What is organizational effectiveness?
More importantly, how can businesses understand and improve their organization’s effectiveness and performance?
The best definition of organizational effectiveness, after all, is one that we can use practically.
For that reason, many leadership consultants and experts have developed models, frameworks, metrics, and processes based around this concept.
Below, we will explore some of these models in detail.
What Is Organizational Effectiveness?
Many professionals agree on the basic definition.
- Wikipedia defines organizational effectiveness as “how effective an organization is in achieving the outcomes the organization intends to produce.”
- Businessdictionary.com defines it as “the efficiency with which an association is able to meet its objectives. The main measure of organizational effectiveness for a business will generally be expressed in terms of how well its net profitability compares with its target profitability.”
- The consultancy Six Sigma says, “Organization effectiveness is the efficiency of an organization, group, or company can meet its goals.”
Although many people agree about the fundamental meaning of this term, there are many frameworks and models that are used to describe it.
Let’s look at a few of those now.
The Leadership Circle and the Six Sigma Approach to Organizational Effectiveness
- Leadership. Business leaders establish and present the organization’s vision, project goals, the method for achieving those goals, and the intended results.
- Communication. Leaders should communicate the goals, guidelines, and aspirations in such a way that other project members can understand them.
- Accountability. Other employees and project managers should be held accountable, then be provided with rewards or consequences based on their results.
- Delivery. Delivery systems must be efficient and effective, minimizing delivery time and errors.
- Performance. The right talent pool is required to complete any project successfully, which is why project leaders should hire the right team members and train employees effectively.
- Measurement. Finally, the only way to improve and understand business process effectiveness is to measure and analyze it.
Frameworks such as this are extremely useful for business professionals that want to improve their organization’s performance.
After all, this framework goes far beyond a basic definition.
It is a model that can be applied in the real world to achieve tangible performance benefits.
This framework is a well-known example of an organizational effectiveness model, but there are certainly others.
McKinsey’s 7-S Framwork of Organizational Effectiveness
The well-known research firm McKinsey has also developed a useful model, called 7-S.
Its components include:
- Style. Leadership and management styles.
- Skills. Employee skills and organizational skills.
- Systems. Procedures for measurement and accountability.
- Structure. How an organizations activities are divided and coordinated.
- Staff. The human aspect of the organization, such as human resources and the demographic characteristics.
- Strategy. The aim of the organization and how it intends to achieve a competitive advantge.
- Shared Values. Corporate culture, identity, the values held by the workforce, and so on.
Like the six systems covered above, this model is designed to be applied practically.
How to Implement Organizational Improvement Projects
Organizations that want to improve their performance can leverage models such as these in several ways.
- Use them to analyze and assess the current state of the organization
- Identify weak points and areas that need improvement
- Develop strategies for change
- Measure and optimize the results of improvement projects
Of course, no improvement is possible without change.
This is why businesses should augment their efforts with change management frameworks and strategies.
Change management frameworks are models that:
- Help enterprises roadmap organizational change
- Offer step-by-step processes that maximize the potential outcomes of a change project
- Address and mitigate risks
- Decrease resistance and minimize the negative impacts of a change
In short, change management can streamline the execution of business process improvements.
Like organizational effectiveness models, change management models are designed to get results.
How Change Management Frameworks Streamline Business Improvement Projects
Organizational effectiveness models break down an organization into a set of measurable dimensions.
Change management frameworks break down organizational change into a set of discrete steps.
For instance, John Kotter’s change model has 8 steps, designed to lead employees and personnel through a business change process … such as organizational improvement projects.
Its steps include:
- Create a sense of urgency
- Build a guiding coalition
- Form a strategic vision and initiatives
- Enlist a volunteer army
- Enable action by removing barriers
- Generate short-term wins
- Sustain acceleration
- Institute change
These steps are built around the human side of the equation.
That is, this framework is designed specifically to enable, train, motivate, and engage employees.
Any change process – including projects designed to improve organizational effectiveness – can benefit from an approach such as this.
After all, identifying necessary improvements is one thing.
Managing and executing those improvements, however, requires another approach, such as change management.