Explores what organisation design is and how it can be done effectively in today’s organisations.
There are many ways to describe organisation development, all of which share common features despite their varied meanings. However, regardless of which approach is preferred, the importance of organisation development has grown over the years to become one of the most critical practices an organisation needs to embrace in order to maintain its levels of performance within a rapidly changing environment.
This factsheet explains what organisation development is, how the models and approaches have developed, and how it compares with organisation design. It looks at how organisation development can be carried out effectively and identifies the stages of the organisation development process.
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Organisation development has been elevated to a mainstream discipline for HR professionals. Its importance has been driven by the pace of change within organisations, which has been accelerating. Key aspects of change management, in particular, are now considered core knowledge for all HR professionals.
Organisation development specialists play a critical role in working with line leaders and HR practitioners to develop the organisation to achieve its goals. The specialists have expertise in navigating complexity to unpick what the organisation is trying to achieve; diagnose underlying issues, challenges, opportunities; and to select the best approaches to develop the organisation moving forward. Employees are often at the centre of changes to the organisation that follow and HR practitioners need to have a solid understanding of the relationship between organisation development, organisational strategy and the HR agenda. They should leverage their HR expertise and knowledge of the organisation to question assumptions, help surface non-obvious problems/issues; diagnose barriers/enablers to execution; and manage change effectively.
What is organisation development?
The Oxford Dictionary defines ‘development’ as “a specified state of growth or advancement” and, in its most basic form, this is what organisational development is. It is the practice of adapting, improving and evolving an organisation so that it can grow or advance. We develop it so that it can improve its performance and achieve its goals.
Development can take many forms and focus on different aspects of an organisation, which is why organisational development has come from various disciplines, which all take a slightly different approach to what it is and how it should be conducted. However, some fundamental principles are always present:
Organisation development focuses on maximising the value gained from the organisation’s resources – for example, in an automated manufacturing plant, the development might focus on mechanical efficiencies, whereas if the organisation produces people services, it might focus on people capabilities.
Organisational development focuses on an organisation’s strategy, goals and core purpose – all development is carried out to achieve these things to a greater extent. Development that’s undertaken without such a focus can become incongruent with the rest of the organisation and can cause issues in other areas.
Where an organisation’s main competitive advantage is delivered through their people (as opposed to technology or machinery), organisation development will involve applying behavioural science knowledge and practice, such as leadership, group dynamics and work design. This ensures that people practices are developed in a way that uses research-based insights and scientific understanding of how and why people behave the way they do.
Organisation development is related to change management in the sense that many developments would be implemented using change management practices, but also, because it is being done continuously; organisation development is a kind of planned, ongoing, systematic change that aims to institutionalise continual improvement within organisations.
Although these points could be seen to apply to almost any HR activity in an organisation, it’s important that recognise organisation development activities as slightly different in the sense that they are done for a different reason than day-to-day HR activities or improvements.
For example, a HR practitioner may review and develop the organisation’s performance appraisal process to improve the level of participation and reduce the time it takes to prepare for it. This could be referred to as a ‘business as usual’ development of a HR practice. Alternatively, a business could identify that people were working in silos, have little focus on their internal customer relationships, and have developed a ‘them and us’ culture between the different teams. In this case, the same appraisal process could be redesigned to include inter-team peer feedback to focus on internal customer service, and include a target of shadowing for a certain number of days to improve cross-team understanding. What makes this an organisation development activity is that the HR activity was redesigned to bring about a certain change that the business needed to make it more effective, not to just improve the effectiveness of the activity itself. There isn’t merely a change in the way the appraisal is done, but a change in resulting behaviours and attitudes as a result of a successful organisation development intervention.
Organisation development is where interventions are developed with a ‘systematic mindset’ – they create alignment with the organisations goals and activities in a planned and intentional way, with a view to bringing about a particular result that will improve the overall performance of the organisation. Our definition of organisation development from a HR perspective is ‘a planned and systematic approach to enabling sustained organisational performance through the involvement or its people’.
When an organisation review reveals a few areas as requiring change, the interventions would be considered organisation development. However, if the range of areas that require development are large, the level of work required is significant, or the interconnectivity of those areas requires a wholesale organisation change, this is where organisation development transcends into organisation design.
