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Organization Development

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Organization Development ­ MGMT 628
Lesson 05
The Evolution of OD
Figure: 04
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.
Organization Development ­ MGMT 628
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
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
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
Organization Development ­ MGMT 628
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
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.
Organization Development ­ MGMT 628
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.
Organization Development ­ MGMT 628
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
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
Organization Development ­ MGMT 628
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.
Table of Contents:
  1. The Challenge for Organizations:The Growth and Relevance of OD
  2. OD: A Unique Change Strategy:OD consultants utilize a behavioral science base
  3. What an “ideal” effective, healthy organization would look like?:
  4. The Evolution of OD:Laboratory Training, Likert Scale, Scoring and analysis,
  5. The Evolution of OD:Participative Management, Quality of Work Life, Strategic Change
  6. The Organization Culture:Adjustment to Cultural Norms, Psychological Contracts
  7. The Nature of Planned Change:Lewin’s Change Model, Case Example: British Airways
  8. Action Research Model:Termination of the OD Effort, Phases not Steps
  9. General Model of Planned Change:Entering and Contracting, Magnitude of Change
  10. The Organization Development Practitioner:External and Internal Practitioners
  11. Creating a Climate for Change:The Stabilizer Style, The Analyzer Style
  12. OD Practitioner Skills and Activities:Consultant’s Abilities, Marginality
  13. Professional Values:Professional Ethics, Ethical Dilemmas, Technical Ineptness
  14. Entering and Contracting:Clarifying the Organizational Issue, Selecting an OD Practitioner
  15. Diagnosing Organizations:The Process, The Performance Gap, The Interview Data
  16. Organization as Open Systems:Equifinality, Diagnosing Organizational Systems
  17. Diagnosing Organizations:Outputs, Alignment, Analysis
  18. Diagnosing Groups and Jobs:Design Components, Outputs
  19. Diagnosing Groups and Jobs:Design Components, Fits