What is the concept of organizational performance?

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The concept of organizational performance is the comparison of an organization's goals and objectives with its actual performance in three distinct areas—financial performance, market performance, and shareholder value. Financial performance refers to an organization's results with regard to return on investment and return on assets. The market performance refers to...

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a company's ability to make and distribute their outputs in the most cost effective way and to set a price that returns a reasonable amount to suppliers. In addition, market performance refers to the ability of a company to meet the demands and expectations of consumers regarding the good or service produced. Some organizations also measure market performance with regard to how great a share of the market they possess relative to their competitors, and some measure their ability to achieve social responsibility (or stewardship of the environment and responsibility to the community). Finally,shareholder value refers to the value of what a person holding shares in the firm possesses. These three measures determine whether an organization is meeting its goals.

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The concept of organizational performance is connected to the ideas of effectiveness and efficiency.  A business organization must produce the right things and it must produce them using the fewest possible inputs if it is to have a strong organizational performance.

Businesses typically try to perform well in a number of areas of organization.  First, they try to perform well financially.  That is, they need to realize a good return on their investment.  They need to add as much value as possible in their production process.   Second, they try to perform well in terms of the market.  What this means is that they must gain as much market share as they can (consistent with the goals of their firm).  They must be producing a product that is in demand and they must be producing it at a price that allows them to compete on the market.  Finally, they need to perform well in terms of creating value for their shareholders.  They need to make money that can be distributed in the form of dividends.  They also need to have their stock price rise at a reasonable pace.

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What are the concepts of organizational structure and performance?

The concepts of organizational structure and performance include departmentalization, delegation, the scalar principle or chain-of-command (authority is defined in the organization), centralization, decentralization, and the contingency approach.

Departmentalization is the grouping of related functions into a departmental unit to achieve efficiency of operations. Departmentalization can include line structure, line and staff structure, and a matrix structure. The matrix structure can include an employee working on projects managed by people not from his or her own department.

Departmentalization as part of organizational structure and performance can be according to product or service category. Therefore, all employees who work on a particular product, for example, leather coats for a clothing manufacturer would be grouped under this department. All employees who are part of taking care of the needs of customers who've purchased products would be in the Customer Service department.

Performance, in fact enhanced performance, in a company is achieved when those best suited to a job are slotted into the appropriate department that can take advantage of the employee's skills and talents. Therefore, company management must analyze their organizational structure and make decisions on who best fits within the departments they've put in place. The end result is properly organized, efficient, productive departments, with  employees in each department achieving their career goals, while helping the business enterprise achieve their goals.

Decentralization is something that can promote creativity and new ways of doing things in a business organization. Within a decentralized organization authority and responsibilities are assigned to lower levels of the organization, who are overseen by senior management. Those in these lower levels have more decision-making capabilities than those in lower levels in a centralized organization.

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