MGM628 - OD Handouts Final PDF

MGMT628 – Organizational Development Lesson Topics Page 1 The Challenge for Organizations -------------------------------------...

MGMT628 – Organizational Development Lesson Topics Page 1 The Challenge for Organizations --------------------------------------------------------- 1 2 OD: A Unique Change Strategy --------------------------------------------------------- 4 3 What an “ideal” effective, healthy organization would look like? --------------------- 8 4 The Evolution of OD--------------------------------------------------------------------- 11 5 The Evolution of OD (Continued) ------------------------------------------------------ 14 6 The Organization Culture--------------------------------------------------------------- 20 7 The Nature of Planned Change -------------------------------------------------------------- 25 8 Action Research Model ------------------------------------------------------------------- 31 9 General Model of Planned Change ------------------------------------------------------ 35 10 The Organization Development Practitioner ------------------------------------------- 43 11 Creating a Climate for Change --------------------------------------------------------------- 48 12 OD Practitioner Skills and Activities ------------------------------------------------------- 55 13 Professional Values ------------------------------------------------------------------------ 62 14 Entering and Contracting ---------------------------------------------------------------------- 67 15 Diagnosing Organizations -------------------------------------------------------------------- 73 16 Organization as Open Systems ----------------------------------------------------------- 80 17 Diagnosing Organizations ---------------------------------------------------------------- 85 18 Diagnosing Groups and Jobs ------------------------------------------------------------- 91 19 Diagnosing Groups and Jobs (Continued) --------------------------------------------- 97 20 Collecting and Analyzing Diagnostic information ------------------------------------ 100 21 Collecting and Analyzing Diagnostic information ------------------------------------ 108 22 Designing Interventions ------------------------------------------------------------------- 121 23 Leading and Managing Change ---------------------------------------------------------- 129 24 Leading and managing change ----------------------------------------------------------- 135 25 Evaluating and Institutionalizing Organization Development ----------------------- 143 26 Evaluating and Institutionalizing Organization Development (Continued) -------- 147 27 Evaluating and Institutionalizing Organization Development (Continued) -------- 156 28 Interpersonal and Group Process Approaches ----------------------------------------- 160 29 Interpersonal and Group Process Approaches (Continued) -------------------------- 164 30 Interpersonal and Group Process Approaches (Continued) ------------------------------------------------------- 168 31 Interpersonal and Group Process Approaches (Continued) -------------------------- 171 32 Interpersonal and Group Process Approaches (Continued) -------------------------- 175 33 Organization Process Approaches ------------------------------------------------------------------ 179 34 Restructuring Organizations ------------------------------------------------------------------------ 187 35 Restructuring Organizations(Continued) ----------------------------------------------- 195 36 Employee Involvement --------------------------------------------------------------------------------------------------------------------------------------------------- 203 37 Employee Involvement(Continued) ----------------------------------------------------- 211 38 Work Design ------------------------------------------------------------------------------- 219 39 Performance Management --------------------------------------------------------------- 228 40 Developing and Assisting Members ---------------------------------------------------- 237 41 Developing and Assisting Members (Continued) ----------------------------------------------------------------------------------- 249 42 Organization and Environment Relationships --------------------------------------- ---- 261 43 Organization Transformation ---------------------------------------------------------------- 276 44 The Behavioral Approach ---------------------------------------------------------------- 284 45 Seven Practices of Successful Organizations ------------------------------------------ 293 Organization Development – MGMT 628 VU Lesson 01 The Challenge for Organizations We live in a world that has been turned upside down. Companies are pouring money, technology, and management expertise into regions that were once off limits, acquiring new enterprises, forming joint ventures, creating new global businesses from the ground up. Many major companies are going through significant changes, including outsourcing, downsizing, reengineering, self-managed work teams, flattening organizations, and doing routine jobs with automation and computers. Some experts contend that if you can describe a job precisely or write rules for doing it, the job will probably not survive. Change is avalanching down upon our heads and most people are utterly unprepared to cope with it. Tomorrow’s world will be different from todays, calling for new organizational approaches. Organizations will need to be adapting to these changes market conditions and at the same time coping with the need for a renewing rather than reactive workforce. Every day managers are confronting 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 organizations have become overstaffed, cumbersome, slow and inefficient. To increase productivity, enhance competitiveness and contain costs, organizations are changing the way they are organized and managed. The successful twenty-first century manager must deal with a chaotic world of new competitors and constant innovation. In the future the only winning companies will be the ones that respond quickly to change. Preparing managers to cope with today’s accelerating role of change is the central theme/purpose of my lectures (concern of this book). Modern manager must not only be flexible and adaptive in a changing environment but must also be able to diagnose problems and implement change programs. Tom Peters suggests that “the time for 10 percent staff cuts and 20 percent quality improvement is past”. Organizations are never completely static. They are in continuous interaction with external forces (see figure below). Changing consumer lifestyles and technological breakthroughs all act on the organization to cause it to change. The degree of change may vary from one organization to another, but all face the need for adaptation to external 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. Figure: 01 The Organizational Environment: The Growth and Relevance of OD: Organizations must adapt to increasingly complex and uncertain technological, economic, political, and cultural changes. The rapidly changing conditions of the past few years have shown that the organizations are in the midst of unprecedented uncertainty and chaos, and nothing short of a management revolution will save them. Three major trends are shaping change in organizations: globalization, information technology, and managerial innovation. © Copyright Virtual University of Pakistan 1 Organization Development – MGMT 628 VU First: globalization is changing the markets and environments in which organizations operate as the way they function. New governments, new leadership, new markets, and new countries are emerging and creating a new global economy. The toppling of the Berlin Wall symbolized and energized the reunification of Germany: entrepreneurs appeared in Russia, the Balkans, and Siberia as the former Soviet Union evolves, in fits and starts, into separate, market-oriented states; and China emerged as an open market and as the governance mechanism over Hong Kong to represent a powerful shift in global economic influence. Second: information technology is redefining the traditional business model by changing how work is performed, how knowledge is used, and how the cost of doing business is calculated. The way an organization collects, stores, manipulates, uses, and transmits information can lower costs or increase the value and quality of products and services. Information technology, for example, is at the heart of emerging e-commerce strategies and organizations. Amazon.com, E-Trade, are among many recent entrants to the information economy, and the amount of business being conducted on the Internet is projected to grow at double-digit rates for well over ten years. Moreover, the underlying rate of innovation is not expected to decline. Electronic data interchange, a state-of-the-art technology application a few years ago, is now considered routine business practice. The ability to move information easily and inexpensively throughout and among organizations has fueled the downsizing, delayering, and restructuring of firms. The Internet and the World Wide Web have enabled a new form of work known as telecommuting; organization members can work from their homes or cars without ever going to the office. Finally, information technology is changing how knowledge is used. Information that is widely shared reduces the concentration of power at the top of the organization. Organization members now share the same key information that senior managers once used to control decision making. Ultimately, information technology will generate new business models in which communication and information sharing is nearly free. Third: managerial innovation has responded to the globalization and information technology trends and has accelerated their impact on organizations. New organizational forms, such as networks, strategic alliances, and virtual corporations, provide organizations with new ways of thinking about how to manufacture goods and deliver services. The strategic alliance, for example, has emerged as one of the indispensable tools in strategy implementation. No single organization, not even IBM, Mitsubishi, or General Electric, can control the environmental and market uncertainty it faces. Sun Microsystems’ network is so complex that some products it sells are never touched by a Sun employee. In addition, new methods of change, such as downsizing and reengineering, have radically reduced the size of organizations and increased their flexibility, and new large-group interventions, such as the search conference and open space, have increased the speed with which organizational change can take place. Managers, OD practitioners, and researchers argue that these forces not only are powerful in their own right but are interrelated. Their interaction makes for a highly uncertain and chaotic environment