What is Organizational Effectiveness?

Cite this article as:"What is Organizational Effectiveness?," in The Business Professor, updated April 1, 2020, last accessed October 23, 2020, https://thebusinessprofessor.com/lesson/what-is-organizational-effectiveness/.

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What is Organizational Effectiveness?

Organizational efficiency concerns how well an organization carries out its tasks. It generally measures and balances the time it takes for completion and the costs to the organization. Organizational effectiveness concerns the extent to which an organization as a whole is achieving its objectives and goals.

An organization can be efficient in the completion of tasks while also being ineffective in accomplishing its higher-level objectives. This generally demonstrates a problem in planning and organization. Likewise, an organization can be inefficient is task completion but effective in achieving its overall goals. This generally demonstrates a problem with management leadership, employee motivation, or control of the operational process.

Determining efficiency requires a specific look at the individuals or groups carrying out specific tasks. There will tradeoffs between reliability, speed, and quality. Determining organizational effectiveness requires looking at specific attributes of the various functional areas or departments within the organization. These attributes may include organizational structure and design, processes and procedures, uses of technology, human resource management, employee development, assessment measures, etc. Effectiveness generally means that there is an alignment between the various functional areas.

Organizational effectiveness may be assessed with these 4 common approaches:

  • Systems Resources Approach – How effective is the organization in acquiring the necessary resources?
  • Goal Approach – What are the organization’s outputs and was the organization able to achieve its stated goals?
  • Internal Functioning Approach – How well are the internal operations of the company functioning in terms of integration, employee satisfaction, financial strain, etc?
  • Strategic Constituencies Approach – Are third-party stakeholders positively influenced by the operations of the company?

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