Chapter 13: Organizational Effectiveness

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.

Effectiveness criteria also vary with time, and often subgroups have different effectiveness criteria.
Also often there are different evaluation criteria applied by those who assign tasks and those who evaluate performance (Scott p. 346). Often effectiveness criteria involve self-interst, are stated as universalistic and objective, and cause conflict and disagreement among subgroups. (Scott p. 348).

Market and Non-market Organizations
Many people emphasize the difference between market and non-market organizations (Scott p. 349). The traditional view is that in properly functioning markets, effectiveness can be readily measured in the marketplace and are directly influenced by customer satisfaction. Fligstein (1990) argues however that markets, like all structures, are socially constructed and vary over time and space, so that conceptions of efficiency or effectiveness also vary.

Public organizations often operate in non-market conditions. Often this means that there is no direct link between the services an organization provides and the income it gets for providing them (Downs, 1967). Controls over these organizations emphasize control over process than over outcome (Scott p. 350). While there have been attempts to evaluate goverment agencies, it proves very difficult, and there continues to be rising discontent with the performance and responsiveness of public agencies. Many of these services have been "privatized" and contracted out to independent businesses.

High Reliability Organizations
Complex organizations that require a high level of reliability are vulnerable to "normal accidents" (Perrow, 1984), inevitable failures due to the overly complicated and tight control mechanisms in some organizations.

Assessing Effectiveness

To evaluate peformance, criteria must be selected and then work sampled and compared to developed standards (Scott . 352).

Setting Standards
Cyert and March (1963) use an aspiration level perspective and argue that organizational goals are a function of previous goals, experience with these previous goals, and other organization's experience with these previous goals. Thompson (1967) notes that the appropriate effectivess criteria depends on how clear the standards and cause-effect relationships are known.

Selecting Indicators
There are three basic types of indicators-- those based on outcomes, on processes, and on structures (Scott p. 353).

Outcomes focus on materials or objects on which the organization has performed some operation (Scott p. 353). These are the most common effectiveness measurements, but can be the most difficult to define and measure and are not immune to ambiguity and measurement error.

Process measures assess effort rather than effect (Scott p. 355). Some measure work quantity or quality. Though they are in some respects a more pure measurement of organizational performance, they are an assessment of conformity of a given objective that can be decoupled from output performance (and ultimately survival itself). Substituting process criteria for outcome criteria can compromise service in some situations though.

"Structural indicators assess the capacity of the organization for effective performance" (Scott p. 357). These are often include organizational features (equipment age or type) or participant characteristics (degree attained, liscensing, etc.). Structural indicators form the basis for accreditation reviews and licensing systems, those these criteria can displace the goals of the organization sometimes.

Selecting Samples

Selecting samples requires proper definition of the organizations, it's work, and it's ultimate organizational goals. Is the organization doing things right, and is it doing the right things?

Participants, Constituents, and Measures
We would expect different groups to prefer different measures Organizational managers may emphasize structural features because they are more under their control. We would expect workers to emphasize process measurements. Clients and customers will naturally focus on output measurements (meets, needs and expectations, promptness, courtesy, sensitivity, etc.). It seems there is a bias in the literature toward structure and process measurements.

Explaining Effectiveness
Because many of the proposed measures of effectiveness are negatively correlated, we shouldn't expect to "find general explanations that will distinquish effective from ineffective organizations" (Scott p. 360). Given the complexity of organizations, we shouldn't find a simple set of factors that accout for effectiveness either. Much of the popular management literature indentifies simple factors that only partially explain effectiveness (and thus the prescriptions based on them are only partly effective as well).

Scott notes that "we are too often in thralldom before a general principle, applying it mindlessly to situations whose complexity swamps whatever truth might have been revealed by a more thoughtful approach. Let us not be misunderstood. We need the guidance of general principles". But we also require sufficiently detailed knowledge of the organizations and their technologies and environments to be able to select valid indicators of the variables to be assessed."

Ultimately, organizational effectiveness is not based only one path nor purely on technical, rational processes, but also a function of sociology and politics.