for all kinds of organizations, including manufacturing and service firms and those in the public and private sector. There is no question that these forces are profoundly affecting organizations. Fortunately, a growing number of organizations are undertaking the kinds of organizational changes needed to survive and prosper in today’s environment. They are making themselves more streamlined and nimble and more responsive to external demands. They are involving employees in key decisions and paying for performance rather than for time. They are taking the initiative in innovating and managing change, rather than simply responding to what has already happened. Organization Development is playing an increasingly key role in helping organizations change themselves. It is helping organizations assess themselves and their environments, and revitalize and rebuild their strategies, structures, and processes. OD is helping organization members go beyond surface changes to transform the underlying assumptions and values governing their behaviors. The different OD concepts and methods increasingly are finding their way into government agencies, manufacturing firms, multinational corporations, service industries, educational institutions, and not-for-profit organizations. Perhaps at no other time has OD been more responsive and practically relevant to organizations’ needs to operate effectively in a highly complex and changing world. What is Organization Development (OD)? What makes one organization a winner, whereas another fails to make use of the same opportunities? The key to survival and success lies not in the rational, quantitative approaches, but rather in a commitment to irrational, difficult-to-measure things like people, quality, customer service, and more importantly, develop the flexibility to meet changing conditions. For example, in a study that examined the “high tech-high touch” phenomenon at Citicorp, the crucial component in adapting to technological change was the human factor. Employee involvement and commitment is the true key to successful change. © Copyright Virtual University of Pakistan 2 Organization Development – MGMT 628 VU Defining Organization Development (OD): The words organization development refers to something about organizations and developing them. “An organization is the planned coordination of the activities of a number of people for the achievement of some common explicit purpose or goal, through division of labor and functions, and through a hierarchy of authority and responsibility.” Organizations are social systems possessing characteristics and OD efforts are directed toward organizations or major subparts of them. Development is the act, process, result, or state of being developed – which in turn means to advance, to promote the growth of, to evolve the possibilities of, to further, to improve, or to enhance something. Two elements of this definition seem important: first, development may be an act, process, or end state; second, development refers to “bettering’ something. Combining these words suggests that organization development is the act, process, or result of furthering, advancing, or promoting the growth of organization. According to this definition, organization development is anything done to “better” an organization. But this definition is too broad and all-inclusive. It can refer to almost anything done in an organizational context that enhances the organization – hiring a person with needed skills, firing an incompetent, merging with another organization, installing a computer, removing a computer, buying a new plant, and so on. This definition serves neither to identify and specify nor to delimit (perhaps something done to “worsen” an organization would be ruled out). The term organization development must be given added meaning, must refer to something more specific, if productive discourse on the subject is desired. Another way of defining OD is to examine the following definitions which have been (suggested in the literature). Definition of Organization Development (OD): OD is an effort (1) planned, (2) organization-wide, and (3) managed from the top, to (4) increase organization effectiveness and health through (5) planned interventions in the organization’s “processes,” using behavioral science knowledge. (Richard Beckhard) Analysis of the definition suggests that OD is not just “anything done to better an organization”; it is a particular kind of change process designed to bring about a particular kind of end result. OD thus represents a unique strategy for system change, a strategy largely based in the theory and research of the behavioral sciences, and a strategy having a substantial prescriptive character. OD is thus a normative discipline, it prescribes how planned change in organizations should be approached and carried out if organization improvement is to be obtained. In summary, OD is a process of planned system change that attempts to make organizations (viewed as social-technical systems) better able to attain their short- and long-term objectives. This is achieved by teaching the organization members to manage their organization processes and culture more effectively. Facts, concepts, and theory from the behavioral sciences are utilized to fashion both the process and the content of the interventions. A basic belief of OD theorists and practitioners is that for effective, lasting change to take place, the system members must grow in the competence to master their own fates. Finally, it is important to note that OD has two broad goals: organization development and individual development. Although it is not stated explicitly in the above definitions, improving the quality of life for individuals in organizations is a primary goal of organization development. Enhancing individual development is a key value of OD practitioners and a key outcome of most OD programs. OD is an effort which planned OD is an effort which organization-wide OD is an effort which managed from the top OD is an effort which use behavioral science © Copyright Virtual University of Pakistan 3 Organization Development – MGMT 628 VU Lesson 02 OD: A Unique Change Strategy Consulting to organizations can take many forms. For example, Edgar Schein describes three consulting models: Types of consultation models: i. Purchase of Expertise Model ii. Doctor-patient Model iii. Process Consultation Model In the “purchase of expertise model,” a leader or group identifies a need for information or expertise that the organization cannot supply. The leader hires a consultant to obtain the information and make a report, often including recommendations for action. Example would be (1) surveying consumers or employees about some matter, (2) finding out how best to organize the company after a merger, or (3) developing a marketing strategy for a new product. This is a typical consulting approach that is widely used. In the “doctor-patient model,” a leader or group detects symptoms of ill health in some part of the organization, and calls in a consultant who diagnoses the situation, identifies the causes of problems and then, like a physician, prescribes a cure. Examples would be calling in “the doctor” to examine (1) low morale at a particular plant, (2) being over budget and behind schedule on a major project, or (3) a high- performing manager who suddenly becomes a low-performer. This too is a well-known, traditional approach to consultation. In the “process consultation model,” the consultant works with the leader and group to diagnose strengths and weaknesses, identify problems and opportunities, and develop action plans and methods for reaching desired goals. In this model the consultant assists the client organization in becoming more effective at examining and improving its own processes of problem solving, decision-making and action taking. This third model, typical in OD, encourages greater collaboration between clients and consultants, engages the resources and talents of the clients, and strengthens clients’ abilities to improve their work processes. Examples would include working on any of the previously mentioned problems, but using a collaborative, participative, you-can-figure-out-the-right-answer-yourselves approach. An organization development consultant typically suggests general processes and procedures for addressing problems and issues. The consultant helps the clients generate valid data and learn from the data. The OD consultant is an expert on process-how to “go about” effective problem solving and decision making. Thus, OD differs substantially from traditional “expert” models of consulting in its overall approach. Likewise, OD practitioners have different goals and focus on different targets compared with other consulting models. Here is a list of “primary distinguishing characteristics of organization development” 1. Change: OD is a planned strategy to bring about organizational change. The change effort focuses on the human and social side of the organization and in so doing, also intervenes in the technological and structural sides. 2. Collaborate: OD typically involves a collaborative approach to change that includes the involvement and participation of the organization members most affected by the changes. Participation and involvement in problem solving and decision making by all levels of the organization are hallmarks of OD. 3. Performance: OD programs include an emphasis on ways to improve and enhance performance and quality. 4. Humanistic: OD relies on a set of humanistic values about people and organizations that aims at making organizations more effective by opening up new opportunities for increased use of human potential. 5. Systems: OD represents a systems approach concerned with the interrelationship of divisions, departments, groups, and individuals as interdependent subsystems of the total organization. 