Improving Organizational Effectiveness Theoretical Framework and Model
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1 Improving Organizational Effectiveness Theoretical Framework and Model Working paper for the HFM-163/RTG Working Group Esther Bisig, Tibor Szvircsev Tresch & Stefan Seiler Swiss Military Academy at the ETH, Zurich Research Interest Project s Goals The Project In December 2007, NATO initiated the HFM-163/RTG project which aims to investigate the organizational effectiveness of peace-promoting multinational coalition operations particularly the effectiveness of NATO headquarters of such operations and, where possible, to submit recommendations. The goals of this project are as follows: 1) to define what is commonly understood by organizational effectiveness, 2) to outline which theories and models of organizational effectiveness exist, 3) to assess how these models can be combined to a new model of organizational effectiveness of peace-promoting multinational operations' headquarters, 4) to investigate what factors influence this effectiveness, 5) to understand how it can be measured and last but not least, 6) to actually collect data and prove the new model. Definition Headquarter s Goal Definition of Organizational Effectiveness Generally speaking, the term of organizational effectiveness describes the degree to which an organization realizes its goals (ETZIONI 1964). From an experts discussion resulted that the main goal of a NATO headquarters in a peace-promoting operation is to support the troops on the ground. Furthermore, it was noted that this goal can only be realized effectively by a) information sharing, b) quick and timely decision making, and c) shared awareness of tasks and responsibilities. In the following, factors influencing this goal achievement will be deducted from previous theory and research on organizational effectiveness Previous Research on Organizational Effectiveness The research on and the measurement of organizational effectiveness focuses on different parts of the organization. Organizations bring resources in from the environment, and those resources are transformed into outputs delivered back into the environment (Fig. 1). 1
2 External Environment Resource Inputs Organization Internal activities and processes Product and Service Outputs System resource approach Internal process approach Goal approach Fig. 1: Approaches to Organizational Effectiveness (DAFT 1998) System Resource Approach Internal Process Approach The system resource approach assesses effectiveness by observing the beginning of the process and evaluating whether the organization effectively obtains resources necessary for high performance. The system resource approach is valuable when other indicators of performance are difficult to obtain. In many not-for-profit and social welfare organizations, for example, it is hard to measure output goals or internal efficiency Although the system resource approach is valuable when other measures of effectiveness are not available, it does have shortcomings. Often the ability to acquire resources seems less important than the utilization of those resources. (DAFT 1998). The internal process approach looks at internal activities and assesses effectiveness by indicators of internal health and efficiency. The internal process approach is important because the efficient use of resources and harmonious internal functioning are ways to measure effectiveness. A significant recent trend in management is the empowerment of human resources as a source of competitive advantage. Most managers believe participative management approaches and positive corporate culture are important components of effectiveness. The internal process approach does have shortcomings. Total output and the organization s relationship with the external environment are not evaluated. Also, evaluations of internal health and functioning are often subjective, because many aspects of inputs and internal processes are not quantifiable. Leaders should be aware that efficiency alone represents a limited view of organizational effectiveness 2
3 Goal Approach (DAFT 1998). The goal approach to organizational effectiveness is concerned with the output side and whether the organization achieves its goals in terms of desired levels of output. The goal approach is mostly used in business organizations because output goals can be readily measured. Business firms typically evaluate performance in terms of profitability, growth, market share, and return on investment. However, identifying operative goals and measuring performance of an organization are not always easy. Two problems that must be resolved are the issues of multiple goals and subjective indicators of goal attainment. (DAFT 1998). The three approaches system resource, internal process, and goal approach to organizational effectiveness described here all have something to offer, but each one tells only one part of the story (DAFT 1998). CTEF Model Existing Models of Organizational Effectiveness This is the reason why we are now looking at several existing models with different approaches to organizational effectiveness; namely: the Command Team Effectiveness (CTEF) Model (ESSENS ET AL. 2005), the Dynamic Five-Factors Model of Leadership (SEILER & PFISTER under review), the Star Model (GALBRAITH 2002), and the 7-S-Model (PETERS & WATERMAN JR. 1982). Later, we will try