What is Evaluation of Organisational Strategy?

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By: Site Engineer, Staff

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Evaluation of organizational strategies is concerned with testing the effectiveness and efficiency of strategies. Through operational and strategic controls, the organizational strategists carry out the setting of standards, measurement of performance and evaluation of existing strategies, and then initiate corrective action.

The eventual result of strategy evaluation is the adjustment of organizational strategies, reformulation of organizational goals and objectives, or adaptation of plans.

Strategy Evaluation Process

The final stage in the strategic management process is to evaluate and control an organization’s performance. Organizational management must make sure that strategies are generating the performance necessary to achieve set goals and objectives.

The fundamental gains of effective and efficient strategy evaluation and control are:

  • Achievement of objectives and goals.
  • Provision of clear guidelines, concerning expected performance from personnel.
  • The direction of the energy of employees towards performance to expectations.

Steps of Strategy Evaluation and Control Process

Strategy evaluation and control aim to examine the effectiveness and efficiency of organizational strategy in achieving set goals and objectives. Therefore, organizational strategy evaluation and control may be seen as the process of determining the effectiveness and efficiency of a given organizational strategy in achieving set organizational goals and objectives and taking corrective action whenever necessary.

In strategy evaluation, the organization tries to find out whether the strategy is formulated and implemented is guiding the organization towards the intended objectives.

Evaluation and control of organizational strategy do the critical job of keeping a company on the right line or course. It is a means for letting organizational strategists know whether or not their strategies are producing the desired effects.

Through the process of strategy evaluation and control, answers to the following questions are provided.

  1. Is the present strategy guiding the company towards its set goals and objectives?
  2. Are the company and its executives doing the appropriate things?
  3. Is there any need to change and reformulate the present organizational strategy?
  4. Are the assumptions made during the formulation of organizational strategy correct?
  5. How is the company performing, quantitatively and qualitatively?
  6. Is the organization adhering to the set time-frames?
  7. Are the organization’s human and non-human resources efficiently and properly utilized?
  8. What are the essential and necessary considerations needed to ensure that organizational resources are efficiently and properly utilized to achieve set goals and objectives?

Questions (1) to (4) concern the more general issues of strategy evaluation and are handled by the application of strategic control approaches, (which involves premises control, implementation control, strategic surveillance and special alert control).

Questions (5) to (8) concern the performance of task issues, and are handled by operational control approaches.

Note that operational control is concerned with the allocation and use of human and non-human resources through evaluation of the performance of organizational units such as divisions to assess their contribution to the achievement of set organizational goals and objectives.

The general process of strategy evaluation as has been stated previously entails:

  • Analyzing deviations between standards and measures of performance.
  • Taking necessary corrective action.
  • Setting standards of organizational performance.
  • Measuring performance.

The organizational strategy must be responsive to changing conditions. After implementing a strategy, strategic evaluation and control are necessary to keep the organizational strategy on track and to make adjustments for environmental changes. Organizational strategies need a continuous evaluation program to keep organizational performance on the track.

Evaluation and Assessment of Organizational Effectiveness

A major source of disagreement in the evaluation of organizational effectiveness has been on the appropriate level of analysis for measuring the construct. Generally, four major levels are often identified.

These are:

  • The individual level.
  • The submit level.
  • The organizational level.
  • The organizational-environment level.

The debates over the domain of activity (models) and the level of analysis have generated so much heat that some authors have suggested that the concept of effectiveness has no inherent meaning and should be abandoned as a research topic.

Also, the appropriate level of analysis for measuring organizational effectiveness may depend on organizational characteristics such as the level of uncertainty and environmental turbulence, the consistency being considered, or the stage in the lifecycle of the organization.

Since the appropriateness of a particular level of analysis may vary as a function of those characteristics, the level of analysis should not be selected based on convenience or researchers’ preference.

This argument is also true about which model of organizational effectiveness is most appropriate. A conscious selection of the level of analysis and models of organizational effectiveness should be made in organizational research. However, the importance of using the individual as the most appropriate unit of analysis has been stressed.

The dynamic relationships between individual behavior and organizational effectiveness have largely been ignored.

Some scholars believed that the effectiveness of an organization should be viewed in submits. Organizations can be effective in one domain but ineffective in another. Achieving effectiveness in one domain may militate against effectiveness in other domains.

Other evaluation methods of organizational effectiveness seem to bring to light the importance of distinguishing the construct in terms of economic and behavioral indices. Hence, we talk of the organization in terms of its economic behavioral effectiveness.

The economic index includes growth in sales net profit; total production decline in production, and financial loss due to errors. The behavioral index includes morale, anxiety, manpower acquisition, employee satisfaction, interpersonal relations, interdepartmental relations, manpower utilization, and manpower retention. It is from these two broad perspectives that most studies view the concept of organizational effectiveness.

There are eight problems considered important in measuring organizational effectiveness as they affect our understanding and investigation of the concept.

These are enumerated as follows:

  • Multiple Criteria: Even though this is often considered a strength of organizational effectiveness, it can, however, be a major weakness, especially if the various criteria conflict with one another.
  • The Precision of Measurement: This problem has to do with the accuracy and consistency of the measures of effectiveness over time.
  • Generalisability: How widely can we generalize the selected evaluation criteria, to other organizations’ situations, etc.
  • Theoretical Relevance: The theoretical relevance of most of the models o£ organizational effectiveness is also in question. To be valuable from a theoretical standpoint, the model must increase our understanding of organizational behavior and business management. It must also assist in making predictions about future behavior.
  • Level of Analysis: Many models of effectiveness deal exclusively with the macro level, they discuss organization-wide phenomena as they relate to effectiveness. They, however, ignore the critical relationship between individual behavior and the larger issue of organizational effectiveness.
  • Construct Validity: This creates the problem of whether the construct used is measuring what it purports to measure. Steers noted that many of the effectiveness criteria are only distantly related. For instance, productivity and satisfaction have frequently been used as two components of effectiveness; yet researches have shown that these two variables are often not strongly related to each other.
  • Criterion Stability: This implies the stability of the evaluation criteria over time. It is known that the criteria used to evaluate effectiveness at one time may be inappropriate or misleading at another time.
  • Time Perspective: This refers to the categorization into long-run short-run and intermediate criteria. The time perspective problem is cyclical and is all about how to balance the different time horizons to maximize stability and growth over time.

 

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