The history of organisation development
Organisation development has its roots in the US in the 1940s and 1950s. It comes from various schools of thought and practice including applied behavioural sciences, sociology and psychotherapy. Various academics and specialist consultancies researched what practices brought about higher levels of people-related results, and then applied that thinking to organisations to help achieve higher levels of performance.
Maslow who suggested that individuals were more likely to achieve ‘self-actualisation’ under conditions of openness and personal recognition, and that creating such an environment in workplaces would lead to higher levels of motivation and resulting performance.
McGregor proposed that different styles of leadership would result in different people reactions – more positive under ‘Theory Y’, which was participatory and democratic, and more negative under ‘Theory X’, which was oppressive and authoritarian. This theory was translated into leadership development activities and practices, and applied in the workplaces in order to bring about higher levels of people engagement and resulting performance.
More recently, organisation development has included more systematic approaches such as systems thinking, business process re-engineering, total quality management, continuous improvement, and human factors engineering. Efficiencies are found from streamlining processes and reducing areas of waste, and human interactions are analysed to identify how processes can be engineered to create specific behaviours and actions.
Each of these different disciplines approaches organisation development from a different stance, depending on what they identify to be the most critical factor in producing organisational performance. But despite their differences, they all aim to develop various practices within an organisation to improve its performance.
Who does organisation development?
This diverse interpretation of what organisation development actually is often causes confusion about who does it, and when. Not only is the term ‘OD’ sometimes used interchangeably with other disciplines, such as organisation design, learning and development, and organisation effectiveness, but the job title ‘Organisation Development consultant’ can also focus on a number of the above disciplines (for example, systems or people etc), and therefore involve very different ways of working from one organisation to another.
This is why organisation development may sit within a project management office, a quality and compliance function, or within the HR department. And when it does sit within HR, organisation development doesn’t replace HR, but it does heavily draw upon and develop many of the processes of HR to bring about the required change.
There are many ways of delivering organisation development. As it’s often a people and problem-centred activity, it usually spans different parts of an organisation, so successful organisation development practitioners need to be very effective at working with colleagues across departments or organisational disciplines in a multi-disciplinary approach. This provides a more holistically-informed perspective when analysing what works and how to realign practices to bring about a desired change.
Organisation development activities are usually overseen at board level to ensure they reach all areas of the business and take the organisation forward in a systematic way. Because of this, to be successful, practitioners also need to have a strong grasp of strategic planning and a good estimation of the potential of the organisation’s human capital and social capital to deliver value. Our Landing transformational change report covers the thinking in the field of change management and practical action points for change interventions in organisations. It’s complemented by case studies of four organisations applying the approaches in practice.
When and why to undertake organisation development
Organisations operate in a constantly-changing environment; externally (where markets change, new competitors emerge, and technology evolves) and internally (where people come and go, cultures evolve, and leadership agendas change). Because the this, organisations often find that the practices they have used historically that used to perform well, no longer work as well as they did - they need adjusting to maximise their impact on the organisation achieving its goals.
So it’s critical that organisation development is an ongoing activity rather than an annual or ad-hoc initiative. Without constant review of the organisation’s goals, its effectiveness in achieving them and an analysis of how the processes and practices are (or are not) helping achieve that performance, there is a risk of organisations drifting into complacency and decline.
One way to approach organisation development is to use organisational metrics and HR analytics to identify the ‘fit’ between the organisations goals and needs, and the practices that are attempting to fulfil them. So, for example, information from an annual staff survey might indicate that there are engagement issues, which might be having an impact upon absence and performance levels. This might be a trigger to undertake an organisation development initiative to review and redesign related practices to improve the connected areas of performance.
However, as well as the ongoing review of organisational effectiveness, there may be a more timebound trigger for undertaking organisational development activities.
The pace of change and disruption facing organisations has never been more of a challenge than now, where organisations are operating in an increasingly volatile and uncertain environment and the rate of disruption and transformation is happening quicker than ever before, with new technology, new start-up firms, and new customer habits all rapidly evolving.
Organisations have historically been able to rely on a linear approach to setting their strategy and goals, where a five year and beyond plan can be executed, and organisational practices designed to implement them. However, with the current pace of change, organisations are having to review their strategy, often altering their course in response to external forces. In these circumstances, it’s critical they fully embrace organisation development to make sure that their practices are in line with the new focus. This type of a trigger requires practitioners to undertake an audit of the organisation to identify what still ‘fits’, and what needs to be adapted.