to integrate and combine their conceptual ideas and indicators to a new, single framework for organizational effectiveness of peace-promoting multinational coalition operations' headquarters. The CTEF model (Fig. 2) makes possible observing, evaluating and promoting group activities. The model assumes that successful leaders have to understand and take into account the following factors: 1) conditions (operation framework, task, organization, leader, team members, team), 2) behavior and processes occurring during the operation (a distinction is made between behavior/processes related to tasks and those related to groups), 3) evaluating the result of these processes (again distinguishing between behavior related to tasks and to groups), and 4) adapting processes and conditions in order to become more effective. 3
4 Fig. 2: CTEF-model (ESSENS et al. 2005) Five Factors Model of Intercultural Leadership Behavior This model was developed by a working group of the NATO Research and Technology Organization. Existing models were used as an inspiration to identify the factors (e.g. DRISKELL, SALAS, & HOGAN 1987; SALAS, DICKINSON, CONVERSE & TANNENBAUM 1992; KLIMOSKI & JONES 1995; BLENDELL, HENDERSON, MOLLOY & PASCUAL 2001; all as cited by ESSENS ET AL. 2005). Moreover, articles and chapters on organizational effectiveness were consulted and interviews with experts were conducted. The advantages of this model are its strong theoretical foundation; the fact that it includes learning and adjustment loops and that it takes the mission framework and context into consideration. However, in regard to multinational peace-promoting operations, this model lacks the (inter-)cultural aspects. Additionally, it focuses very much on team and task characteristics, which does not correspond to a headquarters perspective. On the HQ level, there are other emphases and vulnerabilities, e.g. organizational culture and structure. Yet another weakness of the CTEF model is the complex cause-andeffect structure, which in practice can only be verified partially. The Five Factors Model of Intercultural Leadership Behavior (Fig. 3) presumes that competent leadership in an operation is based on more than just individual competence 1). Additionally, the behavior of a leader is influenced by 2) the dynamics of the team the leader works with, 3) by the organizational framework, 4) by the present context and 5) by the particular situation the leader is faced with. 4
5 Individual Competence Situation Intercultural Leadership Behavior Team/Group Context Organization Fig. 3: Dynamic Five-factors Model of Leadership (SEILER & PFISTER under review) Star Model A big advantage of the Five Factors Model is its focus on intercultural aspects of leadership behavior. In military coalition operations, successful collaboration between troops of different countries, international partners and the population on site is pivotal for success. Hence, intercultural competence is a key factor for organizational effectiveness in a NATO HQ. Another advantage is that it includes the external environment into the evaluation. The main disadvantage of this model in our case is the fact that it is a leadership and not an effectiveness model. Therefore it does not specify how effective leadership is linked with organizational effectiveness. The basic premise of the Star Model (Fig. 4) is simple but powerful: different strategies require different organizations to execute them. The Star Model framework for organizational design is the foundation on which an organization bases its design choices. This framework consists of a series of design policies that are controllable by leadership and can influence employee behaviour. The policies are the tools with which leadership must become skilled in order to shape the decisions and behaviours of their organizations effectively. In the Star Model, design policies fall into five categories: strategy, structure, processes, rewards and people. 5
6 Fig. 4: The Star Model (GALBRAITH 2002) 7-S-Model For an organization to be effective, all these policies must be aligned, interacting harmoniously with one another. This idea of alignment is fundamental to the Star Model. But to solely focus and align the organization is to become vulnerable because alignment around a focused strategy can impede to a new strategy. Today, every organization needs to be adaptive and change as quickly as its context changes. If not, it is falling behind. And if change is constant, we need to design our organization to be constantly and quickly changeable. We need to have organization structures and processes that are easily reconfigured and realigned with a constantly changing strategy. This asks for the skilled use of extensive internal and external networking capabilities. (GALBRAITH 2002) One advantage of this model is the concept of strategic alignment. This alignment of the diverse policies ensures goal-oriented working and therefore organizational effectiveness. Another advantage of the model is the consideration of the adaptability to a constantly changing environment. Nevertheless, the Star Model is not tailored to the organization of a NATO HQ but rather to business and market-oriented companies. Another two weak points are 1) that effectiveness is not a direct output of the design policies, and 2) that culture is only understood as an output and not as an input to the organization. But in a multinational headquarters, where people from different nations are working together, culture certainly also is an entry. The 7-S-Model of the former McKinsey management consultants PETERS and WATERMAN JR. (1982) divide organizations into hard and soft factors. The hard factors cover elements more concrete and can be exposed with policy papers, plans 6
