There are various terms that are often used to denote organizational effectiveness such as efficiency, productivity, profitability and organizational growth. It is the concept of how effective an organization is in achieving the outcomes the organization intends to produce.
According to Barnard
Organizational effectiveness is the degree to which operative goals have been attained while the concept of efficiency represents the cost/benefit rate incurred in the pursuit of these goals.
Cambell who has done considerable research on organizational effectiveness has arrived at the conclusion that:
“Since an organization can be effective or ineffective on a number of different facets that may be relatively independent of one another. OE has no operational definition.”
Effectiveness and Efficiency
Organization Efficiency is concerned with how well an organization performs a given task. It is used in engineering and it refers to the relationship between input and output. This denotes how much inputs have been used to produce certain amount of outputs.
Organizational Effectiveness is related to goals and is externally focused. Organizational effectiveness relates to the maximization of return to the organization by all means.
Likert identifies three variables to explain the phenomenon of organizational effectiveness.
1. Casual variables refer to those independent variables which affect an organization’s growth and accomplishments, and which can be changed through concerted efforts. These variables include leadership strategies, skills and behavior, managerial decisions and policies and structure of the organization.
2. Intervening variables are those human factors, which can be influences by casual variables and which represent the prevailing internal conditions of the organization. Among these variables are included commitment to objectives, motivation and morale of member, and their skills in leadership, communication, conflict-resolution, decision making, problems solving and allied behavioural measures.
3. The end result or output variables are those dependent variables which represent the accomplishments of the organization, and include measures such as output, costs, sales, earnings, union-management relations, turnover, absenteeism and tardiness. These variables can be improved by modifying both casual and intervening variables in the organization.