Groups can have positive and negative impacts on the effectiveness of organizations. Much depends, of course, on what the organization's purpose is, on the culture of the organization, the makeup and structure of the group, the "mission" the group is charged with, and the personalities within the group. Other variables can play a part, too.
Sometimes an organization's purpose requires highly individual work, for example an accounting firm. Too much, and perhaps any, group work is likely to have a negative effect on such a firm's effectiveness. On the other hand, in an organization that produces technological products, groups that focus on research and development are likely to have a positive impact on the organization's ability to conceive of and create new products.
In the cases in which the culture of the organization is highly formal, the people who work for the organization might not be able to function well in groups, and much time must be spent in hoping that a group can coalesce and form a sense of community. In a less formal organizational culture, where people communicate freely horizontally and vertically, a group is more likely to be productive and effective.
How great a contribution a group may have to the organization can be a function of what the group is expected to do. There is a trend today to create groups, just because it is a trend, groups that have no clear mission or goal, and this trend has detracted from organizational effectiveness. Much time is lost in group meetings with no agenda or accomplishment to work towards. If there is a clearly stated goal, a clear process to implement that goal, and clearly stated responsibilities within the group, certainly, a group can be of great use to the organization.
Which employees comprise the group and what kinds of personalities they have also have a bearing on organizational effectiveness. For instance, a group that consists of employees from different departments can contribute significantly through the exchange of new ideas and perspectives, while a group that is composed of employees only in one department may or may not be able to create that synergy. People who are introverted do not function well in groups, and are often best left to themselves to envision and create. So, personalities play a powerful role in group effectiveness.
So, in response to the question, groups are a two-edged sword, in some instances helping an organization to be more productive, more profitable, and more effective, while in other instances, they can bog down an organization a great deal, detracting from the success and effectiveness of an organization.