Organizational Effectiveness 2o4n50

Organizational Effectiveness Katz and Kahn propose defining organizational effectiveness as 'the maximization of return to the organization'. [1] There are several outlooks to measure organizational effectiveness. It can be measured in of how well they fit with the external environment, or how well they satisfy the needs of key stakeholders. Organizational effectiveness can be broadly divided in four perspectives that have been discussed below in detail. [2] Open System Perspective: Open systems perspective is the classical way of measuring organizational effectiveness. In open system model the organization is treated as a system that interact with external environment through s and outputs. Organizations need input such as human resources, raw materials, etc. from the external environment. Organizations also comprise of different sub-systems. There are process systems such as communication, appraisal; there are different departments such as production, marketing; there are technology systems such as information system, etc. All these subsystems transform inputs into various outputs. Some of these outputs are desirable to the external environment such as products and services and some are undesirable output such as pollution. Organizations also receive about their output (in the form of sales and market share) and about availability of inputs in the future. [2] Organizations, which are accurately able to observe, predict and maintain a good fit with the external environment are effective. Such organizations adapt to the changes in external environment by changing its internal sub systems or by redeg outputs. For example, Morgan Stanley changed its appraisal systems, mission and vision to emphasize more on cross-selling in order to adapt with the changing external environment. Some organizations need to be more responsive and adaptive than others. For example, Mobile phone manufacturing companies needs to incorporate the new technology and designs into their newer models quickly. The faster they can incorporate and come up with new features the more effective they are. Organization Learning Perspective: The classical perspective had its major focus on the how effectively inputs are getting transformed into outputs. However the organic organizations of the modern world, where most valued input are its employees such perspective fail to measure effectiveness accurately. The talent and knowledge the organizations possess in the form of its employees are the key drivers of competitive advantage in today’s economy. Through Knowledge Management outlook, organizational effectiveness depends on the organization’s capacity to acquire, use, share, and retain valuable knowledge. Distribution of knowledge is also important among organizations. [2] For example Pixar deliberately kept its cafeteria at the center so that people get more chance to interact and share knowledge with all the employees rather than just within there team. Google is another excellent example of learning organization. It’s mandatory for employees to devote 20%

of there time to discover new knowledge. It has a cultural that encourages employees to share information as part of their job. Google also encourages knowledge use by encouraging its employees to apply its newfound knowledge. A similar approach is being undertaken in Public Sector enterprises like SAIL, where the enterprise has shifted its focus to in-house developmental activities. Earlier they relied on later entry system but moving in line with international trends, now they favor growth within the organization. [3] High performance work practices (HPWP) perspective “High-performance work practices” is one of the most valuable subsystem traits of organizational effectiveness. Every organization has “bundles” particular to its organizational structure, which it uses to gain competitive advantage over other firms. HPWP perspective revolves around the idea of human capital- involving knowledge, abilities and skills possessed by the employees. Human capital helps the organization to better adjust to fluctuations in externalities, and create and utilize existing opportunities. In addition, human capital is one resource, which cannot be easily replicated or substituted. It is limited and unique. For example, a new entrant in a particular market segment cannot expect to replicate the human capital of the existing market leader. It has to come up with its own “bundles” to better utilize the potential of its employees. [2] Although many work practices have been examined over the years, there are four basic practices with enough research backing- job autonomy, employee involvement, employee competence, and performance-based rewards. The Indian PSUs have recently started to focus their attention towards strategic human capital management. Their training programs cater to the need of increasing competencies of their employees, and at the same time bringing about changes in knowledge, skill and attitude. These factors, they believe, can help them sustain in the highly competitive national and international environment. [3] Stakeholder perspective Generally organizations are so engrossed in handling internals factors and processes that they do not pay enough attention to all the stakeholders. Stakeholders play a very integral part in the organization’s well being. Stakeholders include individuals and entities that directly or indirectly affect or get affected by the goals and motives of the organization. They include anyone who is somehow interested in the activities of the companyshareholders, government, employees, labor unions, consumer, suppliers and environmental interest groups. The basic idea behind shareholder perspective is that organizations should keep track of how their activities affect others. [2] Stakeholders have varied interests and agendas. Besides, stakeholders’ interests are dynamic; they keep changing from time to time. In order to understand, manage and satisfy the interests of stakeholders, it is very important for an organization to prioritize

since they cannot satisfy all stakeholders simultaneously at the same time. Prioritizing generally involves satisfying the most powerful stakeholder but that may create problems if the minor stakeholders form coalitions or seek the help of government. As we see, human resource is an important component in all the perspectives to measure organizational effectiveness. In the classical open-system perspectives, human resources are important to have effective sub systems and to increase productivity. In Learning perspective, its main focus is on knowledge management of employees. How employees share and use their knowledge defines organizational effectiveness. High-performance work practices perspective talk about human capital and the use specific “bundles” of work practices to enhance their capability. It could be inferred that a well-groomed human capital can help the organization to tackle externalities. Finally the stakeholder perspective helps us to understand the causal-effect relationship among all entities involved. References 1. The Study of Organizational Effectiveness, James L. Price, The Sociological Quarterly, Volume 13, Issue 1, pages 3–15, January 1972 2. Introduction to the Field of Organizational Behavior, McShane, S. and Von Glinow, Organizational Behavior, 5th Ed., McGraw-Hill, pages 7-15, 2009 3. Talent Development process of SEs: A Reflection on Practices and Requirements, Dipak Kumar Bhattacharyya, The Journal of Institute of Public Enterprise, Volume 37, No. 3&4, 2014