Organization Development

Session 3
Nature of planned change
 Definition of OD

Organization Development (OD) is a

planned process of change in an
organization’s culture through the
utilization of behavioral science
technology, research, and theory.
 Definition of OD

OD refers to a long-range effort to

improve an organization’s problem-solving
capabilities and its ability to cope with
changes in its external environment with
the help of external or internal behavioral-
scientist consultants.
 Definition of OD
OD is an effort (1) planned, (2)
organization-wide, and (3) managed from
the top, to (4) increase organization
effectiveness and health through (5)
planned interventions in the organization’s
“processes,” using behavioral science
knowledge.
 Organization Development is...
a systemwide application and transfer of
behavioral science knowledge to the
planned development, improvement, and
reinforcement of the strategies,
structures, and processes that lead to
organization effectiveness.
 Theories/Models of planned
change
Lewins’s Change Model
1. Driving Forces are forces that push in a direction that causes change
to occur. They cause a shift in the equilibrium towards change.
2. Restraining forces are forces that counter driving forces. They
oppose change. Restraining forces cause a shift in the equilibrium
which opposes change
3. Equilibrium is a state of being where driving forces equal restraining
forces and no change occurs. Equilibrium can be raised or lowered
by changes that occur between the driving and restraining forces.
4. Consists of three distinct and vital stages: “Unfreezing”; “Moving to
a new level or Changing” and “Refreezing”
Lewin’s Change Theory
UNFREE
ZE

CHANGE

REFREE
ZE
 UNFREEZING
• Finding a method of making it possible for
people to let go of an old pattern that was
counterproductive.
• The stage where the desire to change
occurs.
• The more transparent and inclusive the
process is, the more readily people move
through this stage.
 CHANGE
• Change in thoughts, feelings, behavior, or
all three that is more productive in some
way.
• New structures and processes are put in
place to achieve the desired
improvements
• This is the most time-consuming, costly,
yet productive stage.
 REFREEZING
• Establishing the change as a new habit or
process.
• Rewards, support, and champion leadership is
important through this stage.
• The changes are “frozen” in place to ensure that
they become part of normal working procedures.
• Establish supportive mechanisms such as
policies, rewards, ongoing support, and a solid
orientation for new employees.
 Action Research Model
Problem Identification
Joint diagnosis

Consultation with a
behavioral scientist Joint action planning

Data gathering & Action

preliminary diagnosis

Data gathering after

Feedback to Client action
 Positive Model
Initiate the Inquiry

Inquire into Best Practices

Discover Themes

Envision a Preferred Future

Design and Deliver Ways to

Create the Future
 Comparison of
Planned Change Models
• Similarities
– Change preceded by diagnosis or preparation
– Apply behavioral science knowledge
– Stress involvement of organization members
– Recognize the role of a consultant
• Differences
– General vs. specific activities
– Centrality of consultant role
– Problem-solving vs. social constructionism
 General Model of Planned Change

Planning Evaluating
Entering and and
and Diagnosing Implementing Institutionalizing
Contracting Change Change
 Processes for Planned
Organization Change
• Process Model
– Planned organization change requires a
systematic process of movement from one
condition to another
• Unfreezing
– Process by which people become aware of the need
for change
• Change
– Movement from the old way of doing things to a new
way
• Refreezing
– Process of making new behaviors relatively permanent
and resistant to further change
Process of Organizational Change
 Processes for Planned
Organization Change
• The Continuous Change Process Model
– Incorporates the forces for change, a problem-
solving process, a change agent, and transition
management
– Takes a top management perspective
• Perceives forces and trends that indicate
need for change
• Determines alternatives for change
• Selects the appropriate alternative
Continuous Change Process Model of
Organization Change
 Processes for Planned
Organization Change
• The Continuous Change Process Model
– Change agent: a person responsible for managing a
change effort
• Assists management with problem recognition/definition
• Can be involved in generating/evaluating potential action
plans
• Can be from inside or outside of the organization
• Implements the change
• Measures, evaluates, controls the desired results
– Transition management
• Process of systematically planning, organizing, and
implementing change
 OD: Group and Individual
Change
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 Resistance to Change
• The Resistance to Change Paradox
– Organizations invite change when change offers
competitive advantage
– Organizations resist change when change threatens
the organization’s structure and control systems
– Organizations must balance stability (permanence)
with the need to react to external shifts (change)
– Resistance can warn of the need to reexamine the
need for change
 Resistance to Change:
Sources of Resistance to Change
• Organizational • Individual
Sources Sources
– Overdeterminatio – Habit
n – Security
– Narrow focus of – Economic
change factors
– Group inertia – Fear of the
– Threatened unknown
expertise – Lack of
– Threatened awareness
Managing Successful Organization