6. Scientific: OD is based upon scientific approaches to increase organization effectiveness. While the six characteristics, described above, describe organization development, let us add another means of identifying OD. Characteristics of OD: An OD Program is a long-range, planned, and sustained effort that unfolds according to a strategy. The key elements here are long range, planned and sustained, and strategy. Let’s look at each one independently: Long-range: The reason for OD practitioners and theorists conceptualizing OD programs in long-range terms are several. First, changing a system’s culture and processes is a difficult, complicated, and long-term matter if lasting change is to be effected. OD programs envision that the system members become better able to manage their culture and processes in problem-solving and self-renewing ways. Such complex new learning takes time. Second, the assumption is made that organizational problems are multifaceted and complex. One-shot interventions probably cannot solve such problems, and they most assuredly cannot teach the client system to solve them in such a short time period. © Copyright Virtual University of Pakistan 4 Organization Development – MGMT 628 VU There is a long-range time perspective on the part of both the client system and the consultant in OD program. Both parties envision an ongoing relationship of one, two, or more years together if things go well in the program. A one-short intervention into the system is thus not organization development according to this criterion even though the intervention may be one that is used in OD efforts. Planned and Sustained effort: OD involves deliberately planned change, as contrasted with system “drifts.” Unlike an innovative project or program it is generally not limited to a specific period of time. To implement OD, an organizational subsystem – such as a Department of OD – is created and charged with the specific responsibility for planning, managing, and evaluating the continuous process of organizational self-renewal. Members of such a subsystem act as inside change agents or OD development specialists … and usually link with outside consultants to carry out their mission. The essential concept is that some fraction of an organization’s resources is devoted to continuous organizational maintenance, rebuilding, and expansion. Such a concept is familiar to managers in the field of plant maintenance but is much less widely known and accepted in the maintenance of the human organization. Organizations are not easily or quickly transformed. The available evidence suggests that in large organizations two to three years of OD effort is typical before the completion of serious and self-sustaining change. In addition, it must be borne in mind that an organization is never transformed permanently. Instead, institutionalized, built-in OD functions must continually be involved in facing the dilemmas and vicissitudes of organizational renewal. An organizational subsystem is created (OD department). There is, however, a point that is a source of some confusion. When some good management practices are taking place in an organization without an OD program – for example, a manager has worked out effective ways to manage team and inter-group culture and processes – is that organization development? We do not think so. OD practitioners try to inculcate good management practices in organizations, that is, they try to help organization members learn to manage themselves and others better. But many managers and many organizations are competently managing their affairs without help from organization development consultants and OD programs; what they are doing would not be called OD even though they may be using some techniques found in the OD technology. OD practitioners did not invent good management practices; OD practitioners are not the sole source for learning good management practices; and finally, the term organization development is not synonymous with the term good management. Strategy: OD programs unfold according to a strategy. A part of the planned nature of OD programs almost always involves an overall strategy even though the strategy may be only dimly obvious and articulate, and even though the strategy may emerge and change shape over time. (From our experience, the more viable OD efforts have a fairly clear and openly articulated strategy.) Consultants and clients develop overall goals and paths to goals on organization development programs, and these guide the programmatic activities. It is preferable and usual for the strategy to be developed out of the diagnosed problems of the client system, the client system’s desires and capabilities, and the consultant’s capabilities and insights into client system needs. The OD consultant establishes a unique relationship with client system members: Probably the most fundamental differences between organization development programs and other organization development programs are found in the role and behavior of the consultant vis-à-vis the client system. In OD the consultant seeks and maintains a collaborative relationship of relative equality with the organization members. Collaboration means “to labor together” – essentially it implies that the consultant does not do all the work while the client system passively waits for solutions to its problems; and it means that the client system does not do all the work while the consultant is a disinterested observer. In organization development, consultant and client co-labor. A second distinguishing feature of the consultant-client relationship is that it is one of relative equality – the two parties come together as relative equals, each possessing knowledge and skills different from but needed by the other. The client group is encouraged to critique the consultant’s program and his or her effectiveness in terms of meeting client system needs and wants. In OD the consultant’s role is generally that of a facilitator, not an expert on matters of content; the consultant acts primarily as a question-asker, and secondarily as an answer-giver. The consultant’s role is often described as nondirective and that is partially true, but the rationale behind this nondirective posture is less well understood. The OD consultant role rests on three beliefs. The first belief is simply an affirmation of the efficacy of division of labor and responsibility: let the consultant be responsible for doing what he or she does best (structuring activities designed to solve certain problems); and let the client system do what it does best (bring to bear its special knowledge and expertise on the problem and alternative solutions). The second belief is derived from the question: Where is the best solution to this problem likely to be found? In situations where the consultant is an expert role, the answer to the question is that the best solution is in the consultant’s head due to that person’s education, experience, and expertise. Both clients and consultant believe this. In organization development situations © Copyright Virtual University of Pakistan 5 Organization Development – MGMT 628 VU where the consultant is playing an enabling and facilitating role, the answer is that the best solution is in the heads of the client members and the challenge is to structure situations to allow it to become known. The third belief is that the responsibility for changing something rests ultimately in the client system members, not in the consultant. Therefore the members of the client system must “own” the problem and the solution, and that is best done when they generate both the problems and the solutions. This belief no doubt rests on Lewin’s conceptualization of “own” and “induced” forces. Lewin believed, and demonstrated, that an individual’s own forces toward a particular behavior were more powerful in determining the behavior than forces/motives/pushes induced by some outside agent. The consultant is both expert and directive on matters relating to the best ways to facilitate/enable the client group to approach, diagnose, and solve its problems. In organization development, it is this expertise that the clients expect from the consultant - the expertise to offer the clients effective ways to work on problems, not answers to problems. The nature of the intervention differentiates OD from other improvement strategies: OD consultants fashion, conduct, or cause to happen, interventions – structured sets of activities and events in the life of the organization designed to achieve certain outcomes. As indicated in Fig (definitions of OD), the nature of these interventions is that they are reflective, self-analytical, self-examining, proactive, diagnostically oriented, and action oriented. Further, they focus on the organization culture and its human processes. OD consultants try to inculcate diagnostic skills, self-analytical skills, and reflexive skills in organization members, based on the belief that the organization’s members must be able to diagnose situations accurately in order to arrive at successful solutions. But there are several additional beliefs in this statement. Diagnosis and self-reflection are necessary skills to have for problem solution – that is a belief of OD consultants. But who should possess those skills? “The client system members,” answer OD consultants; “me,” answer expert consultants. This is a key difference in the OD prescription. Another belief involved here is the belief that both the problems and the solutions to the problems abound in the client system members. Teaching the client system to diagnose and solve problems and take corrective actions is the goal of the OD consultant. The overriding goal is that the client system members learn to do it themselves. This tenet derives from nondirective therapy notions suggesting that responsibility for improvement and change rests in the individual (organization) that needs to change, not some outside agent. This is supported by most discussions of normalcy and maturity in psychotherapy that include the patient’s ability to solve problems, adapt effectively, and cope effectively as criteria for a healthy organism. Many authors, including Gordon Lippitt, speak of the organization “learning from experience,” and the OD literature suggests that “learning how to learn” is a desired outcome of OD interventions. This is what is being discussed: that the client system becomes expert in self-examination, diagnosis, and corrective action taking. Planning, problem solving, and self-renewal are also mentioned as important processes for the client system to be reflexive about. The same overriding goal applies here: the client system members must learn to manage these processes effectively by themselves. There is thus a unique character to the nature of OD interventions: the intent that the client system becomes proficient in solving its own problems – present and future – by itself. The ancient Chinese proverb seems to describe the underlying rationale: ‘Give a man a fish, and you have given him a meal; teach a man to fish, and you have given him a livelihood.” System improvement: The emphasis of OD is on the system, rather than the individual, as the target of change. In this respect the approach differs from “sensitivity training” and “management development.” “System” may mean either an entire organization or a subsystem such as an academic department or team of teachers. The emphasis however is always on improving both the ability of a system to cope and the relationships of the system with subsystems and with the environment. Individuals, of course, often gain insights and new attitudes during such improvement processes, but the primary concern of OD is with such matters as adequate organizational communication, the integration of individual and organizational goals, the development of a climate of trust in decision making, and the effect of the reward system on morale. Reflexive, self-analytic methods: OD