1. LEARNING AND ORGANIZATIONAL
EFFECTIVENESS: A SYSTEMS PERSPECTIVE
The challenge for leaders today is to create and develop the capability of their organization.
Leaders must perceive and manage their organization as a dynamic, open system where
learning is the core competence underlying innovation, growth, and sustainability. Creating a
culture of learning is the first work of leadership. This article presents a practical framework in
which to consider organizational effectiveness, emphasizing the critical role of systems thinking
and learning theory in organizational development.
THE EMINENT SCHOLAR James MacGregor Burns vided a method, the balanced scorecard, for capturing
(1978) opined, “Leadership is one of the most observed and organizing the results that an organization generates.
and least understood phenomena on earth” (p. 1). With- The balanced scorecard is an innovative and holistic
out hesitation, one can suggest that, in this regard, leader- approach to organizational outcomes management. The
ship shares company with the phrase organizational premise of the balanced scorecard acknowledges the lim-
effectiveness. There is no single, universally accepted defi- itations of measuring organizational effectiveness solely
nition of organizational effectiveness, though two schools in terms of financial metrics, which are generally consid-
of thought have contributed significantly to the develop- ered to be lagging indicators of performance. Instead, the
ment of a coherent framework for considering the sub- scorecard examines organizational performance from
ject. The first posits that an effective organization is one four vantage points:
that consistently achieves its goals. Olmstead’s definition
• The financial perspective.
(2002) characterizes this perspective by defining orga-
nizational effectiveness as “the accomplishment of mis- • The customer perspective.
sions or the achievement of objectives” (p. 14). The second • The internal process perspective.
school of thought suggests that an organization is effec- • The innovation and learning perspective.
tive when it acquires and develops its competencies, and
thus its capacity, to perform at a high level of accomplish- The financial perspective, though important, is “bal-
ment. From this viewpoint, an effective organization is anced” by incorporating a broader set of measures associ-
one whose strategy, structure, processes, and people are ated with customer behavior, process management, and
optimally aligned such that, all things being equal, the learning. These four perspectives represent domains of
achievement of results is predictable, if not expected. measurement that can be customized and weighted to
These two perspectives on organizational effectiveness reflect the specific nature of a business within the context
represent a distinction without a difference. They present of its business cycle and competitive environment. For
two paradigms or mental models that in reality are sim- example, for a semiconductor company like Intel, there
ply a means-end model of performance. Arguments that will be periods of time when measures of innovation such
suggest that one model is more relevant or correct than as patents and new product introductions will the most
the other are little more than academic exercises. important indicator of the future prospects of the com-
Two seminal articles have shaped modern thinking pany. For a retailer of clothing, one is likely to see more
about organizational effectiveness and illustrate this emphasis placed on same-store sales and customer service
means-end relationship. Kaplan and Norton (1993) pro- as key performance indicators. Recently some authors
Performance Improvement, 48, no. 1, January 2009
©2009 International Society for Performance Improvement
Published online in Wiley InterScience (www.interscience.wiley.com) • DOI: 10.1002/pfi.20043 5
2. have suggested a fifth domain of performance measure-
ment, social responsibility, reflecting an increased aware-
Visionary leaders combine
ness that all organizations exist within a larger societal the elements of competence,
system to which they are eventually accountable.
Waterman, Peters, and Phillips (1980) present the 7-S adaptability, teamwork, and
framework, a holistic model of how an organization
should be conceptualized and designed to be effective. a commitment to lifelong
Their article was in reaction to the heavy emphasis
placed on structure as the key design variable of organi-
learning into an amalgam of
zational performance, a bias that still exists in many strategic decisions, processes,
organizations. The 7-S model suggests that the conse-
quent performance of an organization is a result of the and behaviors that results
proper alignment and seamless interaction of seven key
elements: in an organization that
• Overarching or superordinate goals. consistently outperforms
• Business strategy.
• Organizational structure.
• Skills and knowledge of its workforce.
• Staffing policies and practices.
• Work and management systems and processes.