Change and Development

• Keys to Managing Change in
Organizations
– Consider international issues
– Take a holistic view
– Start small
– Secure top management support
– Encourage participation by those affected by
the change
– Foster open communication
– Reward those who contribute to change
 Different Types of
Planned Change
• Magnitude of Change
– Incremental
– Quantum
• Degree of Organization
– Over organized
– Underorganized
• Domestic vs. International Settings
 Diagnosing
Organizational Systems
• The key to effective diagnosis is…
– Know what to look for at each
organizational level
– Recognize how the levels affect each
other
 Organization-Level
Diagnostic Model
Inputs Design Components Outputs
Technology
General

Effectiveness
Organization
Environment Strategy Structure

Culture
Industry
Structure
HR Measurement
Systems Systems
 Organization Environments
and Inputs

• Environmental Types
– General Environment
– Task Environment and Industry Structure
– Rate of Change and Complexity
– Enacted Environment
• Environmental Dimensions
– Information Uncertainty
– Resource Dependency
 Organization Design Components

• Strategy
– the way an organization uses its resources
(human, economic, or technical) to gain
and sustain a competitive advantage
• Technology
– the way an organization converts inputs
into products and services
• Structure
– how attention and resources are focused
on task accomplishment
Organization Design Components

• Human Resource Systems

– the mechanisms for selecting, developing,
appraising, and rewarding organization
members
• Measurement Systems
– methods of gathering, assessing, and
disseminating information on the activities of
groups and individuals in organizations
Organization Design Components

• Organization Culture
– The basic assumptions, values, and norms
shared by organization members
– Represents both an “outcome” of organization
design and a “foundation” or “constraint” to
change
 Outputs

• Organization Performance
– e.g., profits, profitability, stock price
• Productivity
– e.g., cost/employee, cost/unit, error rates,
quality
• Stakeholder Satisfaction
– e.g., market share, employee satisfaction,
regulation compliance
 Group-Level Diagnostic Model

Inputs Design Components Outputs

Goal Clarity

Organization Task Group Group

Design Structure Functioning Effectiveness

Group Performance
Composition Norms
Group-Level Design Components

• Goal Clarity
– extent to which group understands its objectives
• Task Structure
– the way the group’s work is designed
• Team Functioning
– the quality of group dynamics among members
• Group Composition
– the characteristics of group members
• Performance Norms
– the unwritten rules that govern behavior
 Group-Level Outputs
• Product or Service Quality
• Productivity
– e.g., cost/member, number of decisions
• Team Cohesiveness
– e.g., commitment to group and
organization
• Work Satisfaction
 Possible Effects of Feedback
Feedback occurs

No NO Is the energy created

Change by the feedback?
YES Energy to use
What is the direction data to identify and
Energy solve problems
to deny or of the feedback?
fight data
Do structures and
Failure, NO processes turn energy
frustration, into action?
Anxiety, no change
resistance, YES
no change

Change
 The Design of
Effective Interventions

• Contingencies Related to the

Change Situation
• Readiness for Change
• Capability to Change
• Cultural Context
• Capabilities of the Change Agent
 The Design of
Effective Interventions
• Contingencies Related to the
Target of Change

• Strategic Issues
• Technology and structure issues
• Human resources issues
• Human process issues
 Intervention Overview

• Human Process Interventions

• Technostructural Interventions
• Human Resources Management
Interventions
• Strategic Interventions
 Human Process Interventions

• Process Consultation and Team

Building
• Third-party Interventions (Conflict
Resolution)
• Organization Confrontation Meeting
• Intergroup Relationships
• Large-group Interventions
 Technostructural Interventions

• Structural Design
• Downsizing
• Reengineering
• Parallel Structures
• High Involvement Organizations
• Total Quality Management
• Work Design
 Human Resources Management
Interventions
• Goal Setting
• Performance Appraisal
• Reward Systems
• Coaching and Mentoring
• Career Planning and Development
• Management and Leadership
• Managing Work Force Diversity
• Employee Wellness Programs
Strategic Interventions

• Transformational Change
– Integrated Strategic Change
– Organization Design
– Culture Change
• Continuous Change
– Mergers and Acquisitions
– Alliances and Networks
 Strategic Interventions

• Transorganizational Change
– Self-designing Organizations
– Organization Learning and Knowledge
Management
– Built to Change Organizations
Change Management Activities