involves system members themselves in the assessment, diagnosis, and transformation of their own organization. Rather than simply accepting diagnosis and prescription from an outside “technocratic” expert, organization members themselves, with the aid of outside consultants, examine current difficulties and their causes and participate actively in the reformulation of goals, the development of new group process skills, the redesign of structures and procedures for achieving the goals, the alteration of the working climate of the system, and the assessment of results. The targets of OD interventions differentiate OD from other improvement strategies: The OD prescription calls for certain configurations of people as targets of OD interventions – intact work groups, two or more work-related groups, subsystems of organizations, and total organizations. Katz and © Copyright Virtual University of Pakistan 6 Organization Development – MGMT 628 VU Kahn speak of “role sets,” the offices (positions) and people an individual interacts with while performing role-relevant behavior in an organization. They state: Each member of an organization is directly associated with a relatively small number of others, usually the occupants of offices adjacent to his in the work-flow structure or in the hierarchy of authority. They constitute his role set and typically include his immediate supervisor (and perhaps his supervisor’s immediate supervisor), his subordinates, and certain members of his own or other virtue of the work-flow, technology, and authority structure of the organization. Many of an individual’s values, norms, and perceptions of organizational reality are derived from contact with role-set members. Role enactment problems derive from interaction with role-set members. A person’s immediate work group, immediate supervisor, and immediate subordinates are immensely important factors for an individual’s effectiveness in an organization. OD interventions concentrate on work-relevant constellations of people in the belief that these groups have inherent in them considerable power to determine individual and group behavior and also contain many of the sources of organizational problems. What goes on between units is also of vital importance in organizational effectiveness. OD goes beyond intact work teams and also focuses on enhancing key interdependences across units and levels. For example, data are typically collected about the degree of cooperation versus dysfunctional competition between the various units, and identified problems are then worked on with members of the relevant groups present. Thus, intergroup configurations are a second major target of OD interventions. A third target of OD interventions is the organization’s processes and culture. In a sense, OD is comprehensive long-term effort to collaboratively manage the culture of an organization (since processes can be considered part of organization culture). As shown in Figure 1, some of the authors mention culture and some of the authors mention human and social processes as the targets of OD interventions. Problem- solving, planning, self-renewal, decision-making, and communications processes are identified as important processes. This focus on culture and processes is simply a part of the bet/hypothesis/belief system that OD consultants have: culture and processes are important strategic leverage points in an organization for bringing about organization improvement and change. Other consultants and practitioners make different bets on the best strategic leverage points – the technology of the organization, the structure of the organization, its design, and so forth. OD consultants, because they are working with a behavioral science knowledge base, focus on culture and processes. And the OD prescription suggests that these two targets are important ingredients in the process of planned organizational change. OD consultants utilize a behavioral science base: This is a characteristic of the practice of OD, but it is shared by many different improvement strategies. The behavioral science knowledge base of the practice of OD contributes to its distinctive gestalt. OD is an applied field in which theories, concepts, and practices from sociology, psychology, social psychology, education, economics, psychiatry, and management are brought to bear on real organizational problems. The desired outcomes of OD are distinctive in nature: The desired outcomes of OD efforts are both similar to other improvement strategies, and different from other improvement strategies. OD programs and efforts are designed to produce organizational effectiveness and health, better system functioning, greater ability to achieve objectives, and so forth, as shown in some of the definitions in Figure 1. But some of the definitions point additional desired outcomes: outcomes relating to a changed organizational culture, to changed processes (especially renewal and adaptation processes) and to the establishing of norms of continual self-study and pro-action. Michael Beer lists the aims of OD as: “(1) enhancing congruence between organizational structure, processes, strategy, people, and culture; (2) developing new and creative organizational solutions, and (3) developing the organization’s self-renewing capacity.’ It is these self-renewal outcomes that seem particularly distinctive in the OD process. © Copyright Virtual University of Pakistan 7 Organization Development – MGMT 628 VU Lesson 03 What an “ideal” effective, healthy organization would look like? Numbers of writers and practitioners in the field have proposed definitions which, although they differ in detail, indicate a strong consensus of what a healthy operating organization is. An effective organization is one in which: 1. The total organization, the significant subparts, and individuals, manage their work against goals and plans for achievement of these goals. 2. Form follows function (the problems, or task, or project, determines how the human resources are organized). 3. Decisions are made by and near the sources of information regardless of where these sources are located on the organization chart. 4. The reward system is such that managers and supervisors are rewarded (and punished) comparably for: Sort-term profit or production performance, Growth and development of their subordinates, and creating a viable working group. 5. Communication laterally and vertically is relatively undistorted. People are generally open and confronting. They share all the relevant facts including feelings. 6. There is a minimum amount of inappropriate win/lose activities between individuals and groups. Constant effort exists at all levels to treat conflict, and conflict situations, as problems subject to problem-solving methods. 7. There is high “conflict” (clash of ideas) about tasks and projects, and relatively little energy spent in clashing over interpersonal difficulties because they have been generally worked through. 8. The organization and its parts see themselves as interacting with each other and with a larger environment. The organization is an “open system.” 9. There is a shared value, and management strategy to support it, of trying to help each person (or unit) in the organization maintains his (or its) integrity and uniqueness in an interdependent environment. 10. The organization and its members operate in an “action-research” way. General practice is to build in feedback mechanisms so that individuals and groups can learn from their own experience. The only constant is Change: Although many organizations have been able to keep pace with the changes in information technology, few firms have been able to adapt to changing social and cultural conditions. In a dynamic environment, change is unavoidable. The pace of change has become so rapid that it is difficult to adjust to or compensate for one change before another is necessary. Change is, in essence, a moving target. The technological, social, and economic environment is rapidly changing, and an organization will be able to survive only if it can effectively respond to these changing demands. As we move into the twenty first century, increases in productivity of 100 percent, not 10 percent, will be required for corporations to compete effectively. Given this increasingly complex environment, it becomes even more critical for management to identify and respond to forces of social and technical change. In attempting to manage today’s organizations, many executives find that their past failures to give enough attention to the changing environment are how creating problems for them. In contrast 3M Corporation has developed an outstanding reputation for innovation. 3M is big but acts small. 3M’s 15 percent rule allows its people to spend up to 15 percent of the work week on anything as long as it is product related. The most famous example to come out of this is Post-it note. The Organization of the Future: The fundamental nature of managerial success is changing. The pace of this change is relentless, and increasing past sources of competitive advantage, such as economies of scale and huge advertising budgets, is no longer as effective in the new competitive landscape. Moreover, the traditional managerial approach can no longer lead a firm to economic leadership. (See the OD in Practice what Trilogy Software is doing to become a successful company of the future.) Today’s managers need a new mind set – one that values flexibility, speed, innovation, and the challenge that evolves from constantly changing conditions. Virtual organizations can spring up overnight as networks of free agents combine expertise for a new project or produce. Nothing could be more flexible, ready to turn on a dime and grab any new opportunity. Management theorists believe that to be successful in the next century, organizations will require changes of the kind in the figure 2 They suggest that predictability is a thing of the past, and that the winning organization of today and tomorrow, it is becoming increasingly clear, will be based upon quality, innovation, and flexibility. These successful firms will share certain common traits including © Copyright Virtual University of Pakistan 8 Organization Development – MGMT 628 VU Faster – more responsive to innovation and change Quality conscious – totally committed to quality Employee involvement – adding value through human resources Customer oriented – creating niche markets Smaller – made up of more autonomous units Figure: 02 Fig. 1.2. The Changing Organization of the © Copyright Virtual University of Pakistan 9 Organization Development – MGMT 628 VU OD in Practice: Trilogy Software – A New Kind of Company: A dropout of Stanford, Joe Liemandt, formed a small software company, Trilogy Software Inc., in Austin, Texas, in 1989. Starting with a small investment, the company grew from 400 to 1000 employees within a short span of four years. Today, Trilogy