As with any construct, like “Leadership” or “Management”, the answer to the question “What is Organizational Effectiveness?” is necessarily complex. So complex, in fact, that over the last three decades, tens of thousands of words have been devoted to describing multiple different models, or to saying that it is impossible to have any kind of model for organizational effectiveness at all. The problem stems from a variety of sources: the functions of different types of organizations (for-profit vs. non-profit), the requirements of various constituents, questions of measurement, and so on. Since effectiveness is a product of the values and preferences of different types of institutions and the individuals that direct them, the best criteria for evaluating effectiveness are difficult to identify. For my purposes, however, I can focus on organizational effectiveness as it can be construed in the context of a for-profit company.
In this first part of my overview of research on Organizational Effectiveness, I want to briefly review the different models discussed in Cameron and Whetten’s 1983 collection, Organizational Effectiveness: A Comparison of Multiple Models (Cameron & Whetten, 1983). Rising anxiety about the competitiveness of American corporations in the late seventies and early eighties gave rise to a lot of thinking about the topic of Organizational Effectiveness (OE), and this volume sums up the state of research through its publication. As such, this is a good place to start trying to understand OE.
Schneider’s Interactionist Model
The first model examined is based in the behaviors follow from the naturally occurring interactions between people and things. In this “interactionist” perspective, organizations are characterized by the people in them, and the people who join organizations that are like themselves. That is, people with similar abilities and needs are attracted to particular settings, and people with positive experiences in those settings tend to stay there (Schneider, 1983). One of the attractors for organizations are their goals, and organizations will naturally select people who appear to be able to help achieve those goals. People who achieve their own goals within the organization, and help the organization achieve its goals, will tend to remain. Those people that do not achieve their goals, or do not fit in with the organization with the organization will leave, and the resulting cycle, illustrated below, shows this cyclical relationship between organizational goals, attraction, selection, and attrition.
This cycle can, however result in organizational decay, as inertia may set in from like-minded people interacting in the stable environment supported by the attraction-selection-attrition cycle. To survive, the necessity for change must be legitimized, and people with diverse views and capabilities, as opposed to those like people already employed, must be sought out. Ultimately, one measure of effectiveness in this model would be the resources devoted to attracting, hiring, and retaining people whose primary contribution to the organization is the push to change driven by constantly evaluating the organization’s long-term viability.
Seashore’s Integrated Model of Organizational Effectiveness
The second perspective examined (Seashore, 1983) is a framework incorporating multiple models:
- The Natural System Model sees the organization as a self-maintaining system in equilibrium with the environment. Effectiveness here is described and evaluated with reference to all aspects of the organization that have some function in its adaptation, maintenance, and transformation processes.
- The Goal Model assumes that the organization has clearly definable goals, and effectiveness is a measure of the organization’s ability to achieve its stated goals.
- The Decision-Process Model states that organizations develop distinctive ways of managing information resources for the attainment of goals. Here, an effective organization is one that optimizes knowledge management.
Integration is suggested by the need of organizations to balance all three of these models, and integration take place in the process of attending to each of them. Evaluation of effectiveness is a function of the perspective of the different possible evaluating parties or stakeholders, a relational construct fit to the needs and interests of constituents.
Weick and Daft’s Effectiveness of Interpretation Systems
The third model explored hinges on the ability of organizations to interpret, or make sense of, their surroundings in a way that enables them to take productive actions. Interpretation is the process of making sense of the events that occur both within and outside of an organization. All the activities that can impact an organization must be captured and mapped conceptually to bring out meaning. Interpretations, furthermore, are reasonable rather than right. Reasonable explanations accommodate more data than they exclude, are sufficient in the eyes of more than one person, and can be used to explain new occurrences that were not used to generate the original interpretation (Weick & Daft, 1983).
Effectiveness in this model is the ability of an organization to interpret the environment in such a way as to suggest actions. Interpretation of the environment can either take place from an objective assessment (which sees events and processes as hard, measurable, and determinant) or a subjective assessment (where the interpretation shapes the environment more than the environment shapes the interpretation.) Organizations that can push the interpretive boundaries of their interpreted environment are called “test makers”, and will develop interpretations very different from those of organizations that do not push those boundaries (the test avoiders). For example, experimenting with a new product that pushes boundaries by violating expectations will yield valuable insight, if the product is successful.
From the (vastly simplified) forgoing, Weick and Daft’s Model of Organizational Interpretation Styles (below) describes the continuum (Objective-Subjective, Test-Making and Test-Avoiding) onto which organizations’ interpretive styles can be mapped.
The effectiveness of each style will be evaluated differently according to the expectations of different organizations, but the authors lay out criteria that can define the effectiveness of interpretations: the extent to which they are grounded in more detailed knowledge of the data, the extent to which the data are tied together with strong causal linkages, and the ability to reconstruct with more accuracy the initial data that the interpretation was built to explain. Ultimately, the final indicator of effectiveness in this model is the correspondence between interpretation and reality.
Nord’s Political-Economic Perspective on Organizational Effectiveness
Nord’s discussion gets to the heart of the challenges of defining organizational effectiveness. As Nord puts it, the definition of effectiveness must address what organizations should be doing for whom (Nord, 1983). Recognizing the organizations have economic and political effects, Nord argues that the consequences of these effects must be incorporated into evaluations of their effectiveness. If one believes that organizations have a responsibility for promoting the well-being of members of society, then the set of criteria used to define organization effectiveness needs to be expanded. However, Nord has no clear model to define: rather, he calls on students of organizational effectiveness to develop, administer, and publicize indices that would lead to greater acceptance of the political-economic dimension of organizational performance.
If you’ve made it this far, thanks for reading through to the end! In future posts, I will be bringing the discussion of organizational effectiveness up to date by looking at more recent models that reflect the latest thinking on the subject.
Cameron, K. S., & Whetten, D. A. (1983). Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.
Nord, W. R. (1983). A Political-Economic Perspective on Organizational Effectiveness. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.
Schneider, B. (1983). An Interactionist Perspective on Organizational Effectiveness. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.
Seashore, S. (1983). A Framework for an Integrated Model of Organizational Effectiveness. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.
Weick, K. E., & Daft, R. L. (1983). The Effectiveness of Interpretation Systems. In K. S. Cameron & D. A. Whetten (Eds.), Organizational Effectiveness: A Comparison of Multiple Models. New York: Academic Press.