Motivating Change

Creating Vision
Effective
Developing Change
Political Support Management

Managing the Transition

Sustaining Momentum
 Motivating Change

• Creating Readiness for Change

– Sensitize the organization to pressures for change
– Identify gaps between actual and desired states
– Convey credible positive expectations for change
• Overcoming Resistance to Change
– Provide empathy and support
– Communicate
– Involve members in planning and decision making
 Creating a Vision

• Discover and Describe the

Organization’s Core Ideology
– What are the core values that inform
members what is important in the
organization?
– What is the organization’s core purpose or
reason for being?
• Construct the Envisioned Future
– What are the bold and valued outcomes?
– What is the desired future state?
Developing Political Support

• Assess Change Agent Power

• Identify Key Stakeholders
• Influence Stakeholders
Change as a Transition State

Current Transition Desired

State State Future
State
 Implementation and Evaluation
Feedback
Diagnosis

Design and Implementation of Implementation Evaluation

Implementation Intervention Feedback Feedback
of Interventions Measures of Measure of
Clarify Plan for
Intention Next Steps the Intervention Long-term
and Immediate Effects
Alternative Effects
Interventions
Institutionalization Framework

Organization
Characteristics

Institutionalization Indicators of
Processes Institutionalization

Intervention
Characteristics
 Organization Characteristics
• Congruence
– Extent to which an intervention supports or
aligns with the current environment, strategic
orientation, or other changes taking place
• Stability of Environment and Technology
• Unionization
 Intervention Characteristics

• Goal Specificity
• Programmability
• Level of Change Target
• Internal Support
• Sponsor
Institutionalization Processes

• Socialization
• Commitment
• Reward Allocation
• Diffusion
• Sensing and Calibration
Indicators of Institutionalization
• Knowledge
• Performance
• Preferences
• Normative
Consensus
• Value Consensus
 Contingencies Influencing
Structural Design
Environment

Organization Worldwide
Size Structural Operations
Design

Organization
Technology Goals
 The Downsizing Process
• Clarify the organization’s strategy
• Assess downsizing options and make
relevant choices
• Implement the changes
• Address the needs of survivors and those
who leave
• Follow through with growth plans
 Downsizing Tactics
Tactic Characteristics Examples
 Reduces headcount  Attrition
Workforce  Short-term focus  Retirement/buyout
Reduction  Fosters transition  Layoffs

 Changes  Eliminate functions,

Organization organization layers, products
Redesign  Medium-term focus  Merge units
 Fosters transition &  Redesign tasks
transformation

 Changes culture  Change

Systemic  Long-term focus responsibilities
 Fosters  Foster continuous
transformation improvement
 Downsizing is normal
The Reengineering Process
• Prepare the organization
• Specify the organization’s strategy and
objectives
• Fundamentally rethink the way work gets
done
– Identify and analyze core business
processes
– Define performance objectives
– Design new processes
• Restructure the organization around the
new business processes.
 Characteristics of
Reengineered Organizations

· Work units change from functional departments to process

teams
· Jobs change from simple tasks to multidimensional work
· People’s roles change from controlled to empowered
· The focus of performance measures and compensation shifts
from activities to results.
· Organization structures change from hierarchical to flat
· Managers change from supervisors to coaches; executives
change from scorekeepers to leaders
 Characteristics of
Transformational Change
• Triggered by Environmental and Internal
Disruptions
• Aimed at Competitive Advantage
• Systemic and Revolutionary Change
• Demands a New Organizing Paradigm
• Driven by Senior Executives and Line
Management
• Involves Significant Learning
 Integrated Strategic Change
(ISC)

Integrated Strategic Change ………

is a deliberate coordinated process that
leads to gradually or radically systemic
realignments between the environment
and a firm’s strategic orientation
resulting
in improvement in performance and
effectiveness.
The Integrated Strategic Change Process

Strategy Strategy
S1 Strategic S2
Change
Plan

Organization Organization
Implementation
O1 O2

Strategic Analysis Strategic Choice

 ISC Application Stages
• Strategic Analysis
– Assess the readiness for change and top
management’s ability to carry out change
– Diagnose the Current Strategic Orientation
• Strategic Choice
– Top management determines the content of the
strategic change
• Designing the Strategic Change Plan
– Development of a comprehensive agenda to
achieve the change
• Implementing the Strategic Change Plan
 Organizational Design
Conceptual Framework
• Strategy
• Structure
• Work Design
• Human Resources Practices
• Management and Information Systems
Key Point
• Fit, Congruence, Alignment among
Organizational Elements
Organization Design Model

