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38.0 Objectives 38.1 Introduction 38.2 Meaning and Definitions 38.3 Approaches to the study of Organisational Effectiveness 38.4 Determinants of Organisational Effectiveness 38.5 Organisational Development 38.6 Assumptions in Organisational Development Effort 38.7 Types of Organisational Development Interventions 38.8 Criticism 38.9 Let Us Sum Up 38.10 Key Words 38.11 Some Useful Books 38.12 Answers to Check Your Progress Exercises

After reading this unit, you will be able to: r understand the concept and importance of organisational effectiveness (OE) * discuss the approaches to the study of organisational effectiveness e understand the relationship between OE and organisational development (OD) @ describe the meaning and definitions of organisational development 0 discuss the assumption of organisational development * enlist the types of organisational development interventions 9 evaluate the concept of organisational effectiveness and organisational development.

Organisations are like living organisms. They have their infancy, adulthood, maturity, middle age, old age and finally decay. In case of organisms, death is certain after a period of time, whereas organisations continue to exist for a longer period. For example, the Roman Catholic Chruch is several hundred years old. Thus it is possible to maintainorganisations for long time in future:



Organisations are social units with a purpose. Normally there should be a purpose for the birth of an organisation. Each organisation comes into existence with a purpose specific to its genesis. For example we have a galaxy of organisations such as governments, guvernment agencies, corporations, business organisations, universities, trade associations, trade unions, hospitals, schools, theatres;municipal corporations, prisons, slaughter houses, professional societies and a host of several other bodies. Each has its own purpose to live in the society. Organisational Effectiveness (OE) refers to how well the purposes of an organisation are achieved. Thus, effectiveness refers to the achievement of organisational purpose. .TamesPrice defines organisational effectiveness as the degree of goal achievement. The determination of an organisation's goal(s) is crucial in evaluating effectiveness, The first step in the determination of goals is to distinguish between official and operative goals. Official goals are those which are published in the key documents of the organisations such as charters, laws and regulations and other official documents, mentioned in the speeches and messages of key decision makers, and circulated in the public relations


Operating goals refer to those purposes which actually lead to the achieven~e~lt of the real purposes of an organisation. One way of describing official and orga~aisational goals is that official goals pay a lip sympathy to the purposes of an orgarnisation, whereas operative goals really lead to the achievement of organisational purposes. Paul Mott gives emphasis to an organisation's ability to adapt itself to the changes in the environment. Accordingly, there are two important factors in organisational effectiveness, viz., capacity and capability in getting resources required for the organisation:kl purl-jose; and capacity 2nd capability to change according to the circumstances while participating in the process of resource mobilisation to achieve the organisational purpose. Chester Barnard made a distinction between effectiveness as an achievement of group puqoses and efficierrcy as the extent to which the group provides satisfaction to the members of the group, irm the context of organi~atitrnal effectiveness. According to Ch;tpman, effectiveness refers t o achievement of lower level goals in an organisation. Johnson, on the contrary, opines that effectiveness refers to achievement of higher level goals in an organisation. Others define effectiveness as the achicvcment of goals, optinlum which contrifite to the overall objectives of the organisation t11ro~lgl-1 utilisation of resources. Thus, organisationaI effectiveness, as seen from the above definitions is a function of achieving organisational goals. An eflective organisation is the one which achieves thc goals continuously ovcr an indefinitely long time in future.


Organisational effectiveness as a concept and as a field of study, apears to be little explored. According to Evans: "In short, only a relatively modest number of organisational studies have focused or1 performance or effectiveness ;is a principal dependent variable. Sonie researchers o n ~ i tlmis t vari:thle inadvcrlently and others advertently. It is a reflection on the state of tile art of this field that it has thus far failed to grapple with such a funditrncntal variable as organisational cffectiveness" Another trend is that researchers have emphasised on a few aspects of organisatiorlal effectiveness. This has led to a situatioal where there are several competing approaches to the study of organisational effectiveness. One more importiint feature is that there is on what constitutes organisational effectiveness and how to 'hardly any agrecrner~l measure effectiveness of an organisation. The earliest models of organisational effectiveness enlphasised single variables as measure of effectiveness. Prescnt day models use more than one variable to determine organisational effectiveness. Mulford and his associates have enlisted three approaches to the study of organisational effectiveness, viz., (1)formal goal approach, (2)'kystem resource approach and (3) systems :ippmach. Organisational effectiveness is seen as an accomplishment of purposes and go:ils in the formal goal approach. Though, this is an accepted approach, it has a number of limitations. Orgallisations have more than one goal and it is difficult to identify and measure all the goals of an organisation. It is also difficult to measure goal accomplishment, in view of the intangibility of some of the goals. The administrators o r the people running the organisation usually view effectiveness in terms of goal acconlplislament. Outsider's view organisatiormal effectiveness in terms of contributio~l to the society. Thns resource mobilisation ar~d social contribution constitute two yard sticks. Utimately, measurement of orgallisational effectiveness depends upon the judgment of various stake holders in an organisation such as its promoters, government, employees, input suppliers, customers; and the society in general. Perron has iilentificd five such groups of stake holders and their expectations from the organisation. They are given below: 1 Social goals : Society as the larger social system has certain expectations from the organisations. For example, society expects better production and distribution of goods and services, social responsibility, and maintenance of norms and values, etc. from the organisaions.

