Factorial Analysis of Organizational Performance

The annual performances of seventy-five insurance sales agencies over an eleven-year period are examined by factorial analysis methods with a view toward discovering the factorial elements, initially presumed to be goals, that characterize the behavior of small business organizations. It was discovered that ten factors serve to describe most of the variance in a set of seventy-six selected performance indicators. The investigation included an analysis of the stability of the obtained factor structure, which is very high, and the stability of the performance of individual agencies over the period of time, which proved to be high for some aspects of performance and low for others. The factors of performance are of kinds that preclude their being viewed as representing stable goals of the organizations, i.e., as end states or outcomes of intrinsic value. It is suggested that the factors represent, instead, the continuing processes of resource acquisition which are characteristic of adaptive open systems. It is proposed that the conventional concepts of goals and goal attainment are not applicable to organizations, and that organizational performance can be assessed and described, instead, in terms of generalized resource-getting capabilities under conditions of competition for scarce and valued resources. Dr. Stanley E. Seashore is professor of psychology and assistant director of the Institute for Social Research, The University of Michigan. Dr. Ephraim Yuchtman, study director at the Institute and a recent Michigan Ph.D. in social psychology, has accepted a post at Tel-Aviv University, Israel.