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Management effectiveness

Management Efficiency - the effectiveness of management activities.

The peculiarity of management is that managerial work does not directly create material values, but participates in their creation through the organization of labor of other persons, therefore, the results of managers' work are embodied in the results of the work of headed collectives and the organization as a whole.

The purpose of the organization is to achieve maximum results of production activities at minimum cost. Therefore, the effectiveness of the organization’s management is manifested in the efficiency of production. The effectiveness of management shows the extent to which managers realize the goals of the organization, whether high production results are achieved at minimal cost.

T.O. management effectiveness - This is the management of the enterprise with minimal costs and maximum results.

When assessing the effectiveness of management, it is necessary to give answers to 2 questions:

1. What results were achieved in the management process? (What did the managed system do?)

2. How did the management system achieve these results? (At what cost the results were obtained)

In this regard, distinguish between external and internal management effectiveness.

External efficiency determined by the results of activities:

- the degree to which the organization’s goals are achieved

- compliance of the organization with the requirements of the external environment

- the degree of use of opportunities provided by the external environment

Internal management effectiveness Is profitability, i.e. the ability to use the available resources in the best (optimal) way to achieve your goals. This type of efficiency reflects the degree of use of the components of the internal environment of the organization, including production, financial, personnel and other opportunities.

Management effectiveness consists of several elements:

1. Economic efficiency - is expressed in quantitative form and is measured in cost or in-kind meters - the maximum production output per unit of spent funds (capital goods and living labor).

2. Social management effectiveness - increasing the satisfaction of workers' needs.

The organization is an element of the world around and in addition to the implementation of economic goals, it must bear social responsibility to society. Most clearly the influence of the economic efficiency of the enterprise on the social environment can be traced among city-forming enterprises. It is necessary to strive for the growth of not only economic, but also social effectiveness of management. In practice, these two elements are very closely interconnected.

3. Socio-economic efficiency - has a complex nature combining economic benefits and social results. So, with the improvement of the economic situation in the organization, social satisfaction also improves, and vice versa, with an increase in social satisfaction, economic efficiency increases. For example, increasing the profitability of an enterprise leads to an increase in wages and, as a result, to employee satisfaction. Increasing social satisfaction, in turn, helps to increase productivity and improve the quality of labor and, as a result, increases profitability, etc.

T.O. management should ensure the growth of socio-economic efficiency.

The essence, content of the concept of "management effectiveness". Signs of effective management as a managerial performance, evaluation criteria. Ways to improve management effectiveness in the organization. The effectiveness of organizational change.

HeadingManagement and labor relations
Viewessay
LanguageRussian
Date Added10.05.2010

1. The essence and content of the concept of "management effectiveness"

2. Signs of effective management

3. Ways to improve management effectiveness in the organization

4. Efficiency of organizational change

1. The essence and content of the concept of "management effectiveness"

Management effectiveness - the effectiveness of management activities, which is determined through the efficiency (effectiveness) of the core business.

The criteria for the effectiveness of the organization (according to Sink D.S.) are:

1. Effectiveness - the degree to which the goals of the organization are achieved.

2. Profitability - the ratio of the necessary and actual consumption of resources.

3. Quality - compliance of the characteristics of products (services) with standards and requirements of consumers.

4. Profitability - the ratio between income and total costs.

5. Productivity - the ratio of the volume of products (services) for a certain period in physical, cost and other indicators and the cost of resources corresponding to a given volume of products (resources: labor, material, financial, etc.).

6. Quality of working life - working conditions of workers.

7. Innovative activity - introduction of innovations in various functional areas of the organization.

Economic indicators of management effectiveness are

where: Eu - management performance indicator, Zu - management costs, P - the profit of the organization.

where: CZK - managerial staff ratio,

Chu - the number of management employees,

H - the total number of employees of the organization.

where: KZ - management cost ratio, Zu - management costs, 3 - the total costs of the organization.

where: KZP - coefficient of management costs per unit of output (services provided),

Zu - management costs,

OP - the quantity or volume of products (services).

