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Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce. Organizational Effectiveness groups in organizations directly concern themselves with several key areas. They are talent management, leadership development, organization design and structure, design of measurements and scorecards, implementation of change and transformation, deploying smart processes and smart technology to manage the firms' human capital and the formulation of the broader Human Resources agenda. If an organization has practices and programs in the areas above, the OE group does many or all of the following roles
- Examines alignment between the areas and improves them
- Improves trade-offs between reliability, speed and quality in the above areas
- Strategizes for higher adoption rates in these areas
- Facilitates/initiates/catalyses capability building : structure, process and people
Rapid advances in social sciences and technology aided by clever experimentation and observation is bringing several truths to the light of society. There are several disciplines of social sciences that help the OE Practitioner be successful.
Four of them are outlined below
- Decision Making - Ways in which real people make decisions, enabling them real time to make good decisions, improving quality of decisions by leveraging adjacent disciplines ( for example- Behavioral economics) and replicating relevant experiments, creating new ones and implementing their results to make organizations effective
- Change & Learning – Ways in which real people learn, change, adopt and align, get “affected” by dynamics in the environment and leveraging this knowledge to create effective organizations that are pioneers of change and learning
- Group Effectiveness – Ways in which real people work well together, especially in bringing new ideas and innovation, working of people to people protocols, impact of digitization and virtualization in organizations on these protocols
- Self-Organizing & Adaptive Systems– Ways in which self-organizing systems and highly networked systems work, learnings from them and the tangible ways by which they can be put to play to make organizations more effective
The broader idea of organizational effectiveness is applied for non-profit organizations towards making funding decisions.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.
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.
However, scholars of nonprofit organizational effectiveness acknowledge that the concept has multiple dimensions  and multiple definitions. For example, while most nonprofit leaders define organizational effectiveness as 'outcome accountability,' or the extent to which an organization achieves specified levels of progress toward its own goals, a minority of nonprofit leaders define effectiveness as 'overhead minimization,' or the minimization of fundraising and administrative costs. Hence,Organizational effectiveness is typically evaluated within nonprofit organizations using logic models. Logic models are a management tool widely used in the nonprofit sector in program evaluation. Logic models are created for specific programs to link specific, measurable inputs to specific, measurable impacts. Typically, logic models specify how program inputs, such as money and staff time, produce activities and outputs, such as services delivered, which in turn lead to impacts, such as improved beneficiary health.
- Etzioni, Amitia. (1964). Modern Organizations. Englewood Cliffs, NJ: Prentice-Hall.
- Richard et al. (2009): Measuring Organizational Performance: Towards Methodological Best Practice. Journal of Management.
- Herman, Robert D., & Renz, David O. (2008). Advancing Nonprofit Organizational Effectiveness Research and Theory: Nine Theses. Nonprofit Management & Leadership, 18(4), 399-415.
- Mitchell, George E. (2012). The Construct of Organizational Effectiveness: Perspectives from Leaders of International Nonprofits in the United States. Nonprofit and Voluntary Sector Quarterly. http://nvs.sagepub.com/content/early/2012/02/01/0899764011434589.abstract
- McLaughlin, John A., & Jordan, Gretchen B. (2010). Using Logic Models. In Joseph S. Wholey, Harry P. Hatry & Kathryn E. Newcomer (Eds.), Handbook of Practical Program Evaluation (3rd ed.). San Francisco, CA: Jossey-Bass.