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What is organizational effectiveness and why does it matter?

Organizational effectiveness is the efficiency with which an organization is able to meet its objectives. Effective organizations deliver results. It's no surprise, then, that a core part of an online Master of Business Administration (MBA) program is studying the framework and components of organizational effectiveness to be able to assess, develop relevant skills and contribute positively to your organization.

Organizational effectiveness depends on effective communication and much more

According to The Bridgespan Group, a business advisory firm, effective organizations demonstrate strength in five key areas:

  • It can be easy to establish a strong vision and a strong team. What's more difficult is translating that vision into smaller, achievable goals, and then communicating that strategy to others in the organization.
  • Decision-making and structure. When a company isn't able to make decisions, financial performance suffers, as does employee morale. Clear roles and accountability for decisions and a reporting structure that supports key objectives are important factors in organizational effectiveness.
  • Attracting and retaining the right talent are keys to the success of any company. But today's business leaders must go a step beyond, ensuring that people feel that the work they do is aligned to company priorities and that they are evaluated and rewarded in a fair and timely manner for their role in the company's success.
  • Work processes and systems. In order to run smoothly, an organization must have clear and efficient processes in place, as well as the systems to support smooth operations.
  • Research indicates that a strong corporate culture gives companies a competitive advantage. Companies with strong cultures may find that their employees enjoy mutual trust and cooperation, more efficient decision-making processes and a shared understanding of business priorities – all of which can help a company run more smoothly.

Underlying the effectiveness of any organization is the caliber of communications. If communication is ineffective, misaligned or non-productive, none of these five key areas can gain traction or success.

Organizational effectiveness is easily assessed in the for-profit world through positive financial results and increased shareholder value. In both the for profit and not-for-profit arenas, lack of organizational effectiveness shows up in lack of coordination, excessive conflict, unclear roles, gaps in skills or misused resources, poor work flow, reduced responsiveness, conflicting communications and low staff morale.

It's critical that students of an online MBA program develop the knowledge and tools to facilitate improvement in these areas. As part of your degree, you can expect to study the various organizational structure options and which ones work best in which situations. You will also likely be exposed to the linking and grouping aspects of organizational structures, including functional, geographic, program/product, customer/market or matrix models.

The central idea of the study of organizational behavior is that a scientific approach can be applied to the management of workers. Organizational behavior theories are used for human resource purposes to maximize the productivity of individual group members. Because organizational behavior and organizational effectiveness are so inextricably linked, you can expect your online MBA program curricula to include in-depth studies in both.

Some of the areas of research you may explore in your organizational behavior studies include improving job performance, increasing job satisfaction, promoting innovation and encouraging leadership. You are likely to also learn the practical tools needed to achieve the desired results, including reorganizing groups, modifying compensation structures and changing the way performance is evaluated.

Through your online MBA program studies in both organizational effectiveness and organizational behavior, you can be in a position to bring the ideas and communication skills necessary to create tangible improvements to help an organization run more effectively.


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