2. Signs of effective management

T. Peters and R. Waterman conducted research on “model companies,” which for 20 years have shown high core business performance. All exemplary companies had a number of similar attributes that ensured this effectiveness. They identified the following signs of effective management.

Maximum attention to consumers.

The pyramid turned upside down emphasizes the approach of exemplary companies, the needs of consumers determine the entire activity of the enterprise, and the personnel who are in direct contact with consumers are the most important category of workers (see Fig. 1.).

Man is the main resource of the organization

Model companies see each employee as a source of ideas, and not just as a pair of hands. Personnel management is built taking into account the psychological characteristics inherent in most people.

Action orientation

Without denying the importance of strategic planning, marketing research and other scientific methods, model companies are constantly experimenting, introducing new products, new technologies, new procedures, etc. Experimentation acts as a form of effective acquisition of new knowledge, which is less costly and more useful than many other methods.

Development of autonomy and enterprise

Model companies are distinguished by decentralization of management, development of independence, entrepreneurship. Entrepreneurship, search atmosphere is created by the support of enthusiasts, the development of all forms of business contacts between employees, collegial management.

Focus on corporate values

Many model companies everywhere use stories, slogans and legends related to the stages of the organization’s development, as well as the activities of its prominent leaders and specialists, which are very important, expressing the general entrenched values ​​of the organization, i.e. her culture. The stronger the organization’s culture and the more market-oriented it is, the less directive, organization chart, detailed procedures and rules are needed.

Loyalty to their work

A certain degree of diversification becomes the basis for the sustainability of the organization. But indiscriminate diversification is the least successful strategy.

Simplicity and modesty

The leadership of exemplary companies, aimed at continuous improvement, do not allow any frills, strives for maximum rationality.

The values ​​and management methods that turn organizations into exemplary ones are established and developed under the influence of strong, charismatic leaders.

3. Ways to improve management effectiveness in the organization

Improving the effectiveness of management in the organization should be based on a systematic approach. One of the possible options for such a review is McKinsey’s “7-C scheme”, which identifies seven interrelated areas of analysis, evaluation and improvement of the organization’s management system (see Fig. 2.).

Fig. 2. “McKinsey Scheme 7-C”

Based on the analysis of the organization’s performance and research on its management system, the following measures are developed and implemented to improve management effectiveness, affecting all its main elements:

1. Improving the management structure of the organization, its maximum simplification, decentralization of most functions, determining the powers of managers taking into account qualifications and personal qualities.

2. Development of an organization’s development strategy based on an analysis of its strengths and weaknesses, development of the organization’s philosophy and policy, covering all its functional areas.

3. Development of an organization’s information system that provides effective communication between employees and departments. Development of a decision-making system, rules and management procedures, incentive systems.

4. The amount of skills necessary for effective professional work of an employee is accumulated through a system of continuous professional development of employees based on training, retraining, development of initiative, and creativity.

5. Development of a system for selecting, training, evaluating and moving management personnel, planning career leaders, applying a leadership style that is adequate to internal and external factors affecting the organization.

6. The use of the most effective methods of staff selection, assessment, the formation of a workable, compatible staff, the creation of the most favorable socio-psychological climate.

7. Hard work to create a culture of organization, to develop shared values ​​recognized and approved by employees.

Work on improving management effectiveness can begin with any element, the improvement of which is most relevant for the organization. It is only important to keep in mind the relationship of the elements with each other.

In the process of improving management effectiveness, a wide variety of changes are introduced into the organization’s management system, including a very radical one. Managing the process of change is considered one of the most difficult, but also prestigious tasks for managers providing organizational development.

4. Efficiency of organizational change

From a public point of view, efficiency is the degree to which an organization achieves its goals using limited resources. Whatever the main or derivative goals, the structure of the organization and its activities, organizational changes should be evaluated by their real effectiveness. Along with this, it is advisable to use the concept of productivity, which means maximizing the organization of its goals with minimal expenditure of resources. Efficiency and productivity are interconnected, but at the same time, there are certain differences.