is among the world’s largest privately held software companies and is a leading provider of industry-specific software. To call all those who work for Trilogy as “workers” would be wrong. They are all shareholders. They are all managers. They are all partners. The founder, since its start, knows one thing that is Trilogy depends on talented people. He also knows that people can go anywhere, join any of the competitive companies, which means that his biggest competitive headache isn’t companies. His biggest worry is holding onto people. “There is nothing more important than recruiting and developing people,” he says. “That’s my number-one job. Trilogy is going head-to-head with Microsoft and other biggies in the talent war. They have a very clear teachable point of view of what Trilogy is and what they practice. They know how to energize people, how to make courageous decisions. The CEO personally teaches a large portion of the classes held for Trilogy’s employee recruitment and development program – the glue that binds. Trilogy has some unusual practices, including perks like speedboat for water skiing available to all employees, fully stocked kitchens on every floor, and parties every Friday. And there are spontaneous awards, such as a sports car for good work and trip to a Las Vegas. The CEO once took the entire company on a week-long, all-expense-paid trip to Hawaii. Bonuses are given to top performers that are equal to 50 or 100 percent of their regular salaries. The economy is fostering new kinds of organizations with new kinds of practices and operating rules for pulling people together. These companies offer many of the advantages of free agency; flexibility in how, when, and where you work; compensation linked to what you contribute; freedom to move from project to project. However, they also offer the advantages of belonging to an organization in which mutual commitment builds continuity. © Copyright Virtual University of Pakistan 10 Organization Development – MGMT 628 VU Lesson 04 The Evolution of OD A brief history of OD will help to clarify the evolution of the term as well as some of the problems and confusion that have surrounded it. As currently practiced, OD emerged from five major stems, as shown below. The first was the growth of the National Training Laboratories (NTL) and the development of training groups, otherwise known as sensitivity training or T-groups, The second stem of OD was the classic work on action research conducted by social scientists interested in applying research to managing change. An important feature of action research was a technique known as survey feedback. Kurt Lewin, a prolific theorist, researcher, and practitioner in group dynamics and social change, was instrumental in the development of T-groups, survey feedback, and action research. His work led to the creation of OD and still serves as a major source of its concepts and methods. The third stem represents the application of participative management to organization structure and design. The fourth stem is the approach focusing on productivity and the quality of work life. The fifth stem of OD, and the most recent influence on current practice, involves strategic change and organization transformation. Figure: 03 1. Laboratory Training (The T-Group): This stem of OD pioneered laboratory training, or the T-group – a small, unstructured group in which participants learn from their own interactions and evolving dynamics about such issues as interpersonal relations, personal growth, leadership, and group dynamics. Essentially, laboratory training began in 1946, when Kurt Lewin, (1898 – 1947, a prolific theorist, researcher, and practitioner in interpersonal, group, intergroup, and community relationships) widely recognized as the founding father of OD, although he died before the concept became current in the mid-1950s, and his staff at the Research Centre for Group Dynamics at the Massachusetts Institute of Technology (MIT) were asked by the Connecticut Interracial Commission for help on research in training community leaders. A workshop was developed, and the community leaders were brought together to learn about leadership and to discuss problems. At the end of each day, the researchers discussed privately what behaviors and group dynamics they had observed. The community leaders asked permission to sit in on these feedback sessions. Reluctant at first, the researchers finally agreed. Thus, the first T-group was formed in which people reacted to data about their own behavior. The researchers drew two conclusions about the first T-group experiment: Feedback about group interaction was a rich learning experience, and The process of “group building” had potential for learning that could be transferred to “back-home” situations. © Copyright Virtual University of Pakistan 11 Organization Development – MGMT 628 VU As a result of this experience, the Office of Naval Research and the National Education Association provided financial backing to form the National Training Laboratories (NTL), and Gould Academy in Bethel, Maine, was selected as a site for further work (since the, Bethel has played an important part in NTL). The first Basic Skill Training Groups (later called T-groups) were offered in 1947. The program was so successful that out of Bethel experiences and NTL grew a significant number of laboratory training centers sponsored by universities. In the 1950s, three trends emerged: The emergence of regional laboratories, The expansion of year-round sessions of T-groups, and The expansion of the T-group into business and industry, with NTL members becoming increasingly involved with industry programs. Over the next decade, as trainers began to work with social systems of more permanency and complexity then T-groups, they began to experience considerable frustration in the transfer of laboratory behavioral skills and insights of individuals into the solution of problems in organizations. Personal skills learned in the T-group settings were very difficult to transfer to complex organizations. However, the training of “teams” from the same organization had emerged early at Bethel and undoubtedly was a link to the total organizational focus of Douglas McGregor, Herbert Shepard, and Robert Blake, and subsequently the focus of Richard Beckhard, Chris Argyris, Jack Gibb, Warren Bennis, and others. All had been T-group trainers in NTL programs. Applying T-group techniques to organizations gradually became known as team building – a process for helping work groups become more effective in accomplishing tasks and satisfying member needs. 2. Action Research/Survey Feedback: Kurt Lewin also was involved in the second movement that led to OD’s emergence as a practical field of social science. This second stem refers to the processes of action research and survey feedback. The action research contribution began in the 1940s with studies conducted by social scientists John Collier, Kurt Lewin, and William Whyte. They discovered that research needed to be closely linked to action if organization members were to use it to manage change. A collaborative effort was initiated between organization members and social scientists to collect research data about an organization’s functioning, to analyze it for causes of problems, and to devise and implement solutions. After implementation, further data were collected to assess the results, and the cycle of data collection and action often continued. The results of action research were twofold: members of organizations were able to use research on themselves to guide action and change, and social scientists were able to study that process to derive new knowledge that could be used elsewhere. Among the pioneering action research studies was the work of Lewin at a Manufacturing Co. (Harwood Manufacturing Company) and the classic research by Lester Coch and John French on overcoming resistance to change. The latter study led to the development of participative management as a means of getting employees involved in planning and managing change. Other notable action research contributions included Whyte and Edith Hamilton’s famous study of Chicago’s Tremont Hotel and Collier’s efforts to apply action research techniques to improving race relations when he was commissioner of Indian affairs from 1933 to 1945. These studies did much to establish action research as integral to organization change. Today, it is the backbone of most OD applications. A key component of most action research studies was the systematic collection of survey data that was fed back to the client organization. Following Lewin’s death in 1947, his Research Center for Group Dynamics at MIT moved to Michigan and joined with the Survey Research Center as part of the Institute doe Social Research. The Institute was headed by Renis Likert, a pioneer in developing scientific approaches to attitude surveys. Likert’s doctoral dissertation at Columbia University, “A Technique for the Measurement of Attitudes,” was the classic study in which he developed the widely used, five-point “Likert Scale.” In an early study by the institute, Likert and Floyd Mann administered a companywide survey of management and employee attitudes at Detroit Edison. Over a two-year period beginning in 1948, three sets of data were developed: (1) the viewpoints of eight thousand non-supervisory employees about their supervisors, promotion opportunities, and work satisfaction with fellow employees; (2) similar reactions from first- and second-line supervisors; and (3) information from higher levels of management. The feedback process that evolved was an “interlocking chain of conferences.” The major findings of the survey were first reported to the top management and then transmitted throughout the organization. The feedback sessions were conducted in task groups, with supervisors and their immediate subordinates discussing the data together. Although there was little substantial research evidence, the researchers intuitively felt that this was a powerful process for change. In 1950, eight accounting departments asked for a repeat of the survey, thus generating a new cycle of feedback meetings. In four departments, feedback approaches were used, but the method varied, with two © Copyright Virtual University of Pakistan 12 Organization Development – MGMT 628 VU of the remaining departments receiving feedback only at the departmental level. Because of changes in key personnel, nothing was done in two departments. A third follow-up study indicated that more significant and positive changes, such as job satisfaction, had occurred in the departments receiving feedback than in the two departments that did not practice. From those findings, Likert and Mann derived several conclusions about the effects of survey feedback on organization change. This led to extensive applications of survey-feedback methods in a variety of settings. The common pattern