7 and documentations on the development of the organization. The three hard or cold factors of an organization are: 1) strategy, 2) structure, and 3) systems. The expression soft refers to substantially and only marginally concrete elements of an organization that can hardly be described. These elements develop permanently, and can be planed or controlled only limitedly because they are highly dependent on the members of the organization. These soft or warm factors are namely: 4) skills, 5) staff, 6) style/culture, and 7) shared values / super ordinate goals (Fig. 5). While the hard factors are easier to test, the assessment of the soft factors is much more difficult - but they are at least as important for the organization. Fig. 5: The 7-S-Model (PETERS & WATERMAN JR. 1982) Summary Effectively functioning organizations are characterized by a coordinated balance of theses seven factors. In times of change and adjustment, it should be noted that the modification of one factor also impacts on the other factors. A well-functioning organization must aspire towards a right balance between the above introduced factors. In practice, it is often the case that leaders are only focusing on the hard factors. PETERS and WATERMAN JR. (1982) argue, however, that the most successful organizations put their attention also on the optimum balance of the soft factors as they can be decisive for success because new structures and strategies can barely be built on completely opposed cultures and values. This praxis proven model has the advantage that 1) it takes into consideration hard as well as soft factors, and 2) that it emphasizes the importance of a balance between those factors. The four models just discussed above have different foci and cover different aspects of organizational effectiveness, yet they have many similarities. 7
8 To sum up, we expect the following concepts and components of a new model for multinational coalition operations headquarters: a direct link from the input factors through the transformation processes to the goals of the organization the concept of strategic alignment which states that the input factors must be in optimum balance to result in effective goal achievement consideration of hard (e.g. structures, processes) as well as soft (e.g. people, culture) input factors inclusion of the external environment; specifically the ability of the organization to adapt and adjust to the constantly changing situation and context and last but not least, a simple model which can be easily applied in practice New Model On this basis we are now developing a new model in order to capture the effectiveness of military coalition operations headquarters (Fig. 6). In the following paragraph, each component will be briefly described. Fig. 6: Model of Organizational Effectiveness of Peace-Promoting Multinational Coalition Operations Headquarters Goal Achievement Transformation Processes As stated earlier, organizational effectiveness means goal achievement. The main goal of NATO multinational coalition operations headquarters is to support the troops on the ground. Our model hypothesizes that the transformation processes, which include 1) information sharing, 2) quick and timely decision making, and 3) developing a shared awareness, influence the effectiveness of a military coalition operation s 8
9 Input factors Structure People Processes headquarters. GALBRAITH (2002) also supports the assumption that these three factors are needed to meet an organization s goal effectively. ESSENS ET AL. (2005) say that effectiveness is tied to the ability to acquire the lacking information and to manage the information it possesses. Three features are important obtaining, processing, and exchanging information. They also assume that the effectiveness of a team is defined by the quality and efficiency of its decisions. PETERS and WATERMAN JR. (1982) expect that shared understanding of what the organization stands for and what it beliefs in is central for its effectiveness. Thus, a clear understanding of the mission is essential for organizational effectiveness, as is retaining the same mission objective (ESSENS et al. 2005). The three factors (information sharing, decision making and shared awareness) in turn depend on the interaction of four influencing factors; these are: 1) structure, 2) people, 3) processes, and 4) culture. The Structure is understood as the way organizational units are related to each other and determines the location of the decision-making power and authority in the organization. (GALBRAITH 2002; PETERS & WATERMAN JR. 2005). Additionally important is the aspect of organizational infrastructure. Are there adequate resources and communication channels in place to facilitate interaction and knowledge transfer? (SEILER & PFISTER under review) The People factor include selection, rotation, training, and development (GALBRAITH 2002). Additionally important is the embedding of new members (PETERS & WATERMAN JR. 1982) and the internal networking (GALBRAITH 2002). Another central