CIPD - Organisation development

Corporate and HR strategy

October 2007

This factsheet gives introductory guidance. It:

gives a history of organisation development (OD) and points to confusion around the term
provides a number of definitions and identifies common features
describes a typical OD methodology
discusses the links between OD and personnel management, with particular reference to the UK
includes the CIPD viewpoint.

Background

Organisation development is a concept that has been around for more than fifty years. But it is also a term that has been used in various ways, and which can therefore cause confusion. To add to the confusion the term ‘organisational design’ is also used, sometimes more or less interchangeably with ‘organisation development’. In fact, OD itself has developed over the years, and what is defined as OD today may not have been recognised by OD practitioners in the early 1970s. To understand OD, it is therefore necessary to look at its history and how it has developed.

In the United Kingdom, OD is not widely recognised as an academic discipline, whereas in the United States there are said to be over 10,000 practitioners and OD is taught in a number of universities. Most of the literature is therefore American. As an academic discipline, it draws on social psychology, sociology, psychology and anthropology. In the UK the Tavistock Institute, with its work on ‘socio-technical systems’ in which social, technical and economic interests all needed to be balanced, was the main institution to play a significant role in OD¹.

History

Academic beginnings

American psychologists and behaviourists working in the late 1940s and 1950s found that the application of participative methods to small groups led to attitude change, higher performance and greater commitment. Abraham Maslow argued for the inherent potential of individuals to pursue ‘self actualisation’, which was more likely to be achieved under conditions of openness and personal recognition. Organisation theorists like Chris Argyris and Rensis Likert advocated organisation-wide participation as a means of motivating individuals and hence achieving greater performance. New theories of leadership and change also developed: for example, Douglas McGregor proposed that different styles of leadership would result in different reactions – more positive under ‘Theory Y’, which was participatory and democratic, and more negative under ‘Theory X’, which was oppressive and authoritarian.

Some of the early founders were heavily involved in the T-group movement, a movement resembling group therapy and focusing on group dynamics (although the ‘T’ was said to stand for ‘training’ rather than ‘therapy’). T-groups operated on the underlying premise that causality for behavioural problems lay in an individual’s perceptions, assumptions and feelings concerning events and people around the individual. The solution could be found by altering these elements with feedback in a sensitivity group led by a nondirective trainer.

OD spreads

At some point in the 1960s, ‘the term organisation development came into being as an overarching umbrella to include and embrace all of the previous thinking about the behavioural aspects of people involved in changing and developing organisations’². OD then spread rapidly within American organisations, which were looking for help in changing the styles of their managers to improve organisational performance. T-group exercises, run by consultants, often on a large scale and designed to move managers towards more open and trusting behaviour, were frequently the vehicle for this. In the UK, group-based methods of learning and change were being used in coalmines with the involvement of the Tavistock Institute.

OD at this stage can be ‘categorised as primarily focusing on individuals and interpersonal relations. [It] was established as a social philosophy that emphasised a long-term orientation, the applied behavioural sciences, external and process-oriented consultation, change managed from the top, a strong emphasis on action research and a focus on creating change in collaboration with managers’³.

However, ‘like the growth of many management techniques, OD gradually took on characteristics of a fad’² and then began to be criticised for not achieving the desired outcomes. It was seen to be too ‘touchy-feely’, and in particular to put the individual before the organisation and the informal organisation before the formal organisation. Not all consultants practising OD were well trained, and OD’s emphasis on openness and change was seen as threatening by managers. It was questioned whether OD’s emphasis on training programmes was in itself sufficient to produce lasting changes.

OD becomes more strategic

OD had to respond to these criticisms or die. From the mid-1970s, therefore, ‘the OD consultant began to change from a nondirective, process-oriented practitioner to an authoritative specialist as the tension between the humanistic concerns that founded OD and the “bottom line” grew’³. Attention shifted from the individual and workgroups to the larger work context at organisational level, and OD practitioners became involved in implementing new organisational strategic plans and in continuous learning, organisational transformation, cultural change and quality initiatives.

As part of this process, there was overlap with the training and personnel functions: trainers seeking to move from traditional classroom methods became interested in the techniques used by OD; while OD professionals worked with personnel specialists on (for example) team working and job design. OD practitioners became increasingly internal to the organisation rather than working as external consultants, often reporting within personnel (HR) departments.

The above refers largely to the USA. In the UK, OD played less of a role but the term ‘OD’ was (and to some extent still is, but see below) sometimes used for specialists – usually based within personnel departments - whose role was (very broadly) to link business strategy to people strategy.

Definitions

‘The growth of new approaches and techniques has blurred the boundaries [of OD] and made it increasingly difficult to describe’², and with the developments over the past thirty years it is not surprising that American academics have come up with a variety of definitions. In a textbook on OD⁴, four are given. According to them, OD is:

A planned process of change in an organisation’s culture through the utilisation of behavioural science technology, research and theory. (Warner Burke)
A long-range effort to improve an organisation’s problem-solving capabilities and its ability to cope with changes in its external environment with the help of external or internal behavioural-scientist consultants, or change agents as they are sometimes called. (Wendell French)
An effort (1) planned, (2) organisation-wide, and (3) managed from the top, to (4) increase organisation effectiveness and health through (5) planned interventions in the organisation’s ‘processes’, using behavioural science knowledge. (Richard Beckhard)
A systemwide process of data collection, diagnosis, action planning, intervention, and evaluation aimed at (1) enhancing congruence among organisational structure, process, strategy, people and culture; (2) developing new and creative organisational solutions; and (3) developing the organisation’s self-renewing capacity. It occurs through the collaboration of organisational members working with a change agent using behavioural science theory, research and technology. (Michael Beer)