of data collection, data feedback, action planning, implementation, and follow-up data collection in both action research and survey feedback can be seen in these examples. Part of the emergence of survey research and feedback was based on the refinements made by SRC (Survey Research Center of Michigan) staff members in survey methodology. Another part was the evolution of feedback methodology. Likert Scale: Likert scale is often used in questionnaires, and is the most widely used scale in survey research. When responding to a Likert questionnaire item, respondents specify their level of agreement to a statement. A typical test item in a Likert scale is a statement. The respondent is asked to indicate his or her degree of agreement with the statement or any kind of subjective or objective evaluation of the statement. Traditionally a five-point scale is used, however many advocate using a seven or nine point scale. Ice cream is good for breakfast: o Strongly disagree o Disagree o Neither agree nor disagree o Agree o Strongly agree Scoring and analysis: After the questionnaire is completed, each item may be analyzed separately or item responses may be summed to create a score for a group of items. Results of Action Research/Survey Feedback: Likert, along with some of his colleagues, while doing a company-wide study of employee perceptions, behavior, reactions and attitudes found that: When the survey data were reported to a manager (or supervisor) and he or she failed to discus the results with subordinates and failed to plan with them what the managers and others should do to bring improvement, little change occurred. On the other hand, when the manager discussed the results with subordinates and planned with them what to do to bring improvement, substantial favorable changes occurred. Another aspect of the study was the process of feeding back data from an attitude survey to the participating departments had more positive change in business organizations than that coming from traditional training courses. The effectiveness of this method is that it deals with the system of human relationships as a whole (supervisors and subordinates can change together) and it deals with each manager, supervisor, and employee in the context of his job, his own position, and his own work relationship. © Copyright Virtual University of Pakistan 13 Organization Development – MGMT 628 VU Lesson 05 The Evolution of OD Figure: 04 3. Participative Management The intellectual and practical advances from the laboratory training stem and the action research/survey- feedback stem were followed closely by the belief that a human relations approach represented a one-best- way to manage organizations. This belief was exemplified in research that associated Likert’s Participative Management (System 4) style with organizational effectiveness. This framework characterized organizations as having one of four types of management systems: Exploitative authoritative systems (System 1) exhibit an autocratic, top-down approach to leadership. Employee motivation is based on punishment and occasional rewards. Communication is primarily downward, and there is little lateral interaction or teamwork. Decision making and control reside primarily at the top of the organization. System 1 results in mediocre performance. Benevolent authoritative systems (System 2) are similar to System 1, except that management is more paternalistic. Employees are allowed a little more interaction, communication, and decision making but within boundaries defined by management. Consultative systems (System 3) increase employee interaction, communication, and decision making. Although employees are consulted about problems and decisions, management still makes the final decisions. Productivity is good, and employees are moderately satisfied with the organization. Participative group systems (System 4) are almost the opposite of System 1. Designed around group methods of decision making and supervision, this system fosters high degrees of member involvement and participation. Work groups are highly involved in setting goals, making decisions, improving methods, and appraising results. Communication occurs both laterally and vertically, and decisions are linked throughout the organization by overlapping group membership. System 4 achieves high levels of productivity, quality, and member satisfaction. Likert applied System 4 management to organizations using a survey-feedback process. The intervention generally started with organization members completing the Profile of Organizational Characteristics. The survey asked members for their opinions about both the present and ideal conditions of six organizational features: leadership, motivation, communication, decisions, goals, and control. In the second stage, the data were fed back to different work groups within the organization. Group members examined the discrepancy between their present situation and their ideal, generally using System 4 as the ideal benchmark, and generated action plans to move the organization toward System 4 conditions. © Copyright Virtual University of Pakistan 14  Quality of Work Life (QWL) refers to the overall well-being, satisfaction, and work-life balance that employees experience in their workplace, emphasizing Organization Development – MGMT 628 VU a positive and supportive environment. Quality of Work Life: The contribution of the productivity and quality-of-work (QWL) background to OD can be described in two phases. The first phase, starting in 1950s, aimed at better integrating technology and people. These QWL programs generally involved joint participation by unions and management in the design of work and resulted in work designs giving employees high levels of discretion, task variety, and feedback about results. Perhaps the most distinguishing characteristic of these QWL programs was the development of self- managing work groups as a new form of work design. These groups were composed of multiskilled workers who were given the necessary autonomy and information to design and manage their own task performances. Two definitions of QWL emerged during its initial development. QWL was first defined in terms of people’s reaction to work, particularly individual outcomes related to job satisfaction and mental health. Using this definition, QWL focused primarily on the personal consequences of the work experience and how to improve work to satisfy personal needs. A second definition of QWL defined it as an approach or method. People defined QWL in terms of specific techniques and approaches used for improving work. It was viewed as synonymous with methods such as job enrichment, self-managed teams, and labor-management committees. This technique orientation derived mainly from the growing publicity surrounding QWL projects, such as ….. Starting in 1979, a second phase of QWL activity emerged. A major factor contributing to the resurgence of QWL was growing international competition faced by the US in markets at home and abroad. It became increasingly clear that the relatively low cost and high quality of foreign-made goods resulted partially from the management practices used abroad, especially in Japan. As a result, QWL programs expanded beyond their initial focus on work design to include other features of the workplace that can affect employee productivity and satisfaction, such as reward systems, work flows, management styles, and the physical work environment. This expanded focus resulted in larger-scale and longer-term projects than had the early job enrichment programs and shifted attention beyond the individual worker to work groups and the larger work context. Equally important, it added the critical dimension of organizational efficiency to what had been up to that time a primary concern for the human dimension. At one point, the productivity and QWL approach became so popular that it was called an ideological movement. This was particularly evident in the spread of quality circles within many companies. Popularized in Japan, quality circles are groups of employees trained in problem-solving methods who meet regularly to resolve work-environment, productivity, and quality-control concerns and to develop more efficient ways of working. Today, this second phase of QWL activity continues primarily under the banner of “employee involvement,” rather than of QWL. For many OD practitioners, the term “EL” signifies, more than the name QWL, the growing emphasis on how employees can contribute more to running the organization so it can be more flexible, productive, and competitive. Recently, the term “employee empowerment” has been used interchangeably with the term EL, the former suggesting the power inherent in moving decision making downward in the organization. Employee empowerment may be too restrictive, however. Because it draws attention to the power aspects of these interventions, it may lead practitioners to neglect other important elements needed for success, such as information, skills, and rewards. Consequently, EL seems a broader and less restrictive banner than does employee empowerment for these approaches to organizational improvement. Finally, the productivity and QWL approach has gained new momentum by joining forces with the total quality movement advocated by Demming & Juran. In this approach, the organization is viewed as a set of processes that can be linked to the quality of products and services, modeled through statistical techniques and improved continuously. Strategic Change: The strategic change stem is a recent influence on OD’s evolution. As organizations and their technological, political, and social environments have become more complex and more uncertain, the scale and intricacies of organizational change have increased. This trend has produced the need for a strategic perspective from OD and encouraged planned change process at the organization level. Strategic change involves improving the alignment among an organization’s environment, strategy, and organization design. Strategic change interventions include efforts to improve both the organization’s relationship to its environment and the fit between its technical, political, and cultural systems. The need for strategic change is usually triggered by some major disruption to the organization, such as the lifting of regulatory requirements, a technological breakthrough, or a new chief executive officer coming in from outside the organization. One of the first applications of strategic change was Richard Beckhard’s use of open system planning. He proposed that an organization’s environment and its strategy could be described and analyzed. Based on © Copyright Virtual University of Pakistan 15 Organization Development – MGMT 628 VU the organization’s core mission, the differences between what the environment demanded and how the organization responded could be reduced and performance improved. Since