CHAPTER 1
Organization Development and Reinventing the Organization
CHANGE IS THE CHALLENGE FOR ORGANIZATIONS
Change is coming down upon us like an avalanche, and most people are utterly unprepared to cope with it. Tomorrow's world will be different from today's, calling for new organizational approaches. Organizations will need to adapt to chang¬ing market conditions and at the same time cope with the need for a renewing rather than reactive workforce. Every day managers confront massive and accelerating change. As one writer comments, "Call it whatever you like—reengineering, restructuring, transformation, flattening, downsizing, rightsizing, a quest for global competitiveness—it's real, it's radical and it's arriving every day at a company near you."'
Global competition and economic downturns have exposed a glaring weakness in American organizations: the fact that many of them have become overstaffed, cumbersome, slow, and inefficient. To increase productivity, enhance competi¬tiveness, and contain costs, organizations have changed and continue to change the way they are organized and managed.
Organizations are never completely static and they do not exist in isolation of other entities. They are in continuous in¬teraction with external forces including competitors, customers, governments, stockholders, suppliers, society, and unions. Their interactions with their environment are illustrated in Figure 1.1. The conditions facing today's organizations are different from those of past decades. Many companies face global as well as domestic competitors. Changing consumer lifestyles and technological breakthroughs all act on the, organization to cause it to change. Government regulation and deregulation are continually changing, while at the same time, international trade agreements present both new opportunities and obstacles. Stockholders are demanding more accountability. Suppliers, providing both products and services to organizations, come more and more from the world economy. The society within which an organization operates influences the modes, values, and norms that are developed within the organization. The employees and unions have a direct and substantial influence on how well an organization functions. The CEO of Intel Corporation. Paul Otellini. expressed his frustration with operating in an en¬vironment of unknowns in a Wall St/eel Journal interview. "The problem is that there used to be one set of rules out there— U.S. antitrust laws were the de facto rules of the world. Now with globalization, we have different sets of rules for different regions, such as the EU, written around entirely different philosophies. It would sure make things easier if we decided on a single set of rules once again—whatever they are. Then we'd know how to behave and we could plan better for the future."2
The type and degree of external forces vary from one organization to another, but all organizations face the need to adapt to these forces. Many of these changes are forced upon the organization, whereas others are generated internally. Because change is occurring so rapidly, there is a need for new ways to manage it. General Mills is one of a number of
FIGURE 1.1 The Organization Environment
companies that has recognized the challenges confronting it. As the economy unraveled during the first few years of the 2000s, General Mills looked far afield to come up with ways to cut costs. "We can't get by doing what we did yesterday." says retired CEO Stephen Sanger.? Organizations are changing and will continue to do so in order to survive in this complex environment.
This book has been written to help managers and would-be managers learn about organization development (OD) and the part it can play in bringing about change in organizations The purpose is twofold: (1) to create an awareness of the changing environmental forces confronting the modem manager and (2) to provide the techniques and skills needed for dealing with change in organizations.
Organizations are using OD techniques to increase their effectiveness and then adaptabil¬ity to changing conditions. In this chapter, you will learn about this exciting field; What OD is, why it has emerged, and some basic concepts pertaining to the process of organization change. The chapter concludes with a model for organizational change describing the stages of the organ¬ization development process.
WHAT IS ORGANIZATION DEVELOPMENT?
What makes one organization a winner, whereas another fails to make use of the same opportu¬nities? The key to survival and success lies not in rational, quantitative approaches, but rather in a commitment to irrational, difficult-to-measure things like people, quality, customer, service, and, most important, developing the flexibility to meet changing conditions. Employee involve¬ment and commitment are the true keys to successful change.
Organization development (OD) comprises the long-range efforts and programs aimed at improving an organization's ability to survive by changing its problem-solving and renewal processes. OD involves moving toward an adaptive organization and achieving corporate excel¬lence by integrating the desires of individuals for growth and development with organizational goals. According to a leading authority on OD, Richard Beckhard, "Organization development is an effort: (1) planned, (2) organization-wide, (3) managed from the top. (4) to increase organiza¬tion effectiveness and health, through (5) planned interventions in the organization's processes using behavioral science knowledge.
Organization development efforts are planned, systematic approaches lo change. They in¬volve changes to the total organization or to relatively large segments of it. The purpose of OD efforts is to increase the effectiveness of the system and to develop the potential of all the individ¬ual members. It includes a series of planned behavioral science intervention activities carried out in collaboration with organization members to help find improved ways of working together to¬ward individual and organizational goals.
Another way of understanding OD is to explain what it is not:
• OD is not a micro approach to change. Management development, for example, is aimed at changing individual behavior, whereas OD is focused on the macro goal of developing an organization-wide improvement in managerial style.
. OD is not any single technique. OD uses many different techniques, such as total quality management or job enrichment, and none of them by itself represents the OD discipline.
• OD does not include random or ad hoc changes. OD is based on a systematic appraisal and diagnosis of problems, leading to planned and specific types of change efforts.
• OH is not exclusively aimed at raising morale or attitudes. OD is aimed at overall organi¬zational health and effectiveness. Participant satisfaction may be one aspect of the change effort, but it includes other effectiveness parameters as well.
Organization development is an emerging discipline aimed at improving the effective¬ness of the organization and its members by means of a systematic change program. Chester Barnard and Chris Argyris, among other management theorists, have noted that a truly effec¬tive organization is one in which both the organization and the individual can grow and de¬velop. An organization with such an environment is a "healthy" organization. The goal of organization development is to make organizations healthier and more effective. These con¬cepts apply to organizations of all types, including schools, churches, military forces, govern¬ments, and businesses.
Change is a way of life in today's organization, but organizations are also faced with maintaining a stable identity and operations in order to accomplish their primary goals. Conse¬quently, organizations involved in managing change have found that the way they handle it is critical. There is a need for a systematic approach and for the ability to discriminate between features that are healthy and effective and those that are not. Erratic, short-term, unplanned, or haphazard changes may introduce problems that did not exist before or result in side effects that may be worse than the original problem. Managers should also be aware that stability or equi¬librium can contribute to a healthy state. Change inevitably involves the disruption of that steady state. Change just for the sake of change is not necessarily effective; in fact, it may be dysfunctional.
The Characteristics of Organization Development
To enlarge upon the definition of OD, let us examine some of the basic characteristics of OD pro¬grams (see Table 1.1).
• Change. OD is a planned strategy to bring about organizational change. The change effort aims at specific objectives and is based on a diagnosis of problem areas.
• Collaborative approach. OD typically involves a collaborative approach to change that in¬cludes the involvement and participation of the organization members most affected by the changes.
• Performance orientation. OD programs include an emphasis on ways to improve and enhance performance and quality.
• Humanistic orientation. OD relies on a set of humanistic values about people and organi¬zations that aims at making organizations more effective by opening up new opportunities for increased use of human potential.
• Systems approach. OD represents a systems approach concerned with the interrelationship of divisions, departments, groups, and individuals as interdependent subsystems of the to¬tal organization.
• Scientific method. OD is based upon scientific approaches to increase organization effectiveness.