Consideration of effectiveness in terms of goals and resources focuses on two conditions: achieving the goal is a prerequisite for the productive activities of the organization and productive use of resources is a necessary but not sufficient condition for efficiency. These two points reflect the material interest of society in the results of the organization.

Managers are responsible for the performance of the organization. This responsibility and related powers derive from the material interest of those who provide resources. Leaders of organizations are closely connected with the society in which they operate, because they are ultimately responsible to those groups that invest resources in the organization. It would be a simplification to argue that organizational effectiveness is somehow related to the way society achieves its goals through the use of limited resources. The main thing is to identify how managers can find out when and under what circumstances their organizations operate effectively.

The actual process of assessing the effectiveness of an organization is much more difficult than you might imagine. Efficiency can be a vague and volatile criterion. One leader determines efficiency by the size of profit, while another measures it in terms of competitiveness, prestige in the business world or in the eyes of the public, and expansion of an enterprise. Whatever criteria the effectiveness is measured, the principle of effectiveness lies at the heart of the assessment of any organizational structure and its changes. The choice of a suitable performance criterion depends on the specific operating conditions, purpose and strategy of the organization, the reasons for the changes. Based on the theory of systems, efficiency can be determined and measured within the limits that are significant for heads of organizations, both private entrepreneurial and state. Based on the theory of systems as the basis for choosing criteria for the effectiveness of the organizational structure, we can consider a wide range of approaches to it, research and measurement, and on this basis present a general model of the effectiveness of organizational structure.

In the context of systems theory, an organization is considered as one element among those that interact with each other.

The flow of input factors of production (costs) and output (output) is a key starting point in the description of the organization. In its simplest form, an organization draws resources (input factors of production) from a larger system (environment), processes these resources, and returns them in a modified form (output). The diagram demonstrates the fundamental elements of an organization - as a system (Fig. 3)

Fig. 3: Interconnection of system elements

The organization uses its resources productively to ensure output. Its existence depends on how much it satisfies society. If an organization ceases to satisfy society, it becomes ineffective.

The concept of organization as a system that correlates with a larger system includes a feedback category. The organization depends on environmental conditions not only with its input factors of production (costs), but also with the acceptance of manufactured products (output). Therefore, it without fail develops means of regulating demand in the environment. Means of regulation are the channels of information that allow the organization to know the demand. In business organizations, market research is an important feedback mechanism. In a more general sense, feedback is a dynamic process by which any organism empirically learns its environment. Feedback refers to information that reflects the result of an action or series of actions of an individual mind, group or organization. System theory emphasizes the importance of responding to the content of information received as a result of feedback. A systematic approach focuses on two important considerations:

1) ultimately, the survival of organizations depends on its ability to adapt to environmental requirements, and 2) the general cycle of “input factors - process - output” should be the focus of the leader. The criterion for evaluating the result of functioning should reflect these conditions for ensuring effectiveness.

Efficiency should be determined through an optimal balance between different types of activities for the acquisition and use of resources. The activities of the organization, which determines its functioning, covers:

1) the acquisition of resources,

2) the productive use of input factors of production in relation to the output,

3) the production of goods or services,

4) the expedient implementation of technical and administrative tasks,

5) investing in an organization,

6) submission to the rules of conduct,

7) the satisfaction of the diverse interests of people and groups.

Each of these activities is aimed at maintaining a cycle of “input factors - process - output” and adaptation to the environment.

Согласно теории систем, эффективность организации определяется тем, в какой мере она достигает оптимума взаимоотношений во всех видах деятельности. Efficiency is a component of a number of activities - the cycle "input factors - process - output" and adaptation to the environment. In turn, each component (structural unit) of a commercial company - whether it is production, sales, personnel, supply, design and development, research and development - can be represented in the form of a system, with its inputs, the process of adaptation activities, which should Optimize for overall organizational performance. The generalized concept of efficiency includes a number of well-known and clearly defined components. Maintaining an optimal balance between them is the first task of heads of organizations.

