Organizational Performance and Effectiveness

Abstract

While organizational performance is a much-discussed topic, the reality is that there is a good deal of confusion and argument regarding how it should be defined, conceptualized and measured. The traditional approach has been to focus on the ability of the organization to achieve its economic goals by using its available resources in both an efficient and effective manner using measures such as profitability, return on assets and equity, market share and sales growth; however, the growing importance of sustainability has led to arguments that non-financial factors, and the needs and expectations on stakeholders other than investors, should be considered in gauging organizational performance. This chapter begins by discussing conceptualizations of organizational performance and the most used financial and non-financial measures of performance, and then continues with guidance on establishing an organizational measurement performance system that can be used to track, evaluate and improve organizational performance. The chapter also discusses emerging frameworks for incorporating sustainability into performance measurement including the use of the “balanced scorecard”.

Keywords: organizations, organizational performance, organizational effectiveness