An organizational effectiveness diagnostic is a survey-based tool used to rigorously and systematically assess an organization's relative strengths and weaknesses in each area central to organizational effectiveness (e.g. structure, systems, and culture).
How it's used
Organizational effectiveness is essential to a nonprofit's ability to implement its strategy and create impact. Building on Bain & Company research, Bridgespan has found that effective organizations demonstrate strengths in five essential areas: 1) leadership, 2) decision-making and structure (see: decision rights), 3) people (see: talent assessment and development; succession planning), 4) work processes and systems, and 5) culture. (Other organizational diagnostic tools such as McKinsey's Organizational Capacity Assessment Tool cover similar topics but may use slightly different categories.) Identifying an organization's strengths and weaknesses in these areas through an organizational effectiveness diagnostic enables managers to maximize impact by developing action plans to strengthen weaknesses and maximize strengths.
To implement an organizational effectiveness diagnostic, a nonprofit should select a specific tool to use, and may want to engage an external facilitator. Broadly, the process follows four stages:
- Collect data: Have senior leaders complete a survey with probing questions to understand the organization's strengths and weaknesses. The diagnostic would aim to answer critical questions such as:
- Is everyone in our organization clear on the strategic priorities that will enable us to achieve our desired impact? (Diagnostic question, e.g., We have translated our strategic priorities into specific initiatives with clear milestones and accountabilities.)
- Who in our organization must work closely together, and does our structure let them do so? (e.g., Reporting lines for individuals are well understood.)
- Do we have the right people and capabilities, and do their goals and measures align? (e.g., As an organization, we put the right people in the right jobs.)
- Analyze results: Evaluate survey results to diagnose the nonprofit's core organizational strengths and areas for growth. Most organizational diagnostic tools show relative strengths and weaknesses and also allow comparisons with other nonprofits that have used the diagnostic.
- Develop options: Building from the diagnostic, develop options the organization might pursue to make critical changes to address weaknesses or build on strengths.
- Plan implementation: Evaluate the options, taking into account ease of implementation and degree of improvement. Select the most important changes to make. It's important to note that strengths in all five categories (decision making and structure, people, work processes and systems, and culture) are essential for a highly effective organization.
The Effective Organization: Five Questions to Translate Leadership into Strong Management
Bridgespan's article on the importance of organizational effectiveness and its critical components.
Organizational Capacity Assessment Tool
A free online tool published by Venture Philanthropy Partners and McKinsey & Company to help nonprofits assess organizational capacity, strengths, and weaknesses. VPP and McKinsey measure nonprofit organizational capacity across seven areas: culture, aspirations, strategies, organizational skills, human resources, systems and infrastructure, and organizational structure.
Effective Capacity Building in Nonprofit Organizations
For a set of technical tools that are boarder in scope, see this free online tool published by Venture Philanthropy Partners and McKinsey & Company to help nonprofits assess organizational capacity, strengths, and weaknesses. VPP and McKinsey measure nonprofit organizational capacity across seven areas: culture, aspirations, strategies, organizational skills, human resources, systems and infrastructure, and organizational structure.
Examples and case studies
Strategies for Changing Your Organization's Culture
This Bridgespan article examines how culture can positively or negatively influence an organization's efforts to change. The article examines two major organizational transformations. The first examines a large nonprofit merger. The second case study follows the attempts of a new CEO to redirect the program activities of an established nonprofit. Through these two case studies, the article reveals how organizations must adapt their culture to support needed change.
Boys Town: Clarifying Decision-Making Roles Between Headquarters and Sites
This case study examines a decision making shift at Boys Town, a nonprofit serving at-risk youth. While Boys Town's traditional, centralized approach to decision making had served the organization well in the past, it had become increasingly slow and cumbersome. The article follows Boy's Town's adoption of the RAPID decision making tool to allow more decisions to be made closer to the source of the action and the outcome.