I started a discussion in the Harvard Business Review (HBR) group on LinkedIn about two months ago on organisational effectiveness. (LinkedIn is quickly becoming my preferred social media platform for the exchange of ideas, for gaining insights from diverse groups of professionals and for imparting knowledge).
I was surprised to learn that organisational effectiveness, the second theme
about which this blog seeks to explore, (please read my 'welcome note' on my
homepage), is a very significant topic for a lot of professionals. These
specialists spanned different sectors and worked in different organisations
such as large profitable companies, non-profit organisations, small businesses
etc. Most, despite busy schedules, were very enthusiastic about the topic and
someone actually commented that the discussion was becoming addictive!
Even more interesting was the fact that Chevron Nigeria Ltd. a
subsidiary of the U.S oil giant, Chevron Corporation, launched its '2012
Diversity Week' which featured 'Organisational Effectiveness
in Diversity', as well as three other pillars for analysis, ('Culinary in
Diversity'; 'Safety in Diversity'; and 'Culture in Diversity'), during the week
3rd-7th September. Now given that I am not
employed by the company, I unfortunately was not opportune to attend any of its
programmes. However, I thought it was very 'relevant' that the oil major
incorporated such a crucial theme in its diversity initiative. This just
illustrates the far-reaching impact organisational effectiveness has on the
business strategy of any organisation.
Before delving further, it is necessary to define just what it is. In my
opinion, organisational effectiveness, (OE), is the desired state whereby
resources, (human, technological, assets, knowledge, expertise etc.), are
aligned with the culture, objectives and goals of the organisation, to produce
favourable outcomes and wellness across the organisation.
Now I realise that my definition might appear vague but there is a
rationale for this. OE is relevant to all organisations but might vary
from one organisation to another, even within the same sector. This is because
what an organisation may deem necessary to measure as an indicator of
'effectiveness' may be different from its competitors. For example, an
innovative 'green' company may place more emphasis on reducing its carbon
footprint and may measure its 'effectiveness' on how well it has achieved the
goal of becoming 30% greener at the end of X period by switching to relevant
technology. By contrast, one of its competitors may measure its 'effectiveness'
by the number of its energy-saving appliances it sold worldwide, which indirectly
reduced unhealthy emissions, at the end of the same period. Yet another
organisation, a non-profit entity, may consider its 'effectiveness' yardstick
to be based on how successfully it was able to garner funds to provide free
healthcare for families who were rendered homeless as a result of a devastating
natural disaster.
So in a nutshell, OE is relative.
Difference between ‘efficiency’ and ‘effectiveness’
At this point, it is necessary to clarify the difference between
'efficiency' and 'effectiveness', given that the two terms are often used
interchangeably.
'Efficiency' involves generating superior outputs/outcomes
with the available resources. With efficiency, markers are easy - either
employees achieve X% increase in production or not, by using whatever resources
available. So in an environment where every employee is efficient and the focus
is on the number of superior widgets they produce for example, what you get is
an army of robots and over-achievers; a development which is actually
detrimental to the organisation in the long run.
When you talk about 'effectiveness' however, you consider the total
package, (not just the superior outputs/outcomes) - people, processes, systems,
aspirations, culture, vision, good leadership, engagement, goals,
objectives etc. All these facets should work together to produce a
continuous stream which optimises business performance.
The late Peter F. Drucker, (1909-2005), according to various
sources, was one of the best-known and most influential writers on the subject of management theory and practice. He was considered by
many to be the father of modern management and was credited for the widely-famous
quote:
"Efficiency is doing things right. Effectiveness is doing the right
things".
Now I may be no Drucker but in a battle for relevance, as regards to the
broad impact it would have on the organisation, I believe that 'effectiveness'
is a more significant theme to which organisations should aspire.
The importance of organisational effectiveness
OE is a 'hot' theme at the moment but I think it is more than a
fad. I think every organisation seeks better effectiveness even though
each might term it differently. It is relevant to:
1) Management and employees inside the organisation
For management, good indicators of OE among other things, ensure healthy
profits, smooth and efficient operations, good corporate reputation, effective
leadership, (and acceptance thereof), and for those non-profit organisations, achievement of measurable goals.
For the employees, a steady stream of OE increases job satisfaction,
heightens levels of perceived organisational support and encourages the
‘emotional attachment’ to the organisation; all which increase
motivation levels. Depending on character traits, some employees may be proud of being
part of something ‘special’. Many, empowered by the supportive, learning
culture and innovative leadership, become enthusiastic cheerleaders for the
organisation, thereby fuelling higher levels of OE
2) External stakeholder groups such as:
A) Customers/clients and suppliers
For the customers/clients – OE plays an important role in
customer/client loyalty and retention. Satisfied customers or clients are
powerful advocates of the organisation’s products and services. Their free
endorsements are ‘dividends’ from the continuous process and are of
immeasurable value to the organisation.
