Behind every distinguished company, team or division is a powerful structure that determines organisational effectiveness, that is tailored to specific needs, helping employees understand where they fit into the bigger picture and the company function as a whole.
Without adequate structure, an organisation may fail to function and even collapse in on itself. It is accurate to say that substandard organisational design and structure results in a surplus of confusion within roles, a lack of coordination among functions, failure of communication, and sluggish decision-making, bringing administrators unnecessary complexity, stress, and conflict.
So, what are the building blocks of an effective organisation? First, you need to understand what organisational effectiveness and efficiency is.
Organisational Effectiveness Defined
Organisational effectiveness can be defined as the ability with which an association is able to meet its objectives efficiently, that produces the desired effect with a minimum expenditure of time, money, energy and human and material resources. Of course, the desired effect will depend on the objectives of the organisation, and an organisation that operates efficiently will produce a product without waste. If the organisation is effective and runs efficiently, it will maximize its profits by producing with little to no waste.
The leading gauge of organisational effectiveness is generally measured by how well its nett profitability compares with its target profitability. Additional measures usually include growth data, as well as the results of customer satisfaction surveys. Highly effective organisations display strengths across five realms in business; company culture, people, governance, decision making & structure, and processes & systems. Assessing and improving organisational effectiveness and efficiency is one strategy used to help ensure the continued growth and development of an organisation.
Understanding a company’s level of organisational effectiveness is important for a number of reasons, amongst them the ability to see how well internal procedures and processes are performing, as well as providing investors, donors, or employees with an idea of the company’s strengths, and it also highlights areas of ineffectiveness that can be improved.
How to Build an Effective Organisation
Self Assessment
To get a clear understanding of an organisation’s effectiveness, it is essential to collate a clear list of criteria to assess. No two organisations have the same list of criteria, which is why many groups measure their effectiveness through self-assessment. Company personnel are usually in the best position to closely understand the needs, objectives, and performance of their company. Self-assessment of effectiveness can also help company personnel reconnect with the original mission of an organisation. By working creatively to invent new strategies for areas of ineffectiveness, employee loyalty, purpose and dedication may be rejuvenated.
Strategy & Innovation
In 2018, Digital Strategy is intrinsic to organisational effectiveness. The ultimate digital strategies don’t rely on past analyses. Instead, through close assessment of where value is going to be disrupted in business and market over the next three to five years, organisations start fresh and carve out a vision based on where they believe they should compete. By prioritizing a small number of interventions where the organisation can utilize considerable opportunities, then craft a digitally qualified business model around them, could mean creating an updated method for customers to purchase a product, moving into new organisations, or utilizing competitive advantages such as proprietary data in new ways.
Process Automation
The automation of processes within an organisation can result in huge competitive edge because primary investments, when effectively implemented, can scale rapidly without accruing substantial additional costs. In time, organisation effectiveness can improve as automation efforts scale across formerly isolated functions, thus reducing redundant processes. Whilst digitizing processes has less to do with technology and more with how companies approach development, this requires reinventing the entire business process to cut out unnecessary steps altogether, or reduce the number of needless documents.
Leadership
Organisational leadership is a significant factor in the success and effectiveness of an organisation, and includes a dual management approach that simultaneously works towards what is best for individuals and what is best for the organisation as a whole. Leadership deals with both human psychology as well as expert stratagem, placing emphasis on developing the skills and abilities that are relevant across the organisation. When good leadership is in place it can be felt throughout the entire organisation, where the culture is not forced but developed. Communication is effective and open. Everyone understands the vision and goals of the organisation, and everyone has input into how they can be improved. People feel that they are an important part of the organisation and they give their best for the success of the organisation, thus contributing to organisation effectiveness as a whole.
Organisational Effectiveness Through Leadership
In addition to innovative strategy, automation of processes and deploying tools and technology, leadership is by far the most important aspect of building an effective, efficient organisation. Leadership determines superior organisational performance. Leadership success in the implementation of strategy, streamlining of processes and most importantly, effective management is manifested in an advantageous organisational atmosphere that is linked to strategic objectives, flexible structures that support business demands, and an effective organisational culture that influence behaviour in the right direction.