• Style, culture, and workplace ambience. ness: an organization is effective to the extent that it
develops and adapts its systems, processes, and behavior
It is the proper development and alignment of these for the purpose of consistent achievement of a balanced
seven organizational variables that creates the potential for set of performance goals in virtual perpetuity.
performance success. The 7-S model has spawned many Effective organizations acquire, develop, and aggres-
derivative models that form the basis of the design and sively manage to achieve results in such a manner that the
approach used by organization development practitioners organization is sustainable despite turbulence in its envi-
to systematically build the competence and capacity of ronment. As Collins and Porras (1994) aptly wrote, they
organizations. An added feature of models of this form is are “built to last.” The success of these organizations is not
their utility in the diagnosis of performance problems by a matter of luck or good timing. As I describe in this arti-
providing discrete units of analysis for assessment. cle, visionary leaders combine the elements of compe-
This discussion brings us to a working definition of tence, adaptability, teamwork, and a commitment to
organizational effectiveness that bridges the two comple- lifelong learning into an amalgam of strategic decisions,
mentary perspectives. A traditional definition of an orga- processes, and behaviors that results in an organization
nization is that of a complex network of interdependent that consistently outperforms its competition.
relationships among people engaged in purposeful activ-
ity (Olmstead, 2002). However an organization is more
than people with purpose. I offer that an organization THE OPEN SYSTEM
is best conceived as the host for the elements of the Ludwig von Bertalanffy (1968) inspired my concept of the
7-S framework. Although it is abstract, this definition organization as a system when he described systems the-
conceptualizes an organization as a physical, social, and ory as the “general science of wholeness.” Systems theory
purpose-driven entity and provides a parallel with liv- rejects the temptation of reductionism by viewing the
ing, organic systems. Two central characteristics of all organization as an integrated whole rather than merely
living systems are their purposeful behavior and adapt- the sum of its parts. All systems have inputs (raw materi-
ability to changing environments for the purpose of sur- als) that are transformed through a series of linked
vival. It is this latter feature that stimulates the organism processes into outputs (products and services). A conse-
to gather data from its surroundings, reset its goals, alter quence results when consumers use the product or ser-
its form within certain physical limits, and modify its vice. The nature of the consequence then becomes a new
behavior. Inspired by the parallel with living organisms, I piece of data as an input “fed back” into the system (see
offer the following definition of organizational effective- Figure 1). For example, manufacturing companies gather
6 www.ispi.org • DOI: 10.1002/pfi • JANUARY 2009
3. FIGURE 1. GENERAL SYSTEMS THEORY
raw materials that are transformed through work
processes into saleable products. A customer’s purchase of
the product produces a positive or negative consequence.
When the consequence is relayed back to the company, a FIGURE 2. THE ORGANIZATIONAL SUBSYSTEMS
feedback loop is generated and, depending on the nature
of the consequence, the company’s members can choose
to maintain or change the product’s characteristics. In systems is replicated down to the smallest unit of the orga-
effect, the members learn and adapt. This cycle of trans- nization: the individual performer. It is the performance of
forming tangible and intangible raw materials into fin- hundreds of interdependent processing systems that ulti-
ished products and services that are purchased and used mately determines the success and survival of the orga-
by its customers is a daily occurrence in all varieties of nization. Significant disability occurs when the whole is
organizations. reduced to its parts; key relationships are pulled apart, and
I find it useful to conceptualize the organization as one performance is placed in jeopardy. It would be just as friv-
large “processing unit” whose primary purpose is to cre- olous to separate the human respiratory system from the
ate valuable products and services through a series of circulatory system.
interdependent and linked work processes. Each day,
knowledgeable and skillful people perform hundreds of Governance
simple and complex tasks within this large processing It is the function of organizational leaders to take pur-
unit. Each of these tasks is a minisystem or subsystem poseful, unified action in an environment of uncertainty
unto itself with inputs, outputs, and consequences. As (Olmstead, 2002). The governance system makes, directs,
illustrated in Figure 2, every organization serves as host to and audits the decisions and actions that provide this
four interrelated and overlapping subsystems: unity of purpose and guides the affairs of the orga-
• The governance subsystem. nization through uncertainty. The governance process
uses information it acquires from the external and inter-
• The management subsystem.
nal environment in the following ways:
• The work subsystem.