The current level of understanding of organizational effectiveness involves taking into account the time factor, which is introduced into the analysis when the organization is considered as an element of a larger system (environment). Over time, the organization accepts, processes, and returns resources to the larger system. And accordingly, the final test of organizational effectiveness is whether the organization can support itself in the environment. Therefore, survival is the ultimate or long-term measure of organizational effectiveness. However, managers and anyone interested in an organization should have indicators to assess the likelihood of an organization surviving. These are short-term indicators, including measures of productivity, production, and satisfaction. There are also other indicators called intermediate. In this case, we are talking about two criteria - adaptability and development. The relationship between these performance criteria and the time factor is shown in Fig. four.

Fig. four. Performance Criteria and Time

The list of short-term, intermediate and long-term criteria can be increased or reduced. We will analyze the main ones.

Production. In this context, production reflects the organization’s ability to produce as many Products and the quality that the consumer market requires. Production measures include profit, sales, market share, etc. These criteria measures relate directly to the organization’s output that is consumed by customers and customers.

Performance defined in the usual sense as the ratio of output to input resources. This criterion of short-term action is focused on the entire cycle of “input factors - process - output”, but the emphasis is on the elements “input factors” and “process”. Efficiency measures include return on capital or funds, units of value, waste and losses, downtime. Measures of productivity must necessarily be expressed in the form of proportions: profit (value or output) and time are common expressions of these measures.

Satisfaction. Considering the organization as a social system suggests that some attention should be paid to the benefits received by its members, customers and customers. An organizational structure is effective if it helps employees achieve their goals with minimal undesirable consequences or costs. For an employee, for example, an effective organizational structure is one that does not allow losses or errors and ensures job satisfaction, has clear lines of subordination and distribution of responsibility, allows you to participate in solving problems, gives confidence in the future, provides a certain status and opportunities for career growth and provides an acceptable level of salary.

Adaptability can be represented as the level at which the organization can and does respond to changes introduced from within or from outside. Adaptability is considered here as an intermediate criterion, more abstract than the level of production, productivity or satisfaction. This criterion refers to the ability of the leader to feel changes both in the environment and within the organization itself.

Efficiency in achieving a certain level of production, productivity and satisfaction may signal the need to make changes in management practices and strategies, or the environment may require the release of other products or provide other resources, thereby causing the need for change. The level at which the organization cannot or does not want to adapt means a threat to its survival.

In contrast to short-term effectiveness measures, there are no specific and specific measures for measuring adaptability. Management can promote policies that support readiness for change, and there are also specific management practices that, if applied, promote adaptability.

Development.Him the goal is to increase the organization’s ability to survive in the long run. Traditional attempts to develop technical and organizational reconstruction include training programs for managerial and engineering personnel, but it is very important to expand the scope of the organization by including a number of psychological and sociological approaches.

The introduction of the time factor allows us to talk about efficiency in the short, medium and long term. For example, you can evaluate a particular organization as effective in terms of indicators such as production level, satisfaction and productivity, but as ineffective in terms of adaptability and development. A manufacturer of certain products can be very effective in the short term, but he may have little chance of survival. Thus, when it comes to optimal balance, this refers to the balance of the organization’s activities over time.

Another aspect of the optimal balance is the achievement of the proper relationship between the criteria within the allotted time interval. There is no fixed relationship between production level, satisfaction, and productivity. Neither theoretical research, nor actual practice gives grounds to assert that the level of production and satisfaction are closely related. These two indicators can move in one direction or in different directions, depending on the circumstances. Therefore, it is important for the manager to recognize the need to identify potential relationships before pursuing a policy of influence on them.

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2. Vinogradsky M. D., Vinogradska A. M., Shkanova O. M. Management in organizations: Nav. posibnik.- K .: “Condor”, 2002.- 654 p.

