A guide to organisation design approaches, the types of organisational structures, and the factors which influence the choice of organisation design
There are numerous ways to describe organisation development, all of which share common features despite their varied meanings. The factsheet offers an overview of these definitions and unpacks some of the confusion around the concept of organisation development itself, particularly that stemming from its multidisciplinary history.
This factsheet examines the the history of organisation development from academic beginnings and fad status to its present status as a widely practiced approach to building organisational performance. It provides guidance on how to put organisation development into practice through the use of 'interventions' in the workplace. Lastly, the factsheet explores the relationship between HR and organisational development, and how we should view the latter as a continuous review process and not just as a once-off intervention.
Organisation development isn’t a new discipline and has always had a focus on people, but it’s only relatively recently become considered as a mainstream discipline of HR. OD supporters argue that its strength is its ability to transcend functional boundaries within organisations and as such it may be counter-productive to anchor it in the HR function. However, given the increasing need for the HR profession to act as a business partner and its role in guiding behaviours and reinforcing values, OD and its methods play a part in developing HR’s strategic role and its involvement in organisational change and organisational culture. With that perspective there’s an opportunity to challenge assumptions about the organisation’s various communities and pose systems-level questions about the stakeholders they serve, the outcomes they aim to achieve for them, and the appropriate ways of achieving these outcomes.
OD requires sophisticated people management skills and can enable HR to develop the deep organisational insight that’s required to ensure the relationship between the business and its people delivers win-win solutions for both. OD requires the sponsorship and the active involvement of senior executives in order to operate at a strategic level, and implement interventions successfully.
What is organisation development?
We define organisation development (OD) as ‘planned and systematic approach to enabling sustained organisation performance through the involvement of its people’. Behind this definition lies a depth of research and practice, but also confusion.
Existing definitions emphasise different aspects of the OD process as well as its outcomes, 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.
The challenge with many of the definitions of OD is that they may be technically correct, but do they actually help people to understand and practice in the field of OD? This factsheet explores the history of OD and looks at the characteristics and examples of OD in practice.
The history of organisation development
OD developed primarily in the USA out of a number of different schools of thought and practice that have included applied behavioural sciences, sociology, systems thinking, and psychotherapy. Kurt Lewin’s work on group dynamics, action research and the consultant-client dynamic, form the early foundations of OD. More recently, this has also included newer developments and catalysts such as business process re-engineering, coaching, storytelling and large group interventions like team development.
This, in part, explains some of the confusion about OD. The term ‘OD’ is sometimes used interchangeably with other disciplines, such as organisational design, learning and development, and organisation effectiveness. The job title ‘OD consultant’ can therefore reference different disciplines and very different ways of working.
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.
Organisation development spreads
In the 1960s, the term ‘organisation development’ was introduced as an overarching umbrella for managing and developing the behavioural aspects of people in organisations. OD then spread rapidly in US, where companies were looking for help in changing the styles of their managers to improve organisational performance.
At this stage, OD focused on individuals and interpersonal relations, applying knowledge from behavioural sciences to implement long-term change in organisations. Its main methods were change managed from the top, action research, and collaboration with managers to create change.
However, like some other management techniques, OD gradually took on characteristics of a fad, seen to be too ‘touchy-feely’, putting 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.
Given the conflicting priorities that are likely to emerge in OD activities, modern companies need to be clear on the types of outcomes they are aiming to achieve for the business, its people, and the communities they interact with. Our factsheet Business ethics and the role of HR helps practitioners navigate their choices about designing and implementing organisational systems and practices
Putting organisation development into practice
One of the challenges in delivering OD work is that it's not just what you do, but also the mindset that is brought to bear on the work. So what does this mean in practice? Anything that an OD practitioner does in the organisation can be described as an ‘intervention’. Two examples of OD interventions are:
- The HR team working with the business planning team to develop a performance management system that properly aligns individual and organisational goals.
- HR business partners working with their IT and finance colleagues to provide a consistent approach to support management teams in delivering strategy.
So what makes these distinctively OD? An HR practitioner may design and implement a new performance management system without it being an OD intervention. What is distinctive is creating alignment with the work of other parts of the organisation in a planned way – what can be described as a ‘systemic and systematic mindset’. The aim of an OD intervention is to build the reflexivity and capability in the organisation to monitor its own health and to address these without constant intervention by an OD specialist. There isn't merely a change in the way things are done but a change in behaviour and sometimes attitude as a result of a successful OD intervention. There is a greater ability to reflect on and respond to shifts in strategy. Successful OD practitioners are often very effective at working with colleagues across different departments or organisational disciplines.
OD doesn’t replace HR but it does draw heavily on many of the processes of HR. As a people and problem-centred activity, it draws on the people data the organisation collects to support the diagnosis of potential issues linked to realigning to the desired change and the design of the OD intervention. To be successful in that role, an OD practitioner needs to also 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. The distinct contribution of OD is that it aims to align to strategy within the espoused values of the organisation.
Our report Landing transformational change covers some of the thinking and innovative ideas 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.
The relationship between OD and HR
The underlying characteristics of OD work help us to see the commonality across the different areas of OD and the link to HR.
- OD work contributes to the sustained health and effectiveness of the organisation.
- OD work is based upon robust diagnosis that uses real data from organisational, behavioural and psychological sources.
- OD work is planned and systemic in its focus and takes account of the whole organisation.
- OD practitioners help to create alignment between different activities, projects and initiatives.
- OD work involves groups of people in the organisation to maximise engagement, ownership and contribution.
In defining OD, and the associated skills required by an HR professional, emphasis is placed on the need to see OD as a continuous review process and not just as a one-off change intervention. HR needs to develop skills of collecting, analysing and acting on data and information and using this to provide insight across the business.
OD activities are usually managed from board level to ensure they reach across all areas of the business and take the organisation forward in a systematic way. There are many ways of delivering OD. HR might take the lead or it could be a multi-disciplinary approach. However, it's important that HR and OD work together to develop a long-term strategic view for the business where OD activities are supported and underpinned by people management practice.
Useful contacts and further reading
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 Ksenia Zheltoukhova.
Ksenia Zheltoukhova: Head of Research
Ksenia is responsible for leading research innovation and capability development at the CIPD. She joined in 2013 as a Research Adviser, leading a number of projects, including a major research programme, Profession for the Future, investigating principles-based approach to professional standards as a way of driving ethical and sustainable decision-making by the business.
Prior to the CIPD, Ksenia was a researcher at The Work Foundation, working on Future of HR, Leadership, and Health and Well-being streams. With a background in organisational psychology, she holds a PhD in Management from Lancaster University, where her research examined the effects of leaders’ sacrificial behaviours on followers.
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