Internal Process Approach
In the internal process approach, effectiveness Opens in new window is measured as internal organizational health and efficiency. This approach does not consider the external environment.
The effectiveness of an organization depends on departmental activities that should mesh with one another to ensure high productivity. In short, effective organizations have a well-oiled internal process.
From the point of view of the internal process approach, the indicators of an effective organization are as follows:
- Team spirit and group loyalty.
- A positive work climate coupled with a strong and vibrant culture.
- A climate of trust and confidence.
- Excellent two-way communication between workers and management.
- Undistorted horizontal and vertical communication in the organizations.
- Managerial rewards based on performance, growth and development of subordinates.
- Managerial performance judged on the creation of effective working group.
- Conflicts if any resolved in the interest of the organization.
The proponents of the Internal Process Model are writers from the human relations approach like Chris Argyris Opens in new window, Warren G Bennis Opens in new window, Rensis Likert Opens in new window, and Richard Beckhard Opens in new window who have emphasized the connection between human resources and effectiveness.
Evan William developed a method to measure the economic efficiency of the internal process approach. The method consists of two steps:
- 1st Step: The first step identifies the financial cost of inputs (I), Transformation (T) and Outputs (O).
- 2nd Step: In the second step, the three variables I, T and O are combined in ratios to evaluate various aspects of organizational performance.
The most popular assessment of efficiency is:
In a manufacturing organization, this would be the number of units produced per employee. The O/I ratio indicates the overall financial efficiency of an organization.
The financial approach to efficiency is useful for measuring the performance of departments like manufacturing. The manufacturing efficiency of an organization enables it to become a low cost producer.
The internal process approach has many shortcomings:
- The evaluations of internal factors are often subjective because many inputs are not quantifiable.
- External factors are not evaluated; therefore outcomes got could be incomplete.
Therefore, managers must be aware that the internal process approach represents a limited view of organizational effectiveness. However, the process does have something to offer and managers must take note of this.