• The people subsystem. • Develop the organization’s mission, vision, and values.
• Formulate the organization’s goals and strategy.
Each of these four subsystems mimics the behavior of • Make major policy decisions.
the larger system in which it is nested. Each transforms raw
• Establish the core business areas and, in broad terms,
materials into outputs specific to their intended purpose.
its products and services.
Each subsystem has points of intersection with one another
(see Figure 3). This means that, for instance, products from • Audit all aspects of organizational performance.
the governance subsystem serve as inputs to each of the • Evaluate the performance of the organization’s senior
other three subsystems. Each subsystem receives and pro- management team.
vides data from each other, and all four receive and provide • Ensure leadership succession and the future viability of
data to the organization’s external environment. This is the organization.
the essence of the organization as an open system.
Furthermore, each subsystem comprises additional subsys- The individuals who execute the governance process
tems. This matrushka, or Russian doll, of a system-within- are typically members of a board of directors and often
Performance Improvement • Volume 48 • Number 1 • DOI: 10.1002/pfi 7
4. FIGURE 3. ORGANIZATIONAL PROCESSING SYSTEM
include senior managers. Ideally the governance team People
will include individuals from outside the organiza-
The people system influences the way people think, feel,
tion whose role is to provide a degree of independent
and act on the job. Typically associated with the human
resource department, the processes of the people system
Management are best designed, managed, and performed in partner-
ship with executives, line managers, and administrative
The management system implements the decisions made
staff to do the following:
by the governors. The management process transforms
the decisions of the governors into reality. The manage- • Create and manage the performance management
ment system uses information it acquires from the exter- system.
nal and internal environment in the following ways: • Define human resource policies and practices.
• Translate goals and strategy into operational plans. • Train and develop employees.
• Allocate organizational resources based on the plan. • Design and manage compensation and incentive
• Structure the organization for optimal performance. systems.
• Facilitate the day-to-day performance of employees. • Plan for the current and future workforce.
• Outsource functions not core to the organization’s • Plan staff and management succession.
competence. • Communicate essential information to all internal and
• Communicate key messages to all employees. external stakeholders
• Measure progress toward goal achievement.
The Integrated System at Work
Work It is axiomatic of all integrated dynamic living systems
that when one unit takes an action, another unit some-
The work system transforms raw materials into interme-
where else in the system is influenced. It is impossible to
diate and finished products and services. The system
describe the infinite number of interactions that take
includes people, and their tools and equipment, who exe-
place daily in complex organizations. The following sec-
cute the work processes and possess the requisite knowl-
tions describe three common interactions.
edge, skills, and personal attributes necessary to
accomplish the following:
Governance-People Subsystems Interaction. Establish-
• Optimally design lean and efficient work processes. ing an organization’s business strategy occurs in the gov-
• Define job responsibilities that support the work ernance subsystem but not in a vacuum. It is influenced
processes. by any number of external factors, including competitive
pressures, technological breakthroughs, and identified
• Establish work space policies, practices, and ergonomics.