Concepts in Organisations I ~ I

2 Output goals : Different consumer groups in the society expect different goods and
services as outputs from the organisation. Each group has its own interest in particular goods and services. Hence each group presses for production of particular goods and services, from the organisation.
3 System goals : This refer to the way in which an organisation is working, irrespective

of its relationships with various other organisations and stake holders. The emphasis of the systems' goals are on growth, stability and productivity.
4 Product goals : Product goals refer to characteristics such as the qua lit,^, quantity,

range, variety, price, etc., of the goods and services;

5 Derived goals : Derived goals refer to the use of power and other resources of the organisation whiIe accomplishing purposes other than its own goals. For example, an organisation has other goals such as service to the country through rural development, health and nutrition programmes, etc.

Though this classification will not solve the operational problems in measurirlg organisational effectiveness, it provides a comprehensive view of organisational goals. As on today, there is no agreement among social scientists on the criteria to be used to measure organisational effccfiveness. The following table gives a list of criteria used by different social scientists to measure organisational effectiveness.
Name of the Author 1 2 3 4

Criteria for Organisational Effectiveness Adaptability in changing environment. Productivity in terms of more output. Control over environment, growth. Adaptiveness, institutional development through productivity. Organisational growth. Cohesion, efficiency. Resource mobilisation.

Warren Bennis Basil Georgopoulous Daniel Katz and Robert KahriJames Price

5 John Chold 6 Webb 7 Seashore



What determines the organisational effectiveness is a question that may be bothering you. Social scientists are divided in their answers to this question. According to Mott, the determinants of organisational effectiveness are of two types, viz., (a) Organisational Characteristics; and (b) Behavioural characteristics. He believes that certain aspects of narmative environment such as'objectives, roles, policies and procedures influence organisational effectiveness. A strong relationship between functiunal integration and effectiveness is possible. It is presumed that effective individuals working as groups can build up effective organisations. Another view point is that organisational structure influences effectiveness. Some social scientists such as Reimann found a positive relationship between decentralisation and organisational effectivcness. A good integration of the organisation and the environment is found to be.a prerequisite for organisational effectiveness. Organisational effectiveness as a multi-dimensional concept is influenced by several variables. However, it is not possible to identify and .' measure the extent to which organisational effectiveness is influenced by each factor, Social scientists have found four important variables that influence the effectiveness of an organisation. They are; (a) Organisation structure, (b) Environment, (c) Technology, and (d) People. In other words organisational effectiveness can be improved by strengthening these four important factors. This process is known as organisation denebpment (OD).
,.,eck Your Progress 1

~ d t &i)- Use the space below for your answers. ii) Check your answer with those given at the end of the unit.,


1 What is orgarlisational effectiveness?

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2 Describe formal goal approach.

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3 What are the criteria for measuring organisational effectiveness?



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4 What factors influence organisutional effcctivcness?



Organisations, due to various reasons ana,niost particularly due to thcir failure t o adopt to the changing environmt;.,i, becomes sick and ineffective in course of time. Hence, they need to be rejuvenated and revitalised. The process of rejuvenating organisations is called organisational cl~:velopment. Warren Bennis was one of the ei~rliest writers who have recognised thc need for organisational dcvelczprnent as a method of improvi~ig organisational effectiveness. There arc several nlethods of organisational

