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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.


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.


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.



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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.



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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



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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


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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.


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.


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%20Mandate

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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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www.polyphonic.org/harmony/9/Role_Directors_Judy.pdf http://www.vta.vic.edu.au/docs/strategic/New%20Mandate%20Ulrich%2

01998.pdf

Documents

MU0018-SLM-Unit-12