Durda Y.V.
Bukovyna State Finance Academy, Ukraine
Relationships among Effectiveness, Productivity, and
Performance
Strategic
control is a process of implementing strategy and monitoring the organization's
performance as it attempts to execute that strategy. Three key elements of
strategic control are effectiveness, productivity, and performance.
This
problem has been discussed by many Ukrainian and foreign scientists such as Al-Darrab I., Bernolak C., Moseng B., Rolstada S. and others [1,2,3].
On the
basis of their researches we can make a conclusion that process for integrating
effectiveness, performance, and productivity flows from the goal set through
the management functions and performance and productivity to the assessment of effectiveness.
Each of
these is a distinct
area, they can also be integrated in such a way as to provide a general
framework for facilitating strategic control.
The first step in using this framework is to determine the
organization's goal set. Organizations typically establish financial goals
(such as a target rate of return or a certain increase in productivity),
environmental goals (such as growth or market share) and participant goals
(such as lower turnover or employee satisfaction). Survival is generaly an
implied goal.
The organization
then attempts to achieve these goals in an optimal fashion. That is, it tries
to balance goals that are contradictory and inconsistent by nature.
Goals are pursued through the basic
management functions of planning and decision making, organizing, leading and
controlling. These functions are not discrete, sequential activities but
interacting dimensions of the typical manager's job. That is, managers are
usually performing multiple functions simultaneously.
As a
result of the performance of these functions, the organization achieves certain
levels of performance and productivity. Performance reflects the ways in which
the organization attempts are effective. Productivity represents the level of
outputs achieved by the resources of the organization.
Management should assess the extent to which
the organization is effective. The framework suggests that one method for
assessing effectiveness is to ask the four basic questions. Those questions
focus on whether the goals at the organization are understood, whether
interrelationships among these goals are known, whether proper time frames for
the goals have been established, and whether the organization's environments are
being adequately monitored and evaluated.
If the organization can answer “yes” to each question, it is
evidently achieving an appropriate level of effectiveness (assuming, of course,
that proper goals were established to begin with). If this is the
case, the organization can proceed on course with its existing goal set or
modify those goals to meet new and different circumstances. This process
directly affects both the basic managerial functions and subsequent levels of
performance and productivity.
If the answer to one or more of the questions
for assessing effectiveness is no, however, the manager must evaluate the
situation and take appropriate action. If a "no" answer has
performance consequences, several actions are possible: the management audit
and man resource accounting. A management audit can answer several questions
about the organization (such as probing executive effectiveness and production
efficiency), whereas a human resource accounting can help the organization
determine the distribution pattern of strengths and weaknesses among its human
resources.
If a
negative assessment of effectiveness indicates problems with productivity,
different kinds of action may be needed. They include investing in research and
development, emphasizing manufacturing, changing incentive for employees
enhancing cooperation with labor, increasing employee participation, tightening
controls, and attempting to change government policies.
Finally, a "no" answer to a question about
effectiveness may reveal other problems. If this is the case, managers must
evaluate the seriousness of the problem and its implications for the
organization and its goal set. Appropriate changes can then be made. If the
error is a failure to monitor the prices of a small, relatively insignificant
competitor, the organization may choose to do nothing. But if the organizations
very survival is in danger, a drastic overhaul of the goal set may be
necessary.
So, we have presented a framework
interrelating organizational effectiveness, performance, and productivity. The
primary value of this framework is its potential usefulness as a technique for
overall organizational control. This framework, however, encompasses the total
organization. As such, it can help managers monitor all of their activities and
successfully carry out the control function at the organizational level.
References:
1. Al-Darrab
I., “Relationships between productivity, efficiency, utilisation, and
quality” – 2008, Work Study: Vol. 49 No. 3, pp. 97-103.
2. Bernolak C., “Productivity
gainsharing” – 2008, Working Paper: No. EMD/16/E, International Labour
Organisation, Geneva, available at:
http://oracle02.ilo.org/dyn/empent/docs/F111PUB98_01/PUB98_01.htm
3. Moseng
B., and Rolstada S., “Success factors in the productivity process” – 2007, 10th
World Productivity Congress, available at: www.catriona.napier.ac.uk/resource/wpc10th/moseng.htm