Organizational effectiveness

Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce.^[1] The idea of organizational effectiveness is especially important for non-profit organizations as most people who donate money to non-profit organizations and charities are interested in knowing whether the organization is effective in accomplishing its goals.

According to Richard et al. (2009) organizational effectiveness captures organizational performance plus the myriad internal performance outcomes normally associated with more efficient or effective operations and other external measures that relate to considerations that are broader than those simply associated with economic valuation (either by shareholders, managers, or customers), such as corporate social responsibility.^[2]

An organization's effectiveness is also dependent on its communicative competence and ethics. The relationship between these three are simultaneous. Ethics is a foundation found within organizational effectiveness. An organization must exemplify respect, honesty, integrity and equity to allow communicative competence with the participating members. Along with ethics and communicative competence, members in that particular group can finally achieve their intended goals.

Foundations and other sources of grants and other types of funds are interested in organizational effectiveness of those people who seek funds from the foundations. Foundations always have more requests for funds or funding proposals and treat funding as an investment using the same care as a venture capitalist would in picking a company in which to invest.

Organizational effectiveness is an abstract concept and is basically impossible to measure. Instead of measuring organizational effectiveness, the organization determines proxy measures which will be used to represent effectiveness. Proxy measures used may include such things as number of people served, types and sizes of population segments served, and the demand within those segments for the services the organization supplies.

For instance, a non-profit organization which supplies meals to house bound people may collect statistics such as the number of meals cooked and served, the number of volunteers delivering meals, the turnover and retention rates of volunteers, the demographics of the people served, the turnover and retention of consumers, the number of requests for meals turned down due to lack of capacity (amount of food, capacity of meal preparation facilities, and number of delivery volunteers), and amount of wastage. Since the organization has as its goal the preparation of meals and the delivery of those meals to house bound people, it measures its organizational effectiveness by trying to determine what actual activities the people in the organization do in order to generate the outcomes the organization wants to create.

Activities such as fundraising or volunteer training are important because they provide the support needed for the organization to deliver its services but they are not the outcomes per se. These other activities are overhead activities which assist the organization in achieving its desired outcomes.

The term Organizational Effectiveness is often used interchangeably with Organization Development, especially when used as the name of a department or a part of the Human Resources function within an organization.

See also

• Management
• Organization
• Theory of the firm
• Workplace listening

References

1. ^ Etzioni, Amitia. (1964). Modern Organizations. Englewood Cliffs, NJ: Prentice-Hall.
2. ^ Richard et al. (2009): Measuring Organizational Performance: Towards Methodological Best Practice. Journal of Management.

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