Organizational effectiveness is a broad term which can be used to cover many things. But it’s important to keep in mind that it has a qualitative as well as a quantitative aspect. Organizational effectiveness doesn’t simply refer to making more money or, in the case of a non-profit, helping more people. It also refers to creating a certain feeling—a feeling of happiness, contentment, safety, attractiveness etc.—in the mind of the consumer, the employee and the stakeholder. And there’s a lot that can be done to improve organizational effectiveness from within, by fostering an atmosphere of freedom, growth and innovation.
Understanding Organizational Effectiveness
In order to understand how effective an organization is, you need to consider how well it fulfils its stated goals, quantitative as well as qualitative.
Customer-Based Goals
When it comes to for-profit organizations, profit is one of the main goals. But apart from this quantitative goal, there are also qualitative goals. For example, if the organization produces clothing for teenagers, then the aim of the organization is to be current—to understand exactly what teenagers are looking for at any particular time and to produce clothes that will make them feel attractive and comfortable. Similarly, when it comes to non-profit organizations, the goal might be to help a certain population, such as people who are homeless, to find homes where they feel safe and sheltered.
So the goal of an organization is not simply increasing the profit margin or the number of people they have helped. The real goal is one that is qualitative, not quantitative. It involves creating a certain experience. And the more the organization can create that experience, the more effective it is.
Employee-Based Goals
There are also other goals that an organization might have, which involve the way in which it is run. For example, one of these goals might be to have a good company culture which makes employees happy. Once again, this is a qualitative goal as opposed to a quantitative one. Whether or not a company has a good company culture can be determined by questioning its employees and finding out how happy they are with various aspects of the company.
Investor/Stakeholder-Based Goals
An organization might also aim to keep its investors and stakeholders happy; this is usually achieved when the organization reaches its monetary goals and is transparent with regard to finances. Investors and stakeholders are happy when the company makes a lot of money, but they’re also happy when they know everything that’s going on within the company. If the company has ethical practices and shares details about these practices with its investors and stakeholders, then that can help it to reach this goal.
Understanding Overall Effectiveness
You can judge the effectiveness of an organization by considering a combination of all its goals.
- How much money does the organization make?
- How well does it succeed in keeping its customers happy?
- How well does it succeed in keeping its employees happy?
- How well does it succeed in keeping its stakeholders happy?
If you know how well the organization succeeds in these various tasks, then you can get an idea of its organizational effectiveness.
The Role of HR in Organizational Effectiveness
Many things that fall within the scope of HR can help in increasing organizational effectiveness.
Creating an Effective Workforce
One of the main things which makes an organization effective is the people who work there. By hiring the right people and, at times, letting go of people who are not a fit, you can increase organizational effectiveness. Keep in mind that hiring the right people doesn’t simply mean hiring the ones who have the best academic qualifications or the most work experience. You also need to hire people who can communicate well and work well in a team. This will help you to improve your company culture and increase organizational effectiveness.
Encouraging Growth and Leadership
Nurturing growth from within can also help with organizational effectiveness. In order to keep an organization effective, you’ll need to keep people in it long-term. An organization where there is a lot of turnover is not an effective organization. In such an organization, you waste a lot of time hiring people and training them. But once they are trained, they leave. Instead, you need to keep people in your organization long-term, and this can be done by giving them a good working environment. You can also nurture those who have leadership qualities and give them the opportunity to grow within the organization.
Encouraging Innovation and Research
Keep in mind that the goals of an organization are qualitative as well as quantitative. The idea is to create a certain feeling within the mind of the consumer. In order to do this, it makes sense for the organization to encourage research and innovation. By giving employees the freedom to try out new things or come up with new ideas, the organization can come up with new products and services that will make customers happy.
