Do you know how effective your organisation is?
If asked the question about organisational effectiveness and more specifically ‘How effective is your organisation?’, what would you say? Do you have an answer? If you have an answer, do you know it’s accurate?
At a surface level, Organisational Effectiveness is the concern of how effective a group of people are in achieving their stated goals so you might just reflect on whether your goals are being met and derive your answer from that. However, if you don’t have any stated and communicated goals then the question might be somewhat harder to answer!
Even if you have articulated goals or objectives upfront, how do you know that the outcomes are linked to the input? How do you know that the way in which your organisation works is contributing to these results and it’s not just one or two superstars driving your business performance? And how do you know that when you need to focus on a different set of goals, your organisation can adapt and remain effective?
At Blackmore Four, we define Organisational Effectiveness as ‘an organisation’s ability to meet intended business outcomes in a deliberate way, understanding and making best use of the component parts of the organisation as well as the interactions within it, whilst being prepared and equipped to adapt to the demands of your future.’
Here, we attempt to clarify what that means and articulate how you might reassess your organisation’s effectiveness.
What is Organisational Effectiveness?
The nature of Organisational Effectiveness originates back through the history of work to a time when a core focus for management was on the measurement of task and output, representing the nature of industry and typical work environments but also the simplicity of how management was defined.
The study of human behaviour at work and the development of management theory saw the progression of practical thinking in the direction of the nature of the relationship between people and task, and this has largely become enshrined in motivation theories that are played out in businesses across the country. More recently this has also shifted towards models of employee engagement, trying to measure and manage the relationship people have with their work and working environment.
It is this latter point where things become quite complex because that might include how people engage in their tasks, how engaged they feel with the business they work within and/or how engaged they feel with the other people they are working with and for. We are now in an era of work where beyond simple equations of productivity, leaders of businesses of any size have to contend with relationships between people and task, people and other people, people and ‘the business’, and, we would argue, basing all of that on the relationship between people and business performance as measured against goals, aspirations and intended outcomes.
As a start-up or relatively young business, the effectiveness of the team is usually quite easy for the founder/leader to see and as the business develops through its early stages of growth, performance is directly attributed to a small number of people and preparedness for your future is core to developing a fledgling business. However, every successful business reaches a stage of growth where the complexities of the organisation surpass the capacity or capability of a single individual to accurately assess organisational effectiveness and subsequently business performance is somewhat harder to measure, analyse and most importantly, predict.
The nature of uncertainty that comes with increased organisational complexity starts with the challenge of selecting the right individuals to join your team and assessing their fit. Identifying people who have demonstrated the required knowledge or skill is important, but the extent to which an individual will add something new to the team is also of significant importance. Here is a real opportunity to incrementally add value to your business rather than just adding extra capacity. New individuals bring new perspectives, behaviours and influences that need attention to ensure they positively impact the effectiveness of your organisation. It is frustrating to discover that your excellent new hire didn’t turn out to have the impact you expected, especially when they seemed to possess all the knowledge and experience you were looking for.
When you have assembled a team or whilst you continue to build your organisation, it is the source of continued frustration or challenge that despite clear direction, the team may still not be able to achieve your goals in the way you expected. As social systems, organisations tend to take on a life of their own and operate only in part based on what you have asked of them. If you have established a leadership or management team then most of what the rest of the organisation does is likely to be determined by how well those responsible are able to lead and/or manage people. Spoiler: as an individual, you may be significant, but you are not the only and maybe not even the primary source of direction for the people you have employed. Organisation of teams and establishing appropriate systems and processes within an organisation are usually the domain of the founder/owner/leader until the team reaches a size where it is no longer possible for that person/those people to retain control or influence over all operational matters. This is a critical time to start thinking about how you measure, manage and develop your organisational effectiveness and unfortunately, this is where we usually see organisational ineffectiveness creep in.
Whilst it remains important to focus on the familiar fundamentals of cash flow, product development and market conditions, recent research has also found that attempts at growth fail largely due to inattention to organisational attributes. We categorise these internal factors simply into two areas of business practice: Leadership and Organisation Development.
We believe Leadership is contextual and relational. The kind of leadership that is right for your business depends on:
- the environment you are operating in
- the aspirations or goals set for your business
- the nature of people in leadership roles
- the nature of people who you seek to lead
Conducting a leadership needs analysis, assessing capabilities against those needs and investing in targeted development of leadership capability is vital to sustaining your business performance and growth.