The organisation development process
The organisation development process is made up of various stages:
Organisation review - to identify what it needs (‘needs analysis’). Uses a range of tools and approaches including:
- Strategic review
- Future state analysis
- Quantitative performance targets
- Target Operating Model.
Diagnose the extent to which those needs are being met – essentially the same thing as doing a gap analysis to identify the difference between a current position and the desired future position, but using a range of frameworks or diagnostic tools to analyse the situation fully, including:
- Lean / Six Sigma
- Force Field Analysis
- Investors in People (IIP)
- Total Quality Management (TQM)
- Organisation design frameworks (used as diagnostics), such as McKinsey’s 7S model, the Burke Litwin framework, or the 5 Star model.
What intervention would best fit the gap identified, and whether to design it or buy it in - because of organisation development’s multidisciplinary roots, there’re different types of intervention available which can be categorised as:
- Human process interventions – coaching, mentoring, training, group work, facilitation, action learning
- Techno-structural interventions – Lean / Six Sigma, business process re-engineering (BPR), outsourcing
- Human resource interventions – performance management, reward and motivation, employee surveys, psychometrics
- Strategic interventions – business planning, cultural change, transformation programmes.
All of these different types do the same thing in that they seek to develop the processes and practices within an organisation so that it can perform better, but each type approaches the activity differently depending on what the practitioner thinks is needed. In essence, what they are trying to achieve is improved organisational performance, but the how will differ depending on the preferred method. A good organisational development practitioner will identify what the challenge is (diagnosis), and decide which method / approach is most likely to improve it (treatment).
Implement the initiative - it’s always good practice to use robust change management practices, which will include focusing on communication, stakeholder involvement, and evaluation metrics.
Useful contacts and further reading
Videos and blogs
Corporate Rebels – blogs on forward thinking and emerging organisation design and development practices
Naomi Stanford – author and blogger on the practices companies should be targeting with their organisation design and development practices.
Books and reports
CANNON, J.A. and MCGEE, R. (2008) Organisational development and change. CIPD toolkit. London: Chartered Institute of Personnel and Development.
CHEUNG-JUDGE, M-Y. and HOLBECHE, L. (2015) Organization development: a practitioner's guide for OD and HR. 2nd ed. London: Kogan Page.
FRANCIS, H., HOLBECHE, L. and REDDINGTON, M. (2012) People and organisational development: a new agenda for organisational effectiveness. London: Chartered Institute of Personnel and Development.
GARDEN, A. (2015) The roles of organisation development. Aldershot: Gower.
STEWART, J. and ROGERS, P. (2012) Developing people and organisations. London: Chartered Institute of Personnel and Development.
Visit the CIPD and Kogan Page Bookshop to see all our priced publications currently in print.
ATKINSON, P. (2015) OD strategies: installing a lean and continuous improvement culture. Management Services. Vol 58, No 4, Winter. pp12-17.
AXELROD, R.H., & AXELROD, E.M. (2017). The scholar-practitioner mindset: how texts and experience influence organizational change practice. Academy of Management Review. Vol 42, No 3, pp561-571.
ELLIS, F. (2007) The benefits of partnership for OD and HR. Strategic HR Review. Vol 6, No 4, May/June. pp32-35.
VAN NISTELROOIJ, A. and SMINIA, H. (2010) Organization development : what's actually happening? Journal of Change Management. Vol 10, No 4, December. pp407-420.
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.
This factsheet was last updated by Sadie Sharp.
Sadie is an established consultant, professional speaker and non-executive director, specialising in transformational development for individuals and organisations. With a background in strategic HR, organisation re-design, change management and leadership development, she has applied her fresh thinking and innovative approach to help large and small organisations around the world question established ways of working and transform their organisations. In the past 15 years she's worked with universities, local government, Marks & Spencer, Santander, P&O, Sky and the NHS, to re-think how they operate through strategic consultancy, interim management, training, facilitation and coaching. Sadie regularly features at events and in publications to share her innovatively-framed and future-focused insights.
Visit Sadie's website.
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