market opportunities. The choices and decisions regard-
• Acquire and maintain the necessary work-associated ing a business strategy influence the people system in a
equipment, technology, and information systems. number of important ways. It determines who is hired,
• Measure work process performance in real time. what skills are needed, and what organizational structure
8 www.ispi.org • DOI: 10.1002/pfi • JANUARY 2009
5. best suits the implementation of the strategy. Similarly, loyalty, recruit and retain the best people, and deliver
people, through their creativity and innovation, may dis- better returns to their shareholders (DiBella 2001). Non-
cover new lines of business that offer the company oppor- profit organizations retain their relevance and reputation
tunities for unexpected revenue growth, resulting in the with clients and position themselves to be consistent
modification of a previously developed business plan. recipients of donations and grants. Organizations that
These ideas and proposed opportunities are raw material ignore the importance of learning as an essential core
for the governance system to process. competency suffer the consequences of inefficiency, stag-
nation, and cultural decline, which inevitably lead to the
Management-Work Subsystems Interaction. Work pro- demise of their enterprises. Sophisticated managers real-
cesses generate the products and services. The efficiency ize that measurable benefit is achieved when work and
and effectiveness of these processes are measured and learning are integrated. A number of theories and models
monitored by tools and metrics established by manage- of organizational learning appear in the literature, but
ment. The Japanese refer to this form of on-the-job, real- many use abstract concepts and jargon that do not assist
time monitoring as shop floor management. Shop floor managers in establishing learning as a tangible asset. It is
management allows the organization’s members to criti- essential that we demystify the concepts and move peo-
cally assess the performance of a work process and, if and ple’s understanding about learning from abstract con-
when variances from standard occur, to make adjust- cepts to the concrete and practical steps needed to build
ments as necessary. This is the essence of the total quality the systems, processes, and culture of a learning orga-
management (TQM) movement as it applies to a work nization (Lipshitz, Friedman, & Popper, 2007).
system. TQM is a management process with direct links Learning is a multifaceted subject. Learning, as I use
to the work system. the term, is grounded in constructivist theory wherein an
individual’s learning facilitates growth in his or her
Work-People Subsystems Interaction. The interaction knowledge, skill, wisdom, and mastery of a particular set
between work processes and individual contributors is so of processes. It is mastery that enables the individual to
subtle that it often is taken for granted. Processes are sets innovate, solve problems, and alter his or her behaviors in
of work steps executed by trained and knowledgeable pursuit of improved performance. The integration, pro-
workers who perform those work steps with skill ranging ductivity, and performance of the people and processes
from novice to master level. The essence of the work- that operate within the four organizational subsystems
people interaction is the alignment of process, technol- depend on the quality and integrity of the learning that
ogy, equipment, and talent. Misalignment commonly occurs within the organization.
occurs when new technology is introduced to the work- An essential building block of organizational effective-
place and worker training is not provided. ness is the competence of the individual and his or her
A basic premise of organizational effectiveness is that team members. Although many authors use the terms
all four subsystems must function as one fully integrated competency and competence interchangeably, I suggest a
and aligned processing system. A principal factor in distinction is warranted. Knowledge, skills, and personal
ensuring this integration and alignment is the quality and attributes are competencies and represent the capacity,
extent of learning that takes place in the organization. capability, and potential of the individual to perform
The degree to which learning is rooted in the day-to-day effectively. Competence is the actual demonstration of
functioning of the organization determines its perfor- worthy performance or, stated in another way, the
mance and sustainability. achievement of intended purposes in an efficient manner
(Gilbert, 1978). Learning plays a direct and central role in
both the acquisition and development of competencies
and in competence, accomplished through a set of learn-
ing processes executed by individuals who possess and
During the past 20 years, interest in organizational learn- display certain personal attributes.
ing has grown substantially. This is generally attributed Learning is often described as natural phenomenon of
to the emergence of the knowledge economy, global living organisms. While this is true enough, nature has
competition, and technological innovations that require provided living organisms with four essential learning
people and organizations to anticipate and adapt to an processes that must be developed and effectively
ever-increasing pace of change. More specific incentives employed for optimal learning to take place:
for learning become evident on probing more deeply.
For-profit companies that focus on learning garner prof- • Scanning for and acquiring relevant data.
itable rewards from innovation, enjoy greater customer • Data synthesis and meaning making.
Performance Improvement • Volume 48 • Number 1 • DOI: 10.1002/pfi 9
6. • Dissemination of information to others.
Organizational dysfunction is
• Use of information to solve problems, make decisions,
and take appropriate action. a failure of the people in the
These processes are best executed when individuals pos- organization to learn
sess the following personal attributes:
• Sufficient desire and curiosity to scan for and acquire
data about the world around them generally and the
consequences of their work and behaviors specifically.
