Determining Criteria of Effectiveness
There are many ways to measure the effectiveness of an organization. Campbell
(1977) lists over 30 different criteria from productivity, profits, growth,
turnover, stability and cohesion (Scott p. 343). Different theoretical perspectives
can account for the diversity in usage of effectiveness measurements.
Rational perspectives emphasize goal attainment and focus on output variables
such as quality, productivity, and efficiency. Natural system perspectives
focus on the support goals of the organization such as participant satisfaction,
morale, interpersonal skills, etc. Open system perspectives focus on the
exchanges with the environment -- this includes information processing,
profitability, flexibility, adaptability.
Weick (1977) notes that effective organizations are characterized by:
* diversity of linguistic forms
* techniques to break out of normal cognitive and normative constraints
* means of simultaneously crediting and discrediting information received
* structural units that are loosely articulate to maintain sensitivity to
environment and diversity of response
The time perspective (short-run vs long-run) and level of analysis are also
important. Companies at different parts of their life cycle might be evaluated
differently. Population ecologists note that specialized companies may outperform
generalist companies in the short-term but not in the long-term (Hannan
& Freeman 1977). While some people take the social-psychological level
to measure effectiveness, most take an organizational level.
Participants, Constituents, and Criteria
Another perspective holds that organizations are collections of subgroups
of participants with divergent skills, interests, and subgoals (Scott p.
346). We can also consider outside constituencies that hold "goals"
for the organization as well. Also often there are different evaluation
criteria applied by those who assign tasks and those who evaluate performance
(Scott p. 346). On common problem is when vague criteria are used to direct
activities but very explicit criteria used to evaluate them, which can narrow
the goal range or displace them as particiapants focus against the narrower
There are usually multiple goals within organizations and multiple interpretations
of these goals. External constituencies will also propose goals and effectiveness
criteria, often many more groups than direct their activities (e.g. stockholders,
media, interest groups, etc.). Friedlander and Pickle (1968) found that
often to do well in one criterion by one constituency is to do poorly by
Whatever the criteria may be, they often have three characteristics (Scott
p. 348). Usually the criteria are self-interested ones (customers want lower
prices, workers want more wages, etc.). They are often stated as universalistic
and objective, using logic to explain why their criteria is best. Finally,
we would expect some divergence and conflict in goals. Meyer and Zucker
(1989) note that this can explain why some "permanently failing organizations"
survive -- their existence serves various interests.
Finally, researchers themselves are often biased in criteria selection to
benefit their own interests or research objectives.