Organizational Effectiveness

In: Business and Management

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Organizational effectiveness is a tool manager’s use to measure how effective they; and their organizations are at achieving outcomes and creating value. Organizational effectiveness can be very difficult to measure in an organization. Why? The answer is because organizations can be diverse and very large. Also one organization can have multiple goals and perform many activities at the same time. Managers must decide which indicators they want to measure in order to determine the effectiveness of their organization. There are three approaches managers can use in evaluating effectiveness. They are the external resource approach (Control); the internal systems approach (Innovation); and the technical approach (Efficiency). Each approach has something to offer but all focus on different parts of the organization.
The external resource approach evaluates how much control the organization has over its external environment. Managers must look at indicators such as stock price, profitability, and returns on investments. These indicators are used by organizations to show them how well they perform in comparison to their competitors. In order to attract other customers managers gather information about their products and services through surveys and customer feedback to see how they measure up to the competition. Organizations also have stakeholders and the external resource approach can be used to measure the ability to influence stakeholder’s perceptions in its favor (Jones, 2007). Another indicator of management’s ability to influence and control its environment is having the ability to perceive and respond to changes in the environment or initiate the change. This approach can be very valuable especially when other indicators of performance are difficult to get. For example in non-profit organizations it is very difficult to measure output goals or internal…...

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