Suppliers also regularly monitor changing patterns in the organisation
to ensure that their distribution networks are not adversely affected by
payment delays caused by organisational upheavals. Consistently favourable
indicators of OE would not only ensure the steady supply of products and
services, but would also promote loyalty from the suppliers. Depending on how
crisis communications are utilised as part of the OE strategy, suppliers who over the years have enjoyed a good relationship with the
organisation, (based on mutual professional respect), might not suspend their
services following an organisational crisis. They might actually offer support during the difficult time. However,
such a development would not be possible if the organisation is perceived to be
ineffective in the running of its operations.
B) Shareholders and investors
Shareholders’ trust is inevitably tied to the reputation and operations
of the organisation which, when favourable, translate to higher profits.
Investors are primarily interested in healthy returns on their investments.
OE leads to both but must be consistently and proactively sought.
C) Regulatory authorities
Depending on the sector in which the organisation operates, regulatory
authorities may not interfere with its operations. However, scandals/crises
occasioned by human errors, or linked to negligence and/or unethical practices,
are likely to elicit the full wrath of governmental intervention. OE which also
covers leadership, communications, processes, (and accountability for them), helps to minimise or even prevent backlash from this group.
D) The media – traditional and ‘new’ media (such as
digital and social networks and other online platforms)
We live in an era whereby the media could be a strong ally or a
dangerous foe as regards to the image of the organisation. Traditional media
avenues such as print newspaper/magazines, television, (and to some extent),
radio channels, have been joined by the digital and social media platforms. A
writer for Ethical Corporation in a post about social media, stated
that from an activist perspective, the role of social media in galvanising
social and corporate change was, (at the very least), apparent. For
example, Greenpeace was named to be a notable user of social networks to mock,
name and shame companies into a change of policy. This development could mean
either twice the positive public ratings or double the woes. A corporate
reputation could be ruined very rapidly during a crisis, especially in
developed countries with technological advancements.
In such a scenario, effective communications, geared at damage control
or contingency plans, must be placed in high gear. If OE facilitators neglected
to conceptualise and integrate this crucial "Crisis-Mode Plan" component in its
overall strategy, the organisation might struggle to recover, depending on the
scope of the crisis. Some never do.
Measurement of Organisational Effectiveness
During my discussion in the HBR group, a lot of emphasis was placed on the measurement of organisational effectiveness. In fact, many professionals tended to define OE by how it could be measured, and according to X variables. Many cited qualitative and quantitative methods. Once again, depending on how 'effectiveness' is perceived, different variables would be used.
During my discussion in the HBR group, a lot of emphasis was placed on the measurement of organisational effectiveness. In fact, many professionals tended to define OE by how it could be measured, and according to X variables. Many cited qualitative and quantitative methods. Once again, depending on how 'effectiveness' is perceived, different variables would be used.
Below is a table with some suggestions for measuring OE. The list is in
no way exhaustive but may be helpful as a guide to formulating
organisation-specific methods:
Suggested
Method/Tool
|
Brief
Description
|
Name
of Source
|
Balanced
Scorecard (BSC)
|
A strategic performance management
framework that allows organisations to manage and measure the delivery of
their strategy
|
Advanced Performance
Institute
|
Baldrige Criteria for Performance Excellence
|
Provides a systems perspective for
understanding performance management. Also used by businesses and non-profit
organisations
|
National Institute of Standards and Technology (USA)
|
Organisational Excellence Framework
|
Indicators for best practices
and performance measures in seven key areas including - resource management,
governance, and leadership - from micro to large organisations
|
Organisational Excellence
Specialists
|
Investors In People (Specialised services)
|
Framework which specialises in transforming business performance
through people.
|
Investors in People. 100+ case studies featured on website such as:
BBC, McDonalds, Fujitsu Services etc.
|
As regards to the measurement of OE, I believe that its markers should
perhaps be defined by the organisation itself. This move would pave the way for
choosing appropriate OE metrics from a wide variety available on the web or
recommended by experts in the field.
As I stated in the HBR Group, a learning environment should also help
increase OE perceptions. This is because it is quite sensible to use tried and
tested formulas which had previously worked in the organisation for 'similar'
issues. However, if such systems could be flexible and thus upgraded or revised
to fit specific scenarios, (as no two challenges would be exactly the same
because of the human element), that would help to increase positive indicators
of OE.
Conclusion
I am aware that the term 'organisational effectiveness' is not new.
However, I believe that it should be taken very seriously because it impacts so
many facets and links to other constructs and methodology such as Lean,
Six Sigma, Total Quality Management etc.
A novel approach which I have advocated elsewhere, is the
communications-organisational link. This connection is not immediately evident
in management circles but could prove very useful with regards to how
communications could be used as a strategic tool to drive organisational
effectiveness. I could however explore this at a later date...
I am also very honoured that the organisational effectiveness discussion
provided so many insights in the HBR Group on LinkedIn with 453+ comments and 90+ 'likes' logged.
So I simply must ask – and please post your comments so that we could
continue this dialogue - how seriously are you considering organisational
effectiveness?
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N.B - Images courtesy of freedigitalphotos.net
N.B - Images courtesy of freedigitalphotos.net
