How Can We Measure and Improve Organizational Effectiveness?
How can we define and measure methods to improve organizational effectiveness? There are a number of measures you can choose from: retention of key talent, increased productivity, faster and better-quality decisions, improved employee motivation, success in change management initiatives, and so on. Whichever measure you look at, the methods you may consider using to improve organizational effectiveness tend to include some common themes, which I will explore in this article.
Here are my top 10 methods based on many years of listening to organizations about the factors that influence their effectiveness:
1. Be Clear About the Organization’s Goals: Help Employees Understand Their Roles in Achieving Them
Managerial leaders need to set and communicate a clear vision, whether it’s for the whole organization or just one team. People want to understand the part they are expected to play in the overall strategic picture and to have clarity about specific objectives and performance standards for their tasks. Time, energy and stress are often wasted when employees feel their roles are vague or that they overlap with the work being done by others.
2. Ensure That the Organization Has the Right Number of Levels of Work
A great deal of dysfunctional behavior in organizations comes from having too many or too few levels of work. Too many layers create unnecessary bureaucracy and keep employees feeling suppressed in their decision-making. Too few levels, on the other hand, cause problems in communication and gaps in workflow. People’s work roles can become overloaded with tasks that are either too complex or too routine for their capabilities, and this leads to frustration and underperformance. Management models like Requisite Organization can help managers build the right infrastructure for their business type and scope.
3. Make Managers Accountable For the Results of Their Subordinates
This is a controversial idea–not only are managers accountable for their own results, but also for the output of their direct reports. Why is this important? This radical approach creates a far more positive organizational culture: It ensures that managers delegate tasks appropriately, allocate sufficient resources and authority and provide all necessary coaching. This one method alone can transform organizational effectiveness, but it requires a paradigm shift in thinking about managerial accountability.
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4. Give Employees Sufficient Authority to Undertake Their Responsibilities
When we talk about being able to use our initiative at work what is really happening is that our manager has given us enough autonomy to make the decisions required in our tasks. There need to be boundaries, of course, and people have to be capable of making decisions based on the skilled knowledge and experience required. The frustration comes when we feel our bosses don’t allow us or trust us to make decisions within the scope of our capabilities and we feel devalued and micro-managed.
5. Create a Culture of Fairness, Honesty and Transparency
This is probably one of the most common complaints in organizations. Employees need to feel that the organizational culture rewards honesty, encourages fairness – whether in recruitment, training or salary negotiation – and is open about changes going on. Even if bad news has to be communicated (and there are ways to get that right) employees are much more likely to accept even unpopular decisions if they see that they are being treated fairly, that there are clear business reasons for initiating change and that there are no hidden agendas. This factor places a heavy duty of care on the CEO and managerial leaders at all organizational levels to demonstrate personal integrity and courage. An organization’s effectiveness will rely heavily on such factors.
6. Design and Maintain Felt-Fair Pay Systems in the Organization
Elliott Jaques’ research, starting in the 1950s in Glacier Metals in the UK, concluded that employees wanted to receive pay which was fair for the type and complexity level of the work they performed. Staff recognized that others should be paid more for work that carried a higher level of complexity and accountability but that there should be a balanced ratio of pay to work throughout the levels of work in an organization. In order to achieve this, an analysis of the accountabilities and work complexity factors in each role and at each level needs to be undertaken to provide a starting point for calculating felt-fair pay.
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7. Make Managers Accountable for Coaching Their Staff
Many exit interviews with dissatisfied employees reveal that managers often failed to support their subordinates to improve their performance or acquire new skills. This was less a question of financial investment in training programs and more to do with the manager failing to give his or her time and attention to coaching. Managers can be held accountable within their own performance evaluations for employee coaching so that it no longer remains an optional extra but a pre-requisite to good managerial performance. Good coaching is simply about spending more time with employees, setting them goals, giving them feedback and support and creating on-the-job opportunities to learn and improve.
8. Develop Your Employees and Create a Succession Plan
Managers may sometimes feel threatened by the idea of identifying and developing successors for their own roles, but failure to plan for succession will leave the organization vulnerable to unexpected and expensive changes. Employees want to know what may be their long-term potential and have clear goals for developing their talent. This investment leads to improved employee motivation and engagement and is a major factor in retaining key talent.
9. Set Up Occupational Health and Social Facilities
Small changes can make a big difference, whether it’s a new water cooler or access to subsidized healthcare or social facilities. On the other hand, an extensive program of facilities – gym, in-house occupational counsellors, and staff restaurant – will clearly require significant financial investment, and a thorough cost-benefit analysis should be undertaken. Research is important, looking into the experience of other organizations that have made such investments, to ensure that any improvement in organizational effectiveness is more than just superficial or short term.
10. Create Opportunities for Employee Feedback and Participation
Managers are paid to manage and make decisions but they don’t necessarily have all the answers all the time. Everyone has a view, whatever its merits, and employees who are invited to participate and contribute ideas are much more likely to accept decisions and changes if they feel they have had an opportunity for their opinions to be considered.
Organizational effectiveness can be influenced by many factors and methods. Each of these methods to improve organizational effectiveness will have implications for costs, time and emotional investment.
It can be tempting for managers to implement quick-fixes or intiatives that create ‘buzz’ in organizations but which are cosmetic in nature and fail to address the fundamental problems in performance or motivation. Changes in managerial systems and processes have been found to make significant improvements in organizational effectiveness but while, technically, they are easy to implement they do require a certain mind-set and organizational culture to exist (and not just in the top management team) as well as the courage, commitment and determination to sustain them. Those organizations that are prepared to do so will reap rich rewards of improved productivity and performance, faster and better decisions and enhanced employee motivation.
Requisite Development, https://www.requisite-development.co.uk
Jaques, Elliott. Requisite Organization. Cason Hall, 1997
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