Organization Strategy
Strategic Fit

Organization Design
Management
and Information Structure
Systems

Design Fit

Human Resource Work

Practices Design
Organization Designs
 Organization Design
Application Stages

• Clarifying the Design Focus

– Create the overall framework, begins with examining strategy
and objectives and determining organization capabilities
needed
• Designing the Organization
– Results in an overall design for the organization, detailed
designs for the components, and preliminary plans for how to
implement
• Implementing the Design
– Puts the new structures, practices and systems into place,
draws heavily leading and managing change methods
The Concept of Organization Culture
Artifacts
Norms
Values

Basic
Assumptions
Diagnosing Organization Culture
• Behavioral Approach
– Pattern of behaviors (artifacts) most related
to performance
• Competing Values Approach
– Pattern of values emphasis characterizing
the organization
• Deep Assumptions Approach
– Pattern of unexamined assumptions that
solve internal integration and external
adaptation problems well enough to be
taught to others
Competing Values Approach
Flexibility & Discretion

External Focus & Differentiation

Internal Focus & Integration

Clan Adhocracy

Hierarchy Market

Stability & Control

Culture Change Application Stages
• Establish a clear strategic vision
• Get top-management commitment
• Model culture change at the highest level
• Modify the organization to support change
• Select and socialize newcomers; downsize
deviants
• Develop ethical and legal sensitivity
Self-Designing Organizations
• Systemic change process altering most
features of the organization
• Process is ongoing, never finished—
continuous improvement and change
• Learning as You Go—on-site innovation
• Need support of multiple stakeholders
• All levels of the organization adopt new
strategies and change behaviors
 Organization Learning &
Knowledge Management
• Organization Learning interventions
emphasize the structures and social
processes that enable employees and
teams to learn and share knowledge
• Knowledge Learning focuses on the
tools and techniques that enable
organizations to collect, organize, and
translate information into useful
knowledge
 Organization Learning:
An Integrative Framework

Organization Learning Knowledge Management Competitive

Strategy

Organization Organization Organization Organization

Characteristics Learning Processes Knowledge Performance
Structure Discovery Tacit
Information Invention Explicit
Systems Production
HR Practices Generalization
Culture
Leadership
 Characteristics of a
Learning Organization

• Structures emphasize teamwork, information

sharing, empowerment
• Information systems facilitate rapid acquisition
and sharing of complex information to manage
knowledge for competitive advantage
• Human resources reinforce new skills and
knowledge
• Organization culture encourages innovation
• Leaders model openness and freedom to try
new things while communicating a compelling
vision
 Organization Learning Processes

• Single loop learning

– Most common form of learning
– Aimed at adapting and improving the status
quo
• Double loop learning
– Generative learning
– Questions and changes existing assumptions
and conditions
• Deuterolearning
– Learning how to learn
– Learning how to improve single and double
loop learning
Knowledge and Performance
• Organization knowledge must be
relevant and applied effectively to the
competitive strategy
• Link organization learning processes to
organization performance
• Growing emphasis on the value of
intellectual assets and services
 Knowledge Management
Interventions

• Generating Knowledge
– Identify knowledge for competitive strategy
– Develop ways to acquire or create that
knowledge
• Organizing Knowledge
– Put knowledge into a usable form
– Codification and Personalization
• Distributing Knowledge
– Making knowledge easy to access, use &
reuse
Built-To-Change Organizations

• Organizations are designed with the

ability to change constantly to create
the best sustainable source of
competitive advantage.
• Organizations operate in complex
and rapidly changing environments
 Built to Change
Application Stages

• Create a Change-Friendly Identity

• Pursue Proximity
• Build an Orchestration Capability
• Establish Strategic Adjustment a Normal
Condition
• Seek Virtuous Spirals
 Application Stages for
Transorganizational Development
Identification Convention Organization Evaluation

Who should Should a TS How to organize

for task How is the TS
belong to the be created? performing?
transorganizational • Costs and performance?
• Communication • Performance
System (TS)? benefits outcomes
• Relevant skills, • Task • Leadership
• Policies and • Quality of
knowledge, perceptions interaction
and resources procedures
• Member
• Key stakeholders
satisfaction
 Mergers and Acquisitions

• Merger - the integration of two previously

independent organizations into a completely
new organization
• Acquisition - the purchase of one organization
by another for integration into the acquiring
organization.
• Distinct from transorganizational systems,
such as alliances and networks, because at
least one of the organizations ceases to exist.
 Merger and Acquisition Rationale
• Diversification
• Vertical integration
• Gaining access to global markets,
technology, or other resources
• Achieving operational efficiencies,
improved innovation, or resource sharing
 Merger and Acquisition
Application Stages

