Ans. The study of organisational structure is necessary to understand organisational effectiveness. In simple terms better the structure of an organisation more effective would be the organisation and vice versa. You must be aware that some organisations perform better and grow more rapidly than other. On the extreme side some organisations perform badly and within a short period of time go out of business. How can we measure effectiveness? In order to measure the effectiveness let us analyse following components of organisational effectiveness.
The different components of organisational effectiveness can be found from the answer to the following questions.
• Are the employees satisfied with the organisation?
• Are the customers satisfied with the organisation?
• Is the organisation profitable?
• Is the organisation growing in terms of profit, revenue, number of products, expansion into new locations, line of products etc?
• Is the organisation productive i.e., creating goods and services of high value at minimum cost? and
• Is the organisation innovative or stale?
Determinants
of Organisational Effectiveness
Several factors influence the organisational effectiveness. Let us learn them in detail.
Managerial policies and practices integrate the entire organisation, maintain balance among the interest groups in the organisation, and accommodate them with the external environment. Managerial policies and practices have a direct bearing on the Organisational effectiveness. The major managerial policies and practices are as follow :
Strategy: A strategy is a plan for interacting with the competitive environment to achieve organisational goals. Goals define where does the organisation want to go and strategies define how will the organisation reach there. In other words, strategy is the determination of basic long term goals of the organisation, the adoption of the courses of action and the allocation of resources necessary to achieve them. The strategy is the most important factor of an organisation which decides the future course of action for the organisation. New strategy is often selected based upon environmental needs, and then the top management attempts to redesign the organisation to achieve those ends.
Leadership: It is the process of influencing members towards the achievement of organisational goals. It is said that managers are people who do things right and leaders are people who do the right thing. Leaders facilitate the identification of organisational goals. They initiate the development of vision for their organisation.
Decision-making: Decision-making is choosing among alternatives. It has close relationship with all traditional management functions. The decision that management makes has a profound impact on the success of an organisation.
Rewards: Organisational success to a large extent depends on how is management able to gain support of its team by way of compensating them for the efforts they are making for the achievement of organisational goals. It is primarily meant to sustain employee morale and improve or maintain productivity.
Communication: It is the linkages among members of the organisation whereby they exchange information. The organisational structure has to provide for a perfect communication among different members of the organisation. Organisational communication is the grease that enables any organisational change.
Environmental
Characteristics
Organisational effectiveness is influenced to a great degree by the external environmental characteristics. It is dependent on how is the external environment predictable, complex and hostile to the organisation and its activity. The major characteristics are as follow :
Predictability: Predictability refers to how certain or uncertain an organisation may be towards supply of various resources; human, raw material etc. It is an element of external environment.
Complexity: Environment complexity refers to the heterogeneity and range of activities which are relevant to an organisation’s operations. How many diverse groups from external environment the organisations have to deal with.
Hostility: A hostile environment is one in which the underpinning of the organisation is threatened. How is an organisation viewed by the people at large. You may recall the case of Union Carbide after the Bhopal gas leakage about the hostility of environment.
Employee characteristics The characteristics of the human resource could make or break an organisation. It is employee characteristics, which is reflected in the success or failure of an organisation. The major characteristics are as follow :
Goals : Goals define where the organisation wants to go. Goals are intentions that an individual or an organisation would like to achieve in the course of their working. Goals provide a directional nature to people’s behaviour and guide their thoughts and actions.
Skills : Skill is the ability to engage in a set of behaviour that are functionally related to one another and that lead to a desired performance in a given area. The skill can be technical, managerial, behavioural etc.
Motives : A motive is an inner state of a person that energizes activates, or moves and directs towards the achievement of a pre defined goal. The motivated employees have high motives to perform better and achieve the targets.
Attitudes : Attitudes are evaluative statements- either favourable or unfavourable concerning objects, events, or people. Attitudes influence job behaviour and hence organisational effectiveness.
Values : Values represent basic convictions or a specific mode of conduct. It generally influences an individual’s attitude and behaviour. The value that a person holds influences his or her motivation and subsequently behavior.
Organisational Characteristics
Organisational characteristics refer to the general conditions that exist within an organisation. Various organisational characteristics influence organisational effectiveness. The major characteristics are as follow :
Structure : An organisational structure defines how are job tasks formally divided, grouped and coordinated. For organisational effectiveness, six elements need to be addressed while designing organisational structure. These are: work specialisation, departmentation, chain of command, span of control, centralisation and decentralisation, and formalization.
Technology : The term technology refers to how does an organisation transfer its inputs into outputs. Every organisation has at least one technology for converting financial, human and physical resources into products or services. The choice of technology and its use influences organisational effectiveness.
Size : In a narrow sense organisational size refers to the number of people in an organisation. But, if we take a broader view, size refers to the physical capacity of the organisation, the personnel available to the organisation, the organisational inputs or outputs and the discretionary resources available to an organisation. It is the size which influences the structure which in turn influences organisational effectiveness.
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