Organisational Effectiveness — A Critique and Proposal

It may be well argued that in modern industrial society bureaucratic organisations are the predominant means of marshalling society's resources in order to produce desired goods and services. Because bureaucracies influence the creation and distribution of scarce wealth and resources, one must necessarily be interested in the assessment of their organisational utility. The commonly used evaluative concept of effectiveness is complex and requires careful definition. It is often couched in terms of financial measures like profit, profitability, return on investment, but we shall argue that these criteria are insufficient and moreover cannot be applied to all organisations. Clearly financial measures are necessary to a definition of organisational effectiveness but they are not sufficient in themselves. For example, a firm may enjoy a high rate of return on investment because of a monopoly power conferred upon it by society. Some adjustment must, however, be made for that matter in concluding about its effectiveness. Explicit research into the concept began to emerge about 20 years ago but the term remains controversial and still somewhat ill‐defined. As Steers (1977) pointed out, there is no generally recognised theory on the concept, no agreement on its criteria of measurement, determinants and influences.