Organisational effectiveness is the extent to which an organisaton achieves its objectives (goals) within the constraints of limited resources.
The seeking of goals leads to the issue of goal accomplishment or effectiveness. Efficiency is quite often considered a synonym to effectiveness. It can be suggested that efficiency needs to be related to the objective of an organisation.
Organisation can thus be effective without being efficient.
The organisation takes resources (input) from the larger system (the environment) processes these resources and returns them to the environment in the form of (output).
The system concept emphasises two important elements. The ultimate survival of the organisation depends on its ability to adapt to the demands of environment. And in meeting these demands, the total cycle of input-process output must be the focus of managerial attention. Criteria of effectiveness must reflect there two considerations and effectiveness can thus be defined in terms of the optimum balance among the various adaptation and maintenance activities.
Organisational effectiveness is influenced basically by two factors. At the societal level organisational goals are really an extension of what the society needs for its own survival. At the extreme end is the position that organisational goals are nothing more than the goals of the individual members of the organisation.
Organisational goals are creations of individuals and groups in the organisation. The important point is that the goal of an organisation is an abstraction distilled from the desires of members and pressures from the environment and the internal system. Thus organisational effectiveness is greatly influenced by the structure of organisations, people, external and internal environment and the changing technology.
The operation goals of an organisation can undergo drastic changes due to changes in the ‘power system’ of the organisation. There can be sudden influx of new kinds of people or leaders in the organisation who might set new standards and change earlier goals when organisations tend to organise their activities around more early quantifiable spheres, organisational goals become deflected.
The final source of goal change is a more generalised environmental pressure. New technological developments, for instance, may lead to internal readjustment of strategy and structure of organisation.