• Pre-combination Phase
– The organization must identify a candidate
organization, work with it to gather information
about each other, and plan the implementation
and integration activities
• Legal Combination Phase
– The two organizations settle on the terms of the
deal, gain approval from regulatory agencies and
shareholders, and file appropriate legal
documents
• Operational Combination Phase
– Implementing the operational, technical and
cultural integration activities
 Strategic Alliances
• When two organizations formally agree to
pursue a set of goals
• There is sharing of resources, intellectual
property, people, capital, technology,
capabilities or physical assets
• Common alliances are licensing
agreements, franchises, long-term
contracts, and joint ventures
 Alliance Intervention
Application Stages
• Alliance Strategy Formulation
– Clarify the business strategy and why an alliance is
needed
• Partner Selection
– Leverage similarities and differences to create
competitive advantage
• Alliance Structuring and Start-up
– Build and leverage trust in the relationship
• Alliance Operation and Adjustment
 Network Interventions
• Involves three or more companies joined
together for a common purpose
• Each organization in the network has goals
related to the network as well as those
focused on self-interest
• Characterized by two types of change:
creating the initial network
(transorganizational development) and
managing change within an established
network
Cultural Context for Change

• Context Orientation
• Power Distance
• Uncertainty Avoidance
• Achievement Orientation
• Individualism
 Context

• The extent to which meaning in

communication is carried in the words
• Organizations in high context cultures
tend to value ceremony and ritual, the
structure is less formal, there are fewer
written policies, and people are often late
for appointments
 Power Distance

• Extent to which members of a society

accept that status and power are
distributed unequally in an organization
• Organizations in these cultures tend to be
autocratic, possess clear status
differences, and have little employee
participation
 Uncertainty Avoidance

• The extent to which members of a

society tolerate the unfamiliar and
unpredictable
• Organizations in these cultures tend to
value experts, prefer clear roles, avoid
conflict, and resist change
 Achievement Orientation
• The extent to which people in a society
value assertiveness and the acquisition of
material goods
• Organizations in these cultures tend to
associate achievement with wealth and
recognition, value decisiveness, and
gender roles are clearly differentiated.
 Individualism
• The extent to which people in a society
believe they should be responsible for
themselves and their immediate family
• Organizations in these cultures tend to
encourage personal initiative, value time
and autonomy, accept competition, and
autonomy is highly valued
 International Strategic
Orientation
• Characteristics of the International Design
– Sell existing products/services to nondomestic
markets
– Goals of increased foreign revenues
• Implementing the International Orientation
– OD facilitates extending the existing strategy
into the new market
– Cross-cultural training and strategic planning
 The Global Strategic Orientation
• Characteristics of the Global Design
– Centralized with a global product structure
– Goals of efficiency through volume
• Implementing the Global Orientation
– OD supports career planning, role clarification,
employee involvement, conflict management and
senior management team building to help achieve
improved operational efficiency
– OD helps the organization transition to global
integration from local responsiveness
 The Multinational
Strategic Orientation

• Characteristics of the Multinational Design

– Operate a decentralized organization
– Goals of local responsiveness through
specialization
• Implementing the Multinational Orientation
– OD helps with intergroup relations, local
management selection and team building
– OD facilitates management development,
reward systems, and strategic alliances
 Transnational Strategic
Orientation
• Characteristics of the Transnational Design
– Tailored products
– Goals of learning and responsiveness through
integrations
• Implementing the Transnational Orientation
– Extensive selection and rotation
– Acquire cultural knowledge and develop intergroup
relations
– Build corporate vision
 Global Social Change Organizations

 Their primary task is a commitment to serve as an agent of

change in the creation of environmentally and socially
sustainable world futures
 They have discovered and mobilized innovative social-
organizational architectures
 They hold values of empowerment in the accomplishment of
their global change mission
 They are globally-locally linked in structure, membership, or
partnership and thereby exist as entities beyond the nation-
state
 They are multi-organizational and often cross-sectoral
 Application Stages of
Global Social Change Organizations
• Build the local organization
– Using values to create the vision
– Recognizing that internal conflict is often a function of external
conditions
– Understanding the problems of success
• Create horizontal linkages
– Build a network of local organizations with similar views and
objectives
• Develop vertical linkages
– Create channels of communication and influence upward to
governmental and policy-level, decision-making processes