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Four Modern Effectiveness Perspectives

Define the four modern effectiveness perspectives and explain how they are interrelated.

Organizations are always in pursuit to out-perform in the market and increase their productive and organizational effectiveness. There are certain modern effectiveness perspectives out of which four are commonly known. These are open system, organizational learning, and high performance work practice and stakeholder perspective. The Open system perspectives deal with the exchanges taking place between company and its environment. The examples of open system perspective are profitability, information processing, flexibility, adaptableness etc. This is one of the earliest perspectives of organizational effectiveness. It is also the most briefly explained perspective. The company's relationships with industry are a main focus of organizational effectiveness.

The second perspective is Organizational learning that does not only take into consideration the external environment and the relationships but also the capacity of the company to acquire and use the knowledge to its advantage. This perspective is also sometimes called the Knowledge Management perspective. This perspective is used by Google. Google believes in continuous organizational learning. The company acquires knowledge as the information enters the company through external sources. The best talent is hired by Google so that it can acquire the best knowledge available. It develops the most creative ideas using this knowledge. The company engages it employees to spend one-fifth time in thinking on new idea development.

The third perspective on organizational effectiveness is High performance work practice. This perspective is not only concerned with the company's output but also focuses on to develop a competitive advantage. Toyota has worked over years to develop a competitive advantage and now it is the most competitive in lean manufacturing.

The final perspective on organizational effectiveness is the Stakeholder perspective. The central point of this perspective is that the relations with stakeholders should be well maintained. This perspective is hence a broader perspective that covers supplier relations, investor relations, industry environment, legal stakeholders, employees, shareholders etc. However, this perspective does not ignore the importance of organizational resources. Wal-Mart has suffered from organizational issues due to unsatisfied stakeholders few months back. Therefore, observing this perspective can lead an organization to protect itself against legal actions.

Role of absorptive capacity

The organizations are not required only to gain information and learn new things. Simply by training and teaching employees new ideas, an organization cannot learn and be effective. The absorptive capacity of the company requires that the new knowledge that is being acquired should have a base knowledge that supports acquiring new knowledge. The employees should have the capacity to absorb, retain and apply the knowledge they are gaining. Hence the absorptive capacity is the ability of an individual, particularly an employee in this case, to know the value and worth of the information gathered so that he/she can use it to the benefit of an organization and adding value in the organization's activities.

What are the stocks of intellectual capital and how they contribute to flow in the organization in terms of organizational effectiveness?