3. Laft J. K. Organization management effectiveness. - M .: Russian business literature, 2007.- 320 p.

4. Management organization: pidruchnik / zag. ed. L.I. Fedulovo.- K .: Libid, 2003.- 448 p.

5. Nєmtsov V.D., Dovgan L.Є., Sіnіok G.F. Management Organization: Nav. posibnik.- K .: UVPK ExOb, 2001.- 392 p.

6. Osovska G.V., Osovskiy O.A. Management Organization: Nav. posibnik.- K.: “Condor”, 2005.- 860 p.

7. Rumyantseva Z.P. Organization management: Textbook. allowance.- M .: INFRA-M, 2008.- 432 p.

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The essence of the concept

Management effectiveness is an economic category that demonstrates the contribution of the manager and his environment to the overall result of the organization. Many researchers put just such a meaning into this concept. In this case, management performance criteria are presented as the results of activities and the degree to which goals and objectives that were set for the current period are achieved. The main indicator is the profit.

It is worth noting that management effectiveness is a relative indicator that characterizes the management as a whole or its individual subsystem. For this purpose, various integral indicators are used, which give a more accurate digital determination of the results.

It is worth noting that a significant part of the economically active population with an appropriate level of education and qualifications is involved in the management process. Since a large amount of time and money is spent on the training of such personnel, quite a lot of attention is paid to the assessment of such a parameter as management efficiency. Performance criteria allow a deeper look at this issue.

In theoretical studies, the following varieties are distinguished:

  • economic efficiency is the ratio of the costs of production and management, as well as the results obtained,
  • social efficiency is the satisfaction of different categories of consumers with the assortment and quality of goods and services.

The following concepts should also be distinguished:

  • internal efficiency is the achievement of the organization’s own goals at a constant cost level,
  • external efficiency - compliance of the enterprise with the requirements and requirements of the external environment.

The evaluation algorithm is as follows:

  • determination of the goal of performance evaluation,
  • selection of criteria and their detailed justification,
  • collection of initial data that will be used in the analysis process,
  • development of requirements for the resulting indicators,
  • development or selection of a methodology in accordance with which calculations will be made,
  • calculations and assessment of the indicators obtained.

Each organization sets itself specific goals. In the process of evaluating the outcome, certain inconsistencies may be identified. Based on the results of the audit, a decision may be made to adjust the management process or to amend the plans.

Economic criteria for management effectiveness

The main goal of management is to continuously improve the performance of the organization. Of particular importance is the cost-effectiveness of management. Performance criteria can be general or private. In the first case, the global aspect of performance is considered. It is important to achieve maximum results with minimal resources.

Private indicators of management effectiveness are as follows:

  • the level of labor costs of workers employed in the production process,
  • rationality of expenditure of material resources,
  • minimum cost of financial resources,
  • indicators characterizing the use and depreciation of fixed assets,
  • the size of the cost of production (should be minimized),
  • profitability indicator of production,
  • technical equipment of production shops (compliance with modern achievements of technological progress),
  • labor intensity of workers, which is determined by working conditions and organizational structure,
  • Compliance with the cost standards with full compliance with all contractual obligations,
  • the stability of the number and composition of staff,
  • compliance with environmental standards at the same level of costs.

In order to evaluate the efficiency of the enterprise, first of all, economic indicators are used. The main one is the ratio of profit to total costs that were incurred in the reporting period. If deviations or unsatisfactory results have been identified, a factor analysis is carried out to determine specific causes.

Performance components

In assessing the effectiveness of the management of the organization, the following indicators can be used:

  • performance, which is manifested in the degree of achievement of the goals that were set by management,
  • the ability to economically spend material and financial resources, fully satisfying the needs of all structures and units of the organization,
  • achieving the optimal ratio of the obtained economic results to the costs that were carried out in the production process,
  • degree of influence of direct or indirect factors on the final result.