then, change agents have proposed a variety of large-scale or strategic change models, each of which recognizes that strategic change involves multiple levels of the organization and a change in its culture, is often driven from the top by powerful executives, and has important effects on performance. The strategic change stem has significantly influenced OD practice. For example, implementing strategic change requires OD practitioners to be familiar with competitive strategy, finance, and marketing, as well as team building, action research, and survey feedback. Together, these skills have improved OD’s relevance to organizations and their managers. A Model for Organizational Development: Organization development is a continuing process of long-term organizational improvement consisting of a series of stages; the emphasis is placed on a combination of individual, team, and organizational relationships. The primary difference between OD and other behavioral science techniques is the emphasis upon viewing the organization as a total system of interacting and interrelated elements. Organization development is the application of an organization-wide approach to the functional, structural, technical, and personal relationships in organizations. OD programs are based upon a systematic analysis of problems and a top management actively committed to the change effort. The purpose of such a program is to increase organizational effectiveness by the application of OD values and techniques. Many organization development programs use the action research model. Action research involves collecting information about the organization, feeding this information back to the client system, and developing and implementing action programs to improve system performance. The manager also needs to be aware of the processes that should be considered when one is attempting to create change. This section presents a five- stage model of the total organization development process. Each stage is dependent on the preceding one, and successful change is more probable when each of these stages is considered in a logical sequence. © Copyright Virtual University of Pakistan 16 Organization Development – MGMT 628 VU Figure: 05 Organization Development’s Five Stages Stage One: Anticipate a Need for Change: Before a program of change can be implemented, the organization must anticipate the need for change. The first step is the manager's perception that the organization is somehow in a state of disequilibrium or needs improvement. The state of disequilibrium may result from growth or decline or from competitive, technological, legal, or social changes in the external environment. There must be a felt need, because only felt needs convince individuals to adopt new ways. Managers must be sensitive to changes in the competitive environment, to "what's going on out there." When a new CEO of AT&T Corporation took over, he made it clear to top executives that it was not business as usual. In his first week as CEO, he brought in the company's top 20 officers to tell them that the company's tradition of keeping people in top jobs as long as they didn't mess up was over. According to one person at the meeting, the CEO said "You are going to be in my boat or out of it. But don't be there barking or rowing against it Stage Two: Develop the Practitioner-Client Relationship: After an organization recognizes a need for change and an OD practitioner enters the system, a relationship begins to develop between the practitioner and the client system. The client is the person or organization that is being assisted. The development of this relationship is an important determinant of the probable success or failure of an OD program. As with many interpersonal relationships, the exchange of expectations and obligations (the formation of a psychological contract) depends to a great degree upon a good first impression or match between the practitioner and the client system. The practitioner attempts to establish a pattern of open communication, a relationship of trust and an atmosphere of shared responsibility. Issues dealing with responsibility, rewards, and objectives must be clarified, defined, or worked through at this point. The practitioner must decide when to enter the system and what his or her role should be. For instance, the practitioner may intervene with the sanction and approval of top management and either with or without the sanction and support of members in the lower levels of the organization. At one company, OD started at the vice-presidential level, and by using internal OD practitioners the OD program was gradually expanded to include line managers and workers. At another company, an external practitioner from a university was invited in by the organization's industrial relations group to initiate the OD program. Stage Three: The Diagnostic Phase: After the OD practitioner has intervened and developed a working relationship with the client, the practitioner and the client begin to gather data about the system. The collection of data is an important activity providing the organization and the practitioner with a better understanding of client system problems: the diagnosis. © Copyright Virtual University of Pakistan 17 Organization Development – MGMT 628 VU Explain the purpose of diagnosis at organizational level? One rule of operation for the OD practitioner is to question the client's diagnosis of the problem, because the client's perspective may be biased. After acquiring information relevant to the situation perceived to be the problem, the OD practitioner and client together analyze the data to identify problem areas and causal relationships. A weak, inaccurate, or faulty diagnosis can lead to a costly and ineffective change program. The diagnostic phase, then, is used to determine the exact problem that needs solution, to identify the forces causing the situation, and to provide a basis for selecting effective change strategies and techniques. Although organizations usually generate a large amount of "hard" or operational data, the data may present an incomplete picture of organizational performance. The practitioner and client may agree to increase the range or depth of the available data by interview or questionnaire as a basis for further action programs. One organization, for instance, was having a problem with high employee turnover. The practitioner investigated the high turnover rate by means of a questionnaire to determine why the problem existed, and from these data designed an OD program to correct the problems. The firm's employees felt it had become a bureaucratic organization clogged with red tape, causing high turnover. OD programs have since reduced employee turnover to 19 percent, compared with 34 percent for the industry. At a major food company, a new executive vice president needed to move quickly to improve the division's performance. With the help of an external practitioner, data were gathered by conducting intensive interviews with top management, as well as with outsiders, to determine key problem areas. Then, without identifying the source of comments, the management team worked on the information in a 10-hour session until solutions to the major problems was hammered out and action plans developed. Stage Four: Action Plans, Strategies, and Techniques: The diagnostic phase leads to a series of interventions, activities, or programs aimed at resolving problems and increasing organization effectiveness. These programs apply such OD techniques as total quality management (TQM), job design, role analysis, goal setting, team building, and inter-group development to the causes specified in the diagnostic phase (all of these techniques are discussed in detail in subsequent chapters). In all likelihood, more time will be spent on this fourth stage than on any of the other stages of an OD program. Stage Five: Self-Renewal, Monitor, and Stabilize: Once an action program is implemented, the final step is to monitor the results and stabilize the desired changes. This stage assesses the effectiveness of change strategies in attaining stated objectives. Each stage of an OD program needs to be monitored to gain feedback on member reaction to the change efforts. The system members need to know the results of change efforts in order to determine whether they ought to modify, continue, or discontinue the activities. Once a problem has been corrected and a change program is implemented and monitored, means must be devised to make sure that the new behavior is stabilized and internalized. If this is not done, the system will regress to previous ineffective modes or states. The client system needs to develop the capability to maintain innovation without outside support. Continuous Improvement: In today's environment, companies seeking to be successful and survive are faced with the need to continually introduce changes. The unlikely has become commonplace, and the unthinkable has become almost inevitable. The most important lesson managers need to learn is that there are only two kinds of companies — those that are changing, and those that are going out of business. Continual change is a way of life. A critical challenge for managers who are leading change efforts is to inspire individuals to work as a team. This five stage model shows how different OD methods and approaches are used to continuously improve performance so that the vision can be achieved. It is important to remember that no model or paradigm is perfect, but it can still provide useful approaches to change. As an OD program stabilizes, the need for the practitioner should decrease. If the client moves toward independence and evidences a self-renewal capacity, the gradual termination of the practitioner-client system relationship is easily accomplished. If the client system has become overly dependent upon the practitioner, termination of the relationship can be a difficult and awkward issue. At one company, for example, the program produced tangible benefits. Of 264 managers involved in the program, 93 percent reported that the program led to improved teamwork. One important issue in the implementation of an OD program is whether or not the practitioner is able to deal effectively with power and the use of power. Hierarchical organizations, whether they be business, governmental, for-profit, or not-for-profit, rely on power. The individuals in positions of influence generally constitute the power structure and frequently are power-motivated people. Managers compete for promotions, and departments and divisions have disagreements over budget allocations, Political infighting is a reality (and often a dysfunctional factor) in most organizations, and the issue is whether OD © Copyright Virtual University of Pakistan 18 Organization Development – MGMT 628 VU practitioners deal with these power issues in bringing about a change. In a study of high-speed decision