions:
1. True
2. False
3. Effective organisation
4. Effective and efficient
5. True
6. False
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7. External
8. Flexibility9. Rational goal model
10. Internal process model
11. Internal organisational
12. Time bounded
13. Open system
14. Goal and system approach
15. Assessing
16. Final results
17. Productive learning
18. True
Answers to Terminal Questions:
1. Refer section 12.3 Difference between Effectiveness and Efficiency.
2. Refer section 12.4 Perspective on Organisational Effectiveness.
3. Refer section 12.5.1 Goal Attainment Approach and 12.5.2 System
Resource Approach.
4. Refer section 12.5.4 Strategic Constituencies Approach and 12.5.5
Competing Values Approach.
5. Refer section 12.6 Achieving Organisational Effectiveness.
12.11 Case Study
Achieving productivity and effectiveness in XYZ:
XYZ client is a high-end server manufacturer who had more than 2,000
skilled employees on long-term contracts working a standard 18-10
week. But market conditions required more flexible production schedule,
at the same end, the company did not want to lose its in-house expertisein the face of change.
The company hired Right Management to allocate talent more
appropriately that is to increase the flexibility of the production process,
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and to amplify production efficiency. To achieve this, Right management
took over the entire human resources function and managed allworkforce associated aspects of the production process.
Right management also implemented a broader business-transformation
process to transition staff from fixed weekly shift pattern to a flexible
environment. As a result, the XYZ client experienced a 30% increase in
the availability of suitable human resources, and enjoyed improved
manufacturing productivity.
Questions
1. What are the steps taken by the Right management to increase the
production efficiency?(Hint: Human resource function)
2. How did the XYZ Client achieve the availability of human resource
and improve manufacturing productivity?
(Hint: Business transformation)
References
Dr.Radha R. Sharma (2006), Change Management-Concepts and
Applications.
Bhupen Srivastava (2005), Organisation Design and Development-
Concepts and Applications.
E-Reference
http://www.differencebetween.net/business/difference-between-
efficiency-and-effectiveness
http://www.actionaid.org/main.aspx?PageId=259
http://apps.business.ualberta.ca/rfield/Organizational%20Effectiveness,
%20Structure,%20and%20Technology.htm
http://geekswithblogs.net/dthakur/archive/2004/06/09/6290.aspx
http://apps.business.ualberta.ca/rfield/Organisational%20Effectiveness,
%20Structure,%20and%20Technology.htm
http://books.google.co.in/books?id=6bs9-
i2bD3cC&lpg=PA42&dq=study%20to%20goal%20attainment%20approc
hes%20on%20organisational%20effectiveness&pg=PA42#v=onepage&
q&f=false
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http://eprints.qut.edu.au/archive/00004524
www.polyphonic.org/harmony/9/Role_Directors_Judy.pdf http://www.vta.vic.edu.au/docs/strategic/New%20Mandate%20Ulrich%2
01998.pdf
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