These definitions may vary in emphasis, but there are common features:

OD applies to changes in the strategy, structure, and/or processes of an entire system, such as an organisation, a single plant of a multi-plant firm, a department or work group, or individual role or job.
OD is based on the application and transfer of behavioural science knowledge and practice (such as leadership, group dynamics and work design), and is distinguished by its ability to transfer such knowledge and skill so that the system is capable of carrying out more planned change in the future.
OD is concerned with managing planned change, in a flexible manner that can be revised as new information is gathered.
OD involves both the creation and the subsequent reinforcement of change by institutionalising change.
OD is orientated to improving organisational effectiveness by:
- helping members of the organisation to gain the skills and knowledge necessary to solve problems by involving them in the change process, and
- by promoting high performance including financial returns, high quality products and services, high productivity, continuous improvement and a high quality of working life.

A typical OD methodology

Precise approaches will vary according to the circumstances, but will broadly cover the following stages:

Analyse current position within the organisation
Prepare to change (usually involving gathering information)
Design (that is, plan the response that will be the most effective in the situation)
Communicate
Deliver the change
Evaluate (measure the effectiveness of the intervention).

OD and personnel management in the UK

It was reported in People Management in October 2006 that ‘an increasing number of senior HR practitioners seem to have sprouted two new initials: OD’⁵. The article, based on interviews with such practitioners, went on to suggest that there was confusion about the term. One interviewee said that ‘some OD directors…are simply the HR owners of leadership development and talent and succession management. Others are doing big business change and there’s everything in between’.

Personnel management as a whole, and not simply OD, has changed greatly since the 1980s. The rise of HRM has meant an increased emphasis on integrating the personnel function with business needs and taking a more strategic view. For more on this, see our factsheet on the history of personnel management.

Go to our factsheet on Personnel management: a
short history

Organisations have changed too: rather than functioning on traditional hierarchical lines, many are flatter and decentralised.

CIPD research

CIPD research since 1998 has shown that the pace of organisational change is accelerating, with large companies undergoing a major change every three years, while change also happens on a continuous basis. For example, devolving HR responsibilities to line managers, sub-contracting or outsourcing people management or other responsibilities, using consultants, team working, flexible working and ‘lean working’ generally all throw up different challenges. There are growing issues around managing people who are not employed by the organisation but who may deliver products or services to it.

With this growing complexity, the ‘hard stuff’ of organisations – structure and so on – needs to be integrated with the ‘soft’ – culture and the like. Fresh organisational models – virtual, networked, project- and process-based – all involve different trade-offs between knowledge and change capabilities, and those concerned in shaping them ‘should consciously position themselves on the trade-offs between knowledge, change, efficiency and control’⁶.

However, there is no single, off-the-shelf organisational model, because designing and developing organisations is increasingly an ongoing activity. Those who look for quick fixes are likely to be disappointed, and HR professionals need to be involved in design and implementation at the start or they ‘will inescapably be drawn into the messy business of picking up the pieces later’⁶.

For more details of our work in this area, visit our Research projects pages.

Visit our organisation development research page

CIPD viewpoint

Proponents of OD argue that at OD’s heart is the ability to focus on ‘all levels of the organisation – individual, group, inter-group, total system, and inter-organisational – rather than limiting the practice to one or two levels, as in, say, management and leadership development’⁷ – in brief, an ability to understand the whole organisation. This is an ambitious claim, and one that may not always be justified. However, given the increasing need for the personnel profession to act as a business partner, OD and its methods certainly have a part to play in developing HR’s strategic role and its involvement in organisational change, organisational culture and employee engagement.

Moreover, OD’s focus on people and its traditional humanistic values fit well with another of personnel’s roles: that of being the social conscience of the business or value champion. Many of the techniques of OD are being used by personnel and training specialists, often (one suspects) without those who use them being fully aware of their origins.

The discipline of OD is in something of a crisis in the USA: specialists there are concerned that it may become subsumed within the wider area of HR. In the UK and Europe, with little tradition of OD as a separate academic and corporate discipline, this may be of limited concern. What is important is that the values and techniques of OD have fed into those used by personnel professionals; in particular, OD’s emphasis on understanding the whole organisation is valuable for those who seek to develop the personnel function’s role as a strategic business partner.

References

For a description of the work of the Tavistock Institute, see GUEST, D. (2007) Now we are sixty. People Management. Vol 13, No 17, 23 August. pp40-41.
GREINER, L.E. and CUMMINGS, T.G. (2005) OD: wanted more alive than dead. In: BRADFORD, D.L. and BURKE, W.W. (eds) (2005) Reinventing organizational development. San Francisco: Pfeiffer.
RUONA, W.E.A and GIBSON, S.K. (2004) The making of twenty-first century HR: an analysis of the convergence of HRM, HRD and OD. Human Resource Management. Vol 43, No 1, Spring. pp49-66.
CUMMINGS, T.G, and WORLEY, C.G. (2005) Organization development and change. 8th ed. Mason, OH: South-Western Publishing.
PICKARD, J. (2006) Get your motor running. People Management. Vol 12, No 20, 12 October. pp40-41.
WHITTINGTON, R. and MAYER, D. (2002) Organising for success in the twenty-first century: a starting point for change. Research report. London: Chartered Institute of Personnel and Development.
BRADFORD, D.L. and BURKE, W.W. The crisis in OD, in BRADFORD, D.L. and BURKE, W.W. (eds) (2005) Reinventing organizational development. San Francisco: Pfeiffer.

Organisation development