making, Kathleen Eisenhardt and L. J. Bourgeois III found that politics influence decisions and those political conflicts "within top management teams are associated with poor firm performance. The OD practitioner acts as a facilitator to promote team problem solving and collaboration, and encourages such values as trust, openness, and consensus. Given the nature of an OD program, it is our view that OD is not a political/power type of intervention. Given the political nature of organizational decision making, however, the OD practitioner must be aware of politics and use a problem-solving approach that is compatible with power-oriented situations. © Copyright Virtual University of Pakistan 19 Organization Development – MGMT 628 VU Lesson 06 The Organization Culture Basically, organizational culture is the personality of the organization. Culture is comprised of the assumptions, values, norms and tangible signs (artifacts) of organization members and their behaviors. Culture is one of those terms that are difficult to express distinctly, but everyone knows it when they sense it. For example, the culture of a large, for-profit corporation is quite different than that of a hospital which is quite different that that of a university. You can tell the culture of an organization by looking at the arrangement of furniture, what they brag about, what members wear, etc. -- similar to what you can use to get a feeling about someone's personality. Organizational culture is the shared values, beliefs, norms, and practices that shape the behavior and interactions of people within a Definition: workplace. It defines "how things are done" in an organization. “The culture of an organization is its customary and traditional way of thinking and doing things, which is shared to a greater or lesser degree by all its members, and which new members must learn and at least partially accept, in order to be accepted into service in the firm. Culture covers a wide range of behavior: the methods of production; job skills and technical knowledge; attitudes towards discipline and punishment; the custom and habit of managerial behavior; its way of doing business; the methods of payment; the values placed on different types of work; beliefs in democratic living and joint consultation”. Culture shows up in both visible and invisible ways. Some manifestations of this energy field called "culture" are easy to observe. You can see the dress code, work environment, perks, and titles in a company. This is the surface layer of culture. These are only some of the visible manifestations of a culture. The far more powerful aspects of culture are invisible. The cultural core is composed of the beliefs, values, standards, paradigms, worldviews, moods, internal conversations, and private conversations of the people that are part of the group. This is the foundation for all actions and decisions within a team, department, or organization. Visible Manifestations of Culture: Dress Code Work Environment Benefits Perks Conversations Work/Life Balance Titles & Job Description Organizational Structure Invisible Manifestations of Culture: Values Private Conversations (with self or confidants) Invisible Rules Attitudes Beliefs Worldviews Moods and Emotions Unconscious Interpretations Standards of Behavior Paradigms Assumptions Business leaders often assume that their company's vision, values, and strategic priorities are synonymous with their company's culture. Unfortunately, too often, the vision, values, and strategic priorities may only be words hanging on a plaque on the wall. In a thriving profitable company, employees will embody the values, vision, and strategic priorities of their company. What creates this embodiment (or lack of embodiment) is the culture that permeates the employees' psyches, bodies, conversations, and actions. The energy fields that make up a group's culture are dynamic and change continuously. Culture is created and constantly reinforced on a daily basis through conversations, symbols, rituals, written materials, and body language. It is the small, mundane actions and behaviors that create a culture and can shift a culture. Creating and sustaining a healthy, vibrant culture requires reinforcement of the culture through daily and proactive conversations and communications. The failure to discuss the values, purpose, and rules within a group often leads to a culture that is at cross purposes with the stated intention of the group. Poor communication creates a lot of confusion and often a crisis of meaninglessness. © Copyright Virtual University of Pakistan 20 Organization Development – MGMT 628 VU Since a culture is created every time a group of people come together to form a team, a company will have many sub-cultures that exist within its main culture. Within the company, there may be sub-cultures in departments, divisions, regions or operating units. For example, the marketing and technology teams may have different worldviews, jargon, work hours, and ways to do things. A big challenge for today's company is to create a strong, cohesive corporate culture that pulls all of the sub-cultures together and ensures that they can work as a unified team. Corporate culture starts when the organization begins and develops as it grows. Corporate culture controls the way the people in an organization interact with each other and the stakeholders outside the organization. Over time, the culture changes as people come and go. Culture reflects the values, ethics, beliefs, personality and traits of the company's founders, management and employees. In a well-established company, the culture is so strong that even new top management may not be able to change it. Or, if they try, it may take 5, 10 or 20 years to change. Employees who feel comfortable and compatible with the company culture will stay; those who don't will leave or will not perform as well as they can. Culture is extremely powerful. The rules of the game, what behavior is ethical and accepted, the mood of the organization, and the enthusiasm of employees are all contained in the culture. So, culture can be a powerful, hidden asset or it can be a liability - a time-bomb waiting to go off. If your leadership team has not pro-actively created a corporate culture to support the company's purpose, then chances are that the culture is a hidden liability. Every time people come together with a shared purpose, culture is created. This group of people could be a family, neighborhood, project team, or company. Culture is automatically created out of the combined thoughts, energies, and attitudes of the people in the group. Have you ever noticed how people react to foreign visitors; whether an exchange student or a visiting professional? The stranger may be welcomed, but may never be accepted unless that person can adapt to the norms of their new environment. If they do not, the members will shun the stranger and reject the alien from their culture. The same is true in business. If the new employee, consultant or visitor cannot adapt to the corporate culture, their chances for success are slight. The members of the culture will reject the person outright and will work against them. The reason for this phenomenon is because people tend to prefer conformity in their culture. Conformity represents a harmonious environment where the behavior and actions are predictable. Most people have a deeply rooted desire for a sense of order and stability in their lives, which is what conformity provides. A stable environment promotes self-confidence in the members of the culture and allows them to concentrate on their work. Culture is an energy force that becomes woven through the thinking, behavior, and identity of those within the group. Culture is powerful and invisible and its manifestations are far reaching. Culture determines a company's dress code, work environment, work hours, rules for getting ahead and getting promoted, how the business world is viewed, what is valued, who is valued, and much more. The term organization culture refers to a system of shared meanings, including the language, dress, patterns of behavior, value system, feelings, attitudes, interactions, and group norms of the members. Examine the patterns of behavior on your campus or in your company. How do people dress? What jargon or unique terms do they use? Norms: Norms are organized and shared ideas regarding what members should do and feel, how this behavior should be regulated, and what sanctions should be applied when behavior does not coincide with social expectations. The values and behaviors of every organization are unique. Some patterns of behavior may be functional and may facilitate the accomplishment of organizational goals. Other patterns of behavior or cultural norms may actually inhibit or restrict the accomplishment of organization goals. A look at the types of norms that exist in an organization will help in gaining a better understanding of the organization's culture. Norms are generally enforced only for the behaviors viewed as most important by most group members. Norms essential to accomplishing the organization's objectives are called pivotal norms. Norms that support and contribute to the pivotal norms but are not essential to the organization's objectives are called peripheral norms. For example, dress codes that are enforced Monday through Thursday are probably peripheral in light of Friday's being a casual dress day. Pivotal and peripheral norms constantly confront individuals in an organization, and they must decide whether or not to conform. The pressure to conform to norms varies, allowing individuals some degree of freedom in responding to these organizational pressures depending on how they perceive the rewards or punishments. The organization also has latitude in the degree of conformity it requires of its members. © Copyright Virtual University of Pakistan 21 Organization Development – MGMT 628 VU The Socialization Process: Even if an organization does an effective job of recruiting, new employees must still adjust to the organizational culture. Because they are not aware of the culture, new employees are likely to disagree with or question the customs and values that exist. Socialization may be defined as the process that adapts employees to the organization's culture. The socialization of employees at Procter and Gamble Co. starts at an early age because employees often begin their careers there and grow up together. The culture is one of being resistant to new ideas and even being insular. P&G is, by many measures, a family company and only promotes from within. It is located in a relatively small city, Cincinnati, where employees live near one another, go to the same social functions, and eat at the same restaurants. CEO Alan Lafley admits, "I am worried that I will ask the organization to change ahead of its understanding, capability, and commitment." New Employee Expectations: To fu