cwcepe 10 orgllnbatims

development. That is why organisational development is a flexible approach to organisational effectiveness. According to Bennis, organisational development is a complex educational strategy intended to change beliefs, attitudes, values and structures of organisations so that they can adopt to new technologies, markets and challenges and the dizzying rate of change itself. Beckhard described ~rganisation~l development as a planned, organisation wide process of change aimed at organisational effectiveness. French and Bell described it as a long term effort to improve an organisation's problem-solving capabilities and its ability to cope with changes in the environment. It refers to a planned system of changes introduced in an organisation to energise its personnel, resolve conflicts, improve tasks and structures and thus finally improve its effectiveness and performance. French and Bell have enlisted the characteristic features of organisation development 'practices as follows: a) An emphasis on changing the behaviour of groups of individuals working in an organisation through suitable methods. b) An emphasis on the work teams in an organisation as units of analysis, study and research. c) An emphasis on collaboration and cooperation while working with teams of people. d) An emphasison involving the total organisation and its people in the organisational development (OD) efforts. e) Attention to administrative systems and practices. f) Use of research findings to share with the people of organisation in which the organisational developn~e~lt efforts are made. g) Use of key persons with knowledge in organisational development to supervise the programmes of development. h) Organisational developmerlt is seen as a continuing process rather than to solve problems as and when they come to the surface. to develop positive feelings Finally, the emphasis is on human and social re!ationsl~ips among people working in the organisation and thus leading towards organisational effectiveness.


While making efforts to improve the effectiveness of organisations, the practitioners of organisational development depend on the following assunlptio~ls about people and groups:
a) People :There are two assumptions about people as individuals, viz.. (a) people have a drive towards personal growth; and (b) people are capable of making higher contributions to the orgnnisation. Regarding the first ass'umption, the organisation has to provide conducive environment for the individuals to become what they are capable of. Coming to the second one, most people have treniendous potential to contribute to organisationa1effectivcness. Organisations havc to raise this potential for their long term growth and survival (in an indefinitely long time in future). Most often people in organisations, use their potential for cross purposes, thus contributing to inefficiency in the organisation. The people making organisational development efforts have to keep the above aspects in mind.
b) Groups : People give a lot of importance to work groups. Thc type of things that

happen in work groups have a lot of significance to people. Most people feel that they should be accepted and admired by others in the work groups. People can contribute towards resolving conflicts in the work groups. Forrnal leaders of work groups cannot be effective in all times in all circumstances. Hence they have to dependon other members. When there is cooperation from other members,it leads to organisational effectiveness.


Suppressed emotions and feelings among individuals adversely affect the capabilities,skills and attitudes work group members. It requires careful handling

of people has to be seen that they should not suppress their emotions, both positive and negative for too long. It also requires open communication and trust among people working in the organisation. Finally, most of the problems of the organisations can be solved t h o u g h improved relationships among individuals and groups. Though, individual is an important unit of work groups, the importance of groups in an organisation cannot be underestimated. c) People in organisations : A number of assumptions about people in organisations are, given due weightage in organisational development efforts. A n administrator is a part of a work group as a member and also as a superior. Thus he has an opportunity to influence the attitudes and behaviour of people in organisations. In addition, an administrator is a member of two work groups, viz., the one he is leading and theone in which he is a peer among other administrators. For example, a district collector is a head of administration at the district level; and at the same time he is one of the collectors at the state level. It is believed that the administrator tries to pass on his leadership style and culture from the higher level work group (in which he is a peer) to the lower level work group (which he is leading). Another assumption is that at times of conflicts, a person or a group wins. However, such happenings are not beneficial in the intercsts of the organisation. Organisations should create an environment where everyone feels that he is a winner. Organisational development efforts need timc and practice. It is a long drawn process.

Organisational Emeclivenesr



As described earlier, organisational development is a flexible approach with a number of interventions. We will discuss about some of the major interventions. a) Diagr~ostic : This includes collection of data on the nature of the organisation and its problems. Mcthods of data collection includes, interviews, questionnaires, meetings, etc. This data is used in analysing the reasons for lack of effectiveness in the organisation.
b) Team Building : Organisational Development depends on t l ~ cooperation e and working members in the organis;~tion. 'This rcquircs communication among varioi~s leadership and communication skills on the part of mernbcrs of various work groups. Hence, team building is a major organisational dcvclopment intervention.

c) Inter-group : Different groups in an organisation have differcrit views about cach other. If it is made possible to develop positive feelings among thc people about each other, it leads to effectiveness. 'This requires information sharing, resolution ot' conflicts and openness in communication. d) Survey Feedback : This is some what relatcd to diagnostic type activities. In stlrvcy feedback, data is collected about the state of affairs in the organisation and that information is discussed among the work groups in the organisat ion. 'Thc discussion is followed by appropriate action to set the organisation right. e) Education and Training : Educational and training programmes are arranged for people working in an organisation to improve their skills; and influence their attitudes. This is done to develop positive attitudes Lowards other people working in the organisation. f ) Structural activities : This includes rcorgntlisation of the entire organisation or its departments to improve the effectiveness. Reorganisation also include, reorganisation of technology, tasks and functions in the organisation.

