Measure What Really Matters
Many executives see organizational effectiveness as an outcome of various factors such as employee engagement, information technology and strategy and a culture inspiring innovation and creativity within companies. Furthermore, executive are encouraged to improve the bottom line and increase organizational performance. For instance, every executive is held to the grindstone of maximizing financial and non-financial measures - their careers are tied to performance measures. Every executive also knows that financial and non-financial measures can illustrate whether the company’s culture, employee engagement, information technology and strategy are contributing to bottom-line improvement. Thus, organizational effectiveness can be achieved when executives can effectively measure the effectiveness of these four factors.
Measuring the Effectiveness of Organizational Culture in Companies
The global markets represent cross cultural settings and require top management executives who can adapt to various environments successfully. In fact, there is a global need to evaluate organizational culture to accomplish sustainable competitiveness in global markets. Organizational culture includes three dimensions:
- Collaboration
- Trust
- Learning
These three cultural aspects play a critical role in enhancing the effectiveness of organizational knowledge cycles. Collaboration provides a shared understanding about the current issues and problems among employees, which helps to generate new ideas within companies. Trust towards their leader’s decisions is also a necessary precursor to create new knowledge. Moreover, the amount of time spent learning is positively related with the amount of knowledge gained, shared and implemented. To effectively lead organizational culture, executives need to accurately measure organizational culture within companies.
In the first step, the measurement items of collaboration should basically evaluate the degree to which employees actively support and provide significant contributions to each other in their work. In doing this, the sample statements in the survey can be:
- In my company, members are supportive
- In my company, members are helpful
In the second step, executives should investigate trust in a company’s capacity to maintain the volume of reciprocal faith in terms of behaviors and intentions. In doing this, the sample statements in the survey can be:
- In my company, members work toward organizational goals
- In my company, members have reciprocal faith in others’ ability
In the third step, in examining the cultural aspect of learning, executives should evaluate the extent to which learning is motivated within the workplace. In doing this, the sample statements in the survey can be:
- In my company, various social mechanisms such as clubs and community gatherings are provided
- In my company, members are satisfied by the contents of job training or self-development programs
Therefore, success in today’s global business environment can be more effective when executives can effectively gauge the effectiveness of culture in companies. Building on these three aspects of organizational culture, companies can attempt to continuously innovate and create new and valuable services through applying new ideas and knowledge.
Measuring Employee Engagement in Companies
Executives must create a climate of engagement and openness for individuals to convert individual knowledge into valuable resources for their companies to close the performance gap and help companies prosper. The burden of success when effective implementation of knowledge conversion is concerned is heavily dependent on the capabilities of the company’s executives to engage employees in decision making.
Executives are aware that engaging employees is a key activity for companies to enhance knowledge. Executives and their expert groups and/or steering committees are the ones who can delegate decisions and improve engagement around the company. Success, therefore, is dependent upon how executives formulated their organization’s mission, vision and strategy to enhance innovation and new idea generation.
The key is for executives to inculcate employee engagement within companies so that information can be found and used instantaneously. In doing this, they create an inspiring view of future and motivate employees to develop relationships in companies so as to provide further information and opportunities for all members and subsequently create valuable resources for a company as a whole.
To measure the effectiveness of employee engagement, the measurement items should basically evaluate the degree to which employees actively support and provide significant contributions to each other in their work. In doing this, the sample statements in the survey can be:
- In my company, members are satisfied by the degree of collaboration between departments
- In my company, there is a willingness to accept responsibility for failure
As a consequence, in today’s global business environments, companies will increasingly need more executives to effectively engage employees in decision making.
Measuring the Effectiveness of Organizational Strategy in Companies
Organizational strategy is a pattern of decisions and plans, which are directed at interacting with the external and internal environment and effectively and efficiently allocating capabilities to improve sales and increase profitability. Scholars found that strategy embraces four aspects:
- Analysis
- Futurity
- Defensiveness
- Pro-activeness
The first aspect, “analysis”, focuses on identifying the best solutions for the organizational problem. Therefore, executives should evaluate the level of problem analyzing, which provides the best solutions for problems and develops a more efficient method to allocate organizational resources. In doing this, the sample measurements in the survey can be:
- In my company, there is a limited use of information systems to support decision making
- In my company, there is a comprehensive analysis undertaken when confronted with an important decision
The second aspect “futurity” emphasizes the effectiveness of long-term decisions. In assessing futurity strategy, executives should explore the degree of emphasis on both longterm effectiveness and short-term efficiency in decision-making process within companies. In doing this, the sample measurements in the survey can be:
- In my company, there are key indicators of operations forecasted
- In my company, there are formal tracking of significant and general trends
The third aspect, “defensiveness” can also be applied by executives by taking into account the objectives of strategic implication that seeks to decrease organizational costs and redundancies. To capture defensiveness, this strategy is operationally determined as the extent to which companies undertake defensive behaviors to enhance efficiency and reduce existing costs. In doing this, the sample measurements in the survey can be:
- In my company, there are regular modifications to the service technology
- In my company, there is a use of current management techniques to ensure that we move smoothly at the required level
The fourth aspect, “pro-activeness” incorporates a pro-active strategy that identifies the opportunities that are available but not always addressed in the business, the global environment and the political regulation changes. In order to examine pro-activeness, executives should investigate companies’ capacity to continuously search for emerging opportunities and changing trends in external environments and actively respond to them. In doing this, the sample measurements in the survey can be:
- In my company, there is a constant search for new opportunities
- In my company, there is a strategic elimination of those operations that are no longer profitable in later stages of life cycles
Thus, executives can now see how to visualize organizational strategy and subsequently cultivate an effective strategic decision-making process and add to technological initiatives, which will improve sales and profitability within company.
Measuring the Effectiveness of Information Technology in Companies
Executives can use information technology as communication mechanism manifestation and deployment and decision-aid technology. Communication technology disseminates protocols among members and allows them to be knowledgeable of their progresses toward meeting determined milestones stated in the strategic plans. Therefore, executives should measure the following parameters to evaluate the effectiveness of communication technology:
- How technology supports for collaborative work regardless of time and place
- How technology supports for communication among employees
Decision-aid technology also develops cohesive infrastructures to store and retrieve knowledge to enable employees in creating more innovative solutions to problems and managing operational risks. Ergo, decision-aid technology supports knowledge by enabling interactions and providing more comprehensive and effective solutions to solve organizational problems. Therefore, executives should measure the following parameters to evaluate the effectiveness of decision-aid technology:
- How technology supports for searching for accessing necessary information
- How technology supports for systematic storing of knowledge
Hence, this section of the article offers novel insights into how the effectiveness of information technology can be measured by quantifiable metrics and measurements.
Improving Organizational Performance with Internal Characteristics
This article uncovers how organizational effectiveness can be affected by substantial internal characteristics of companies such as organizational culture, employee engagement, information technology and most importantly, organizational strategy. My contribution to the literature and practice lies in presenting a link between the measurement of these internal characteristics and effectiveness that incorporates the activities that may impact the effectiveness of managers to enhance their capabilities to effectively play their roles within companies. In fact, when knowledge has been highlighted as a strategic resource for improving business performance, companies need to measure their capabilities to identify and meet their needs in today’s business environment. Therefore, I suggest executives working in companies should consider the importance of these quantifiable metrics in measuring the effectiveness of organizational factors and subsequently improving performance within companies.
About the Author: Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to HR.com, People + Strategy, Consulting Magazine and The Canadian Business Journal and his work has been featured in these top-flight business publications.
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