Organisational Development is a social science and depends on every aspect of the anatomy of the business being fit, healthy and aligned with business objectives. We identify four elements of an organisation that need to be developed to ensure overall effectiveness:
- organisational structure
- organisational processes/systems
- organisational knowledge, skills and abilities
- organisational behaviour
Conduct a thorough analysis of your organisational needs (what does it look like to achieve outstanding business performance), assess your capabilities/effectiveness against your future ambition and develop or implement new solutions to ensure people can fulfil their collective potential and perform effectively in pursuit of your goals. Of course, you then need to ensure this is monitored and developed as your business continues to grow but having completed the foundation work, this will allow you to more easily measure, appraise, change and monitor future developments.
In high-performance businesses, leaders go beyond clearly articulating a strategic framework of mission, vision, values and goals (although these are important). Leaders design effective structures and processes that enable their teams to be at their best and engage people to learn areas of strength and behavioural preference. In the current working world, leaders must combine goal-orientation, people-orientation and task-orientation to guide the development of their business.
Leadership needs analysis, assessment, development and repeat
Leadership is a topic of research, writing, study and practice the world over but is still subject to significant personal definition and endeavour. The lack of immediate, tangible impact makes leadership something that we can easily dismiss or be complacent about, and leadership development becomes a ‘nice to have’ rather than a business necessity.
That is a mistake and one that can easily be rectified. The changing nature of work organisations involves moving away from command and control management, and towards environments of teamwork, collaboration and empowerment. Extensive amounts of research highlight the trend between high quality leadership and key business outcomes, including product or service quality and customer satisfaction, in addition to your key financial indicators.
Every growth stage requires your team to be clear, aligned and motivated to sustain outstanding performance through the challenge of change. Their ability to preserve what has worked and adapt to something new, whilst maintaining alignment to your company’s vision and goals is critical. You can find plenty of material that defines a ‘high-performing team’ or ‘employee engagement’ and a quick comparison will provide you with a core set of ingredients. However, as your team grows there are a few organisational attributes that provide the anchor for sustaining high performance. These are Shared Purpose, Aligned Expertise and Mutual Empowerment.
Shared Purpose, Aligned Expertise and Mutual Empowerment
Does your team have a compelling shared purpose? People seek purpose but the compulsion of sharing a purpose comes from our innate need to belong and be part of some social structure. Purpose that can be clearly stated and consistently understood is the anchor for team performance as it gives everyone reference from which to make sense of their role. As your business grows, it is easy for people to lose sight of shared purpose and hard for new team members to identify it.
People also want to take pride in their work. For growing teams to thrive, mastery needs to be relevant to your organisation’s goals and this is what is referred to as aligned expertise. Some businesses prefer to dictate skill development and implement processes to facilitate interaction, however, there is little value created from collaboration based on rules and prescribed behaviour. You are more likely to achieve successful growth by fostering relationships that respect aligned expertise.
With shared purpose and aligned expertise, your team are well placed to make great decisions for your business, but do they have the authority to make meaningful decisions? Mutual empowerment requires a level of trust within the team allowing people to speak honestly, ask open questions and learn how to create value for your business. This is about creating an environment where everyone can use their expertise to make good decisions for the business.
If you reflect on these attributes, that wasn’t a strategic plan, job descriptions, nice new chairs and a free lunch – although they may also help your team’s performance!
Organisational Effectiveness is not a big company worry, it should be central to the role of leaders of small and medium-sized business and those who seek to sustain business performance through periods of growth and significant change. It can’t be taken for granted; it needs attention.
Leadership remains a critical component of any successful business but don’t be fooled into thinking one size fits all and don’t limit yourself to what you have seen previously. Leadership is contextual and relational making it specific to your business and the behaviours required can be developed.
Organisations come in all different shapes and sizes and it’s important to consider the realities of your own business and the people involved to get the right structure, systems and processes (if required) in place rather than simply adopting what appeared to work elsewhere. It is also critical to accept that human behaviour at work is rarely prescribed and that the formalities of structure and process is only one component of what leads people to behave how they do. Developing a better understanding of your teams and how they really work will help fuel the development of the organisation to even better performance.
If you entrust people to work in your business then you want them to share in a common purpose, align their knowledge, skills and abilities, and contribute freely to decision making that will truly power outstanding business performance.
We will be expanding the topics covered here in future articles so if you have an interest and appreciate a thoughtful and grounded opinion then please sign up to our newsletter and let us know your thoughts.
Blackmore Four are an independent consulting company, offering specialist advice and tailored solutions to businesses looking to sustain or improve the effectiveness of their organisation. Our approach is based on a deep understanding of human behaviour at work and an ability to identify and address the specific leadership and organisational development needs of your business.