Diagnozing

Organizations
Introduction to Organizational Diagnosis

 Follows the entering and contracting stage and precedes the planning and
implementation phase.
 When done well, clearly points the organization and the OD practitioner toward a
set of appropriate interventions
 Is the process of understanding a system’s current functioning; involves collecting
pertinent information about current operations, analyzing those data, and drawing
conclusions for potential change and improvement.
 Effective diagnosis provides the systematic knowledge of the organization needed
to design appropriate interventions. Thus, OD interventions derive from diagnosis
and include specific actions intended to improve organizational functioning
The need for diagnostic models

 Are conceptual frameworks that are used to understand organizations.

 Describe the relationships among different features of the organization, as well as
its context and its effectiveness.
 Therefore, point out what areas to examine and what questions to ask in assessing
how an organization is functioning.
 Applying open system model to diagnose organizations
Open System Model

 Assumes that organizations operate within an external environment, takes specific

inputs from the environment, and transforms those inputs using social and
technical processes. The outputs of the transformation process are returned to the
environment and can be used as feedback to the organization’s functioning.
Diagnozing organizational systems using
open systems mode
Inputs

 General Environment: consists of all external forces and elements that can
influence an organization and affect its effectiveness. The environment can be
described in terms of the amount of uncertainty present in social, technological,
economic, ecological, and political/regulatory forces. Each of these forces can
affect the organization in both direct and indirect ways.
 Industry structure: important input into strategic orientation; can be defined by
Porter’s five forces: supplier power, buyer power, threats of substitutes, threats of
entry, and rivalry among competitors
Design components

 Strategic orientation of an organization is composed of five major design

components: strategy, technology, structure, measurement systems, and human
resources systems—and an intermediate output—culture.
 Effective organizations align their design components to each other and to the
environment.
Strategy

 A strategy represents the way an organization uses its resources (human,

economic, or technical) to achieve its goals and gain a competitive advantage. It
can be described by the organization’s mission, goals and objectives, strategic
intent, and functional policies.
Technology

 Technology is concerned with the way an organization converts inputs into

products and services. It represents the core transformation process and includes
production methods, work flow, and equipment.
Structure

 Describes how attention and resources are focused on task accomplishment.

 Represents the basic organizing mode chosen to: (i) divide the overall work of an
organization into subunits that can assign tasks to individuals or groups and (ii)
coordinate these subunits for completion of the overall work.
 Therefore, needs to be closely aligned with the organization’s technology.
 Two ways of determining how an organization divides work are to examine its
formal structure or to examine its level of differentiation and integration.
Measurement Systems

 Are methods of gathering, assessing, and disseminating information on the

activities of groups and individuals in organizations.
 Indicates how well the organization is performing and are used to detect and
control deviations from goals.
 Closely related to structural integration, measurement systems monitor
organizational operations and feed data about work activities to managers and
members so that they can better understand current performance and coordinate
work.
 Effective information and control systems clearly are linked to strategic
objectives; provide accurate, understandable, and timely information; are accepted
as legitimate by organization members; and produce benefits in excess of their
cost.
Human resource systems

 include mechanisms for selecting, developing, appraising, and rewarding

organization members. These influence the mix of skills, personalities, and
behaviors of organization members. The strategy and technology provide
important information about the skills and knowledge required if the organization
is to be successful.
 Appraisal processes identify whether those skills and knowledge are being applied
to the work, and reward systems complete the cycle by recognizing performance
that contributes to goal achievement. Reward systems may be tied to measurement
systems so that rewards are allocated on the basis of measured results.
Organizational culture

 represents the basic assumptions, values, and norms shared by organization

members.
 Cultural elements are generally taken for granted and serve to guide members’
perceptions, thoughts, and actions.
 orients employees to company goals and suggests the kinds of behaviors
necessary for success
 an outcome of the organization’s history and environment as well as of prior
choices made about the strategy, technology, structure, measurement systems, and
human resources systems. It is also a constraint in that it is more difficult to
change than the other components.
Outcomes - a three-pronged assessment

 Organization performance refers to financial outputs such as sales, profits,

return on investment (ROI), and earnings per share (EPS).
 Productivity concerns internal measurements of efficiency, such as sales per
employee, waste, error rates, quality, or units produced per hour.
 Stakeholder satisfaction reflects how well the organization has met the
expectations of different groups.
Thank You!