Criteria groups

Criteria for assessing management effectiveness are specific indicators that allow us to evaluate the feasibility and effectiveness of the implementation of certain measures. Modern economic science distributes them into two groups:

  • particular (local) criteria:
    • labor costs of workers involved in the direct production of goods or services,
    • expenditure of material resources for managerial and other purposes,
    • expenses of financial resources
    • indicators that characterize the use of fixed assets (purpose, wear, efficiency, etc.),
    • the turnover rate of funds
    • payback period of investments (its reduction or increase).
  • quality criteria:
    • an increase in the output of products that belong to the highest category of quality indicators,
    • environmental responsibility of the organization, as well as the introduction of modern energy-saving technologies,
    • compliance of products to the urgent needs of society,
    • continuous improvement of working conditions of workers, as well as their social level,
    • saving resources.

It should be noted that all criteria for evaluating management effectiveness should be accompanied by maximization of output (or the number of services provided). There should also be an increase in profits.

Management Criteria and Performance Indicators

In order to evaluate the economic results from management events or decision-making, appropriate methods are used. So, the criteria and indicators of management effectiveness are as follows:

  • general indicator of management efficiency (ratio of profit for the reporting period to the costs allocated to management),
  • managerial staff ratio (ratio of the number of top managers and the total number of employees employed in the enterprise),
  • coefficient of management costs (the ratio of the total costs of the organization to the costs of management activities),
  • ratio of management expenses to the volume of output (in physical or quantitative terms),
  • эффективность совершенствования управления (экономический эффект за год делится на объем денежных средств, затраченных на управленческие мероприятия),
  • annual economic effect (the difference between the total savings due to the implemented management measures and the costs multiplied by the industry coefficient).

Organization Management Efficiency

Economists identify the following criteria for the effectiveness of organization management:

  • organization of management entities, as well as the full validity of their activities,
  • the amount of time resources spent on the solution of certain issues that are the responsibility of senior management,
  • management style,
  • the structure of governing bodies, as well as the smooth relationship between their various links,
  • total costs that are incurred by the maintenance of the administrative apparatus.

Any organization seeks to maximize benefits. It is worth noting that the increase in profit is one of the main parameters, in accordance with which the effectiveness of management is determined. Organization performance criteria in this context imply the end result of the entire enterprise. This is due to the fact that the implementation of plans largely depends on the quality work of managers.

Key Performance Assessment Approaches

The most important indicator of the functioning of any organization is the effectiveness of management. Performance criteria can be defined and applied in accordance with several basic approaches:

  • The target approach, as the name implies, is associated with assessing the degree of achievement of the planned result. Moreover, the action is much more complicated if the company does not produce any tangible products, but is engaged, for example, in the provision of various kinds of services. We can also talk about overlapping goals. Also, criteria for evaluating the effectiveness of managing an organization quite often represent a set of formal goals that do not reflect the real situation.
  • A systematic approach involves the consideration of the management process as a combination of input, direct operation, as well as output. At the same time, management of both the highest level and the middle one can be considered. Most often, the system is considered in the context of its adaptation to internal and external conditions, which are constantly undergoing changes. No organization can be limited only to the release of products and the provision of services, because it must act in accordance with market conditions.
  • The multi-parameter approach is aimed at covering the interests of all groups that have formed in the organization.
  • The approach of competing assessments allows the use of such criteria for the effectiveness of enterprise management as the control system, as well as internal and external influences. Moreover, the head often enough faces a mutually exclusive choice.

HR management performance assessment

Criteria for the effectiveness of personnel management include quality, timeliness, as well as the completeness of the performance of certain works and the achievement of goals. The total numerical indicator, according to which it is possible to evaluate the performance of employees, is the ratio of the achieved indicators to labor costs for a certain period.

Evaluation of the effectiveness of personnel management is usually carried out in order to assess the feasibility and validity of the introduction of motivational mechanisms or the work of personnel changes. It should be borne in mind that personnel costs can be primary (wages) and secondary (social services and other costs provided for at the legislative level).