.The concept of organisational effectiveness was mainly criticised on two grounds, viz., (a) Organisational effectiveness is a matter of larger system such as a nation; (b) lack of

Concepts in orgiisations 1 1 1

agreemefit on definition and measurement of organisational effectiveness among social scientists. According to oneview point, organisational effectiveness is a matter of effectiveness of the large social system such as nation States. Organisation effectiveness is related to national effectiveness. In the history of the mankind there has always been a rise and fall of nations in terms of effectiveness. This rise and fall is influenced by the nature of leadership, commitment and national interest of the people at the highest levels of authority in government. That is why certain nations rise into higher levels of effectiveness under certain leaders, circumstances and times. Ahother view point is that there is little agreement on the definition and measurement of organisational effectiveness, among social scientists. As Rosabeth Moss Kanter mentions: "some leading scholars have expressed impatience with the very concept of organisational effectiveness, using researchers to turn their attention to more fruitful fields." There are too many terms which are used to denote effectiveness. These are growth, productivity, results, performance, success, etc. Each word is again seen different]yby different people. Above all, there is no equivalent term to "profit" in social sciences. Profit is a term used in accountancy and it is un Jcrstood by all. Whereas there is no such termin social sciences which can be understood by all. Profit is one term which denotes organisational effectiveness. In the absence of a common measure, the whole concept and discussion on organisational effectiveness becomes vague. This in brief is, another criticism on the concept of organisationai cffectiveness. Despite these criticisms, we cannot leave the organisations to the circumstances. Moreover, these criticisms are more methodological than practical. Wc cannot wait for the 'Golden agc' to come. Wc have to strive hard tomake our organisations effective ~ n purposeful, d so that our nation will be effective.
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Check Your Progress 2 Note: i) Use tlle space below for your answers. ii) Check your answer with those given at the end of the unit.

1 What is organisational development?

2 Discuss different types of organisational development interventions.

3 What is the major criticism against organisational effectiveness?

Orgnnisational Effectiveness

38.9 L E T T US SUM UP
Organisations come into existence with specific purposes justifying their birth. How well an organisation achieves its purposes is known as organisational effectiveness. Organisations can be maintained effectively over an indefinitely long period of time in 'future. The Roman Catholic Church is an example of a long standing organisation with a purpose, living effectively in the environment. Organisational development efforts are necessary to keep organisations effective continuously in the long term future. Organisational development efforts include a wide variety of methods. Therefore, people have a wide range of choices. In India organisational development efforts have been used to improve the effectiveness of organisations. We have examples of organisational development cfforts in post offices, public enterprises and government departments. To be successful, organisational development efforts require the cooperation of all the people working in organisations, commitment and support of top decision makers, and time and patience of the organisational development experts and all those concerned with organisational effectiveness. Though there is some criticism of the concept of organisational effectiveness, we cannot leave our organisations to circumstances. We have to strive hard for the success of organisations, which will lead to the success of our nation.


Official goals : The broad goals which are mentioned in the key documents of an organisation. Operating goals : Goals which are to be implemented and operationalised to achieve the official goals. Organisational characteristics i These characteristics refer to the procedures of an organisation-its forms and its structure. Normative environment : Values which guide one, in the surroundings one grows up. Professional societies : Association of journalists, teachers, doctors, engineers.


French, Wendell L. and Bell,. Cecil H., 1983. Organisation Development. (2nd edition); Prentice Hall: New Delhi. Kanter, Rosabeth Moss and Brinkerhoff, Derick, 1981. Organisational Performance; Recent Developments in Measurement, Annual Review of sociology, VoI. 7, pp 321-49.

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M a t h u r , B . C . et al ( e d . ) . 1079. Managementin Government; Publications Division, Ministry of Information and Broadcasting, Govt. o f India. Michalman, Hans J . , 1978, Organisational Effectiveness in a Multinational Bureaucracy. Saxon Mouse : Hampshire, England. Matt- Paul E . , 1972. Tt?e C1lar;lcteristics o f Effective Cbrganisntions; Harpcs 8: Row : New York. price, James Z,.,1968. OrganisationalEffectveness,Richard D. Irwin : kio~newood, Illinois.


Check Your Progress I 1 See Section 38.2 2 See Section 38.3 3 See Section 38.3 4 See Section 38.4

Check Your Progress 2 1 Sec Sec. 38.5 2 See S ~ C 38.7 . 3 See Sec. 38.8