International Journal of Business and Behavioral Sciences Vol. 2, No.9; September 2012 21 Connotation of Organizational Effectiveness and Factors Affecting It *Dr. Muhammad Tariq Khan 1 , Dr. Naseer Ahmed Khan 2 , Sheraz Ahmed 3 , & Mahfooz Ali 3 1 Head, Department of Management Sciences University of Haripur, PAKISTAN, 2 Postmaster General, Pakistan Post, Rawalpindi, PAKISTAN, 3 Lecturer, Department of Management Sciences University of Haripur, PAKISTAN *tariq_phd@yahoo.com Abstract Organizational effectiveness is critical to success in any economy. It is commonly referred when discussing organizations that have achieved maximum performance. Organizational effectiveness, in general, is based on the integration of the goals of the organization and the employees. Neither of them should be viewed in isolation. There are some factors that may affect the organizational effectiveness such as: performance, motivation, organizational environment, managerial expertise, creative synergy, multi-ethnic and racial background. This article is focused to explain concept of organizational effectiveness with the elaboration of factors affecting it. 1. Introduction Organizational effectiveness (OE) is critical to success in any economy. Organizational effectiveness has been identified, in earlier theories, with 'maximization of profits' or 'high productivity' or 'efficient service' and good employees morale. OE is commonly referred to when discussing organizations that have achieved maximum performance. In order to achieve increased and sustainable business results, organizations need to execute strategy and engage employees. To create organizational effectiveness, business leaders need to focus on aligning and engaging their people, the people management systems, the structure and capabilities (including organizational culture) to the strategy. This engagement results in higher financial performance, higher customer satisfaction and higher employee retention. An organization that can sustain such alignment will achieve increased business results. Organization performance is often measured by effectiveness. According to some researchers organizational effectiveness, in general, is based on the integration of the goals of the organization and the employees. But neither of them should be viewed in isolation. However an organization can be made effective not only by augmenting productivity but also by coordinating and developing a system for the efficient handling of employees who are deeply committed to the objectives of the organization. 2. Definition and Explanation of Key Terms a) Organization Organization is composed of two or more people who work together in a structured way to achieve a specific goal or set of goals (Stoner et al). According to Aluko (2003) an organization is defined as basically a structure for carrying out a particular social activity on a regular basis. Generally it has the following features: - A specific goal - A defined membership - Rules of behavior or conduct and authority relationships. Malik et al (2011) mentioned in their paper that a composition of people, which formulate independent business identity for some specific purpose, is commonly known as, organization and getting desired outcome within defined resources is treated as effectiveness. b) Effectiveness EffeĐtiǀeŶess is the aďilitLJ to deteƌŵiŶe appƌopƌiate oďjeĐtiǀes: doiŶg the ƌight thiŶgs ;“toŶeƌ et alͿ. AĐĐoƌdiŶg to “Đott et al ;ϮϬϬϴͿ at its siŵplest, effeĐtiǀeŶess is the likelihood of aĐhieǀiŶg the iŶteŶded objectives of aŶ aĐtiǀitLJ, poliĐLJ oƌ otheƌ iŶteƌǀeŶtioŶ. TheLJ also Ƌuoted aŶotheƌ defiŶitioŶ as: the edžteŶt to ǁhiĐh a deǀelopŵeŶt iŶteƌǀeŶtioŶ has attaiŶed, oƌ is edžpeĐted to attaiŶ, its ƌeleǀaŶt oďjeĐtiǀes.