area within the People factor is leadership. Research demonstrates that an effective leader can have a positive impact on effectiveness (HOGAN, CURPHY & HOGAN 1994; JUDGE, PICCOLO & ILLIES 2004; and KURECA, AUSTIN, JOHNSON & MENDOZA 1982). Within leadership we focus in the capabilities of the leader, his skills and knowledge. In order for leaders to be successful in an organization, they must be 1) strategically (e.g. planning, conflict resolution), 2) professionally (e.g. expertise), 3) socially (e.g. communications, cooperation, support), 4) cognitively (e.g. knowledge, intelligence), 5) individually (e.g. stress resistance, self criticism), and 6) interculturally (e.g. foreign language skills, tolerance of ambiguities) competent (BOLTON 2005; as cited in SEILER & PFISTER under review). By Processes is meant the way the organization implements its goals in the framework of the given structures (PETERS & WATERMAN JR. 1982). That is to say that information and decision processes cut across the organization s structure; if structure is thought of as the anatomy of the organization, processes are its 9
10 Culture Strategic Alignment physiology or functioning (GALBRAITH 2002). This functioning involves managing information, assessing the situation, making decisions, planning, directing, controlling, networking, providing and maintaining vision and common intent, motivating, and adapting to context and situation (ESSENS ET AL. 2005). The adaptability to the external environment is especially important as effectiveness can only be achieved if the organization as a whole is willing to adapt its structures, where necessary, to the ever-changing conditions (SEILER & PFISTER under review). Culture is divided into three components: 1) organizational culture, 2) leadership culture, and 3) national cultures. PETERS and WATERMAN JR. (1982) also distinguish between 1) the organizational culture as the dominant values and norms that have developed over time and become stable elements of the headquarters and 2) management style as the general manner, outlook, attitude, and behaviour of a leader in his or her dealings with subordinates. In multinational coalition operations, national culture must certainly be added as a third cultural component. Most important for effectively achieving goals is that the four factors Structure, People, Processes, and Culture are strategically aligned towards the organizational goals. Instrument Usability This new model's scope and simplicity allow for a construction of an instrument which measures effectiveness in a particular context like a NATO multinational coalition operations' headquarters. One application possibility of the model is for example 1) identifying the current state of each factor in the headquarters and 2) describing the generally perceived influence of each of these factors on effectiveness. On the basis of the collected data and taking into account the mutual interaction of the factors can be 1) investigated the impacts of different influencing factors, 2) localized inefficiencies in NATO headquarters 3) determined measures to achieve better organizational effectiveness, and 4) proved and if necessary adapted the newly developed model. 10
11 References BLENDELL, C., HENDERSON, S. M., MOLLOY, J. J. & PASCUAL, R. G. (2001). Team performance shaping factors in IPME (Integrated Performance Modeling Environment). Unpublished DERA report. DERA, Fort Halstead, UK. BOLTON, J. (2005). Interkulturelle Personalentwicklungsmassnahmen: Training, Coaching und Mediation. In G. K. STAHL, W. MAYRHOFER & T. M. KÜHLMANN (eds.), Internationales Personalmanagement: Neue Aufgaben, neue Lösungen (S ). München: Rainer Hampp Verlag. DAFT, R. L. (1998). Organization. Theory and Design. Cincinnati: South-Western College Publishing. DRISKELL, J. E., SALAS, E. & HOGAN, R. (1987). A taxonomy for composing naval teams. Naval Training Systems Center, Human Factors Division (Code 712), Orlando, FL. ESSENS, P. J. M., VOGELAAR, A. L. W., MYLLE, J. J. C., BLENDELL, C., PARIS, C., HALPIN, S. M., BARANSKI, J. V. (2005). Military Command Team Effectiveness: Model and Instrument for Assessment and Improvement. NATO RTO technical report. ETZIONI, A. (1964). Modern Organizations. Englewood Cliffs, N.J.: Prentice-Hall. GALBRAITH, J. R. (2002). Designing Organizations. An Executive Guide to Strategy, Structure, and Processes. San Francisco: Jossey-Bass Publishers. HOGAN, R., CURPHY, G. J. & HOGAN, J. (1994). What we know about leadership: Effectiveness and Personality. American Psychologist, 49, JUDGE, T. A., PICCOLO, R. F. & ILIES, R. (2004). The forgotten ones? The validity of consideration and initiating structure in leadership research. Journal of Applied Psychology, 89, KLIMOSKI, R. & JONES, R. G. (1995). Staffing for effective group decision making: Key issues in matching people and teams. In R. A. GUZZO, E. SALAS & Associates (eds.). Team effectiveness and decision making in organizations. San Francsico: Jossey-Bass Publishers. KURECA, P. M., AUSTIN, J. M., JOHNSON, W. & MENDOZA, J. L. (1982). Full and errant coaching effects on the assigned role leaderless group discussion performance. Personnel Psychology, 35, PETERS, T. & WATERMAN, R. (1982). In Search of Excellence. New York, London: Harper & Row. SALAS, E., DICKINSON, T., CONVERSE, S. A. & TANNENBAUM, S. I. (1992). Toward an 11
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