• Cognitive ability to interpret and make sense of the
data they acquire.
• Readiness to share information with others. Learning enables people engaged in the people subsys-
• Openness, rather than defensiveness and rationaliza- tem to do the following:
tion, when data are provided.
• Establish progressive human resource policies that
• Willingness to change and experiment with new
attract, retain, and inspire employees and will position
processes and behaviors.
the organization for success today and tomorrow.
It is the marriage of these four processes and personal • Create an organizational culture conducive to individ-
attributes that create the potential for making people ual and organizational growth and prosperity.
effective. As illustrated below, it is competency in learning • Determine and develop the knowledge and skill
that enables individuals and teams to make the proper resources of the organization.
decisions that align the subsystems.
Learning enables people engaged in the governance In the absence of even one of these learning processes or
subsystem to do the following: personal attributes, individual and organizational effective-
ness is suboptimized. Organizational dysfunction is a fail-
• Assess whether the organization’s mission, vision, and
ure of the people in the organization to learn effectively.
strategy are viable and competitive.
For optimal learning to occur, the organization must
• Improve the quality of socially responsible decision intentionally develop the tools, processes, mechanisms,
making. and culture that support individuals’ learning. It must
• Synthesize, interpret, and appropriately use new exhibit a commitment to (1) scanning the environment
information gathered from the environment. for data relevant to current and future success of the orga-
• Use performance data to determine the effectiveness of nization; (2) building the capacity to assess the reality that
the organization and its management team. surrounds it and interpret what is happening in the con-
text of the organization’s mission, vision, and goals in real
Learning enables people engaged in the management and practical terms; (3) making meaning and sense of the
subsystem to do the following: data that are collected; and (4) acting on the information
• Determine the optimal structure of the organization. to improve performance.
• More effectively manage the performance of
organizational members. CONCLUSION
• Make accurate decisions about outsourcing. In living systems, learning is a biological imperative, for
• Improve the quality of management problem solving. learning results in adaptation, alignment, renewal, and
survival. No less is true of the complex organizations
Learning enables people engaged in the work subsys- operating in today’s environment of threat, challenge, and
tem to do the following: opportunity. Although people are learners by nature,
• Assess and improve the quality of their performance. learning in organizations is rarely optimal. Accordingly,
performance improvement professionals and organiza-
• Distinguish well-performing work processes from
tional leaders must create the conditions that encourage
those that are dysfunctional or poorly performed.
people to learn in a systematic matter that will influence
• Identify the means by which work processes can be improved results in individual and team performance.
improved. This takes time, skill, and commitment. Ideally, organiza-
• Generate new ideas for valuable products and services. tions will hire people who are curious, open to feedback,
10 www.ispi.org • DOI: 10.1002/pfi • JANUARY 2009
7. willing to make changes, and unafraid of criticism. But References
like any other intervention, the creation of a learning
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and with the people it currently employs. Thus, it Collins, J.C., & Porras, J.I. (1994). Built to last. New York:
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task does not need to be onerous. It can begin by asking DiBella, A.J. (2001). Learning practices: Assessment and action
a few relatively simple but yet profoundly introspective for organizational improvement. Upper Saddle River, NJ:
Gilbert, T.F. (1978). Human competence: Engineering worthy
• How well do we scan the environment for information
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about our business?
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another adequate? development, applications. New York: Bazillier.
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• Are we willing to pilot new ideas?
• Do we promote and otherwise reward people for
Argyris, C. (1992). On organizational learning. Cambridge,
It is the organization’s demonstrated commitment to
ask and answer these questions and make the necessary
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NICHOLAS ANDREADIS, MD, is assistant professor for counselor education and counseling psy-
chology and coordinator of the master’s program in human resource development at Western
Michigan University. He also serves as associate dean of the Lee Honors College. His research
interests and consulting activities include organization development with a special emphasis on
performance technology, organizational learning systems, and program evaluation. He received
his BA from Kent State University and MD from Creighton University. He may be reached at
Performance Improvement • Volume 48 • Number 1 • DOI: 10.1002/pfi 11