Workers must ensure the achievement of the goal. Criteria for the effectiveness of personnel management are, for the most part, specific indicators that are calculated per unit of production capacity or manufactured products.

Assessment of the effectiveness of the management system

The following criteria for assessing the effectiveness of the management system are distinguished:

  • the complexity of the organizational structure and justification of the appropriateness of the functioning of each of its links,
  • speed of response to new situations and the adoption of appropriate management decisions,
  • a strategy in accordance with which the organization as a whole and each of its individual subsystems are managed,
  • the costs that are incurred by the maintenance of the administrative apparatus, as well as their relationship with the results obtained,
  • results of continuous monitoring of senior management activities,
  • assessment of the impact of the administrative apparatus on the final result of the enterprise’s activity,
  • the numerical and qualitative composition of the management, as well as the ratio with the total number of employees.

It is worth noting that the results of the organization’s activities depend not only on the efficiency of the production staff, but also on how well the organizational structure is built. To do this, a periodic check is carried out in order to identify inconsistencies, as well as bringing the parameters to modern requirements and standards (criteria for the effectiveness of control systems are used).

Classification of methods for assessing management effectiveness

The criteria and indicators for assessing management effectiveness can be applied in accordance with the following approaches:

  • orientation to the definition of the original tasks in order to determine the degree of their implementation,
  • assessment of the effectiveness of the administrative apparatus, as well as the degree to which managers are provided with information and other resources,
  • Evaluation of manufactured products or services to determine the satisfaction of the end user,
  • involvement of professional experts to identify weaknesses and strengths of the organization’s functioning,
  • comparative analysis of various points of view of managers or management systems,
  • involvement of all parties and participants in the management and production process to determine the degree of effectiveness.

Valuation activities may correspond to one of the following types:

  • formative:
    • determination of the discrepancy between the desired and actual state of affairs,
    • assessment of the production process in order to identify strengths and weaknesses,
    • assessment of the degree of achievement of goals.
  • summarizing:
    • identification of varieties of products and services that bring a real economic effect in order to eliminate irrational areas,
    • the study of changes in the welfare of employees and customers as a result of the organization,
    • assessment of the ratio of costs to actually achieved economic results.

Management effectiveness is an economic category that demonstrates the contribution of a manager to the resulting indicator of an organization’s activities. The defining indicator here is profit (namely, a comparison of the indicator that was achieved and that which was noted in the plan for the corresponding period).

Management effectiveness is critical for several reasons. The first of them consists in the fact that a lot of time is spent on preparing this kind of personnel, and their number is quite large. In addition, senior management is characterized by the highest degree of remuneration at the enterprise, which should be economically justified.

Management efficiency can be both economic (return on costs invested in production) and social (degree of satisfaction of the population with quality, quantity, and also the range of products and services). It is also worth separately highlighting the internal and external work efficiency.

To assess the effectiveness of the management of the organization, one or several approaches can be used. So, the target involves evaluating the result and comparing it with the intended for the period. If we talk about a systematic approach, then we are talking about the perception of the work of the organization as a holistic process. Multiparameter assessment affects all groups that are somehow related to the activities of the enterprise or are interested in its results. It is also worth paying attention to the approach of competing assessments, which takes into account factors of the opposite direction.

In the process of evaluating management effectiveness, a number of criteria are used that can be applied independently or in combination. So, the main indicator is the ratio of costs and profit. An important role is also played by the optimal ratio of production workers to the number of managers, as well as the costs that are regularly allocated to management. The last indicator is important to correlate not only with the level of profit, but also with the real volume of production (in physical or quantitative terms). Also, when calculating economic efficiency, it is important to adjust the indicators of the industry coefficient.

It is important to understand that not only the composition of the production staff plays a key role in achieving the success of the enterprise, criteria for the effectiveness of management quality are equally important. The correct organizational structure should be selected, which will ensure optimal interaction between all departments of the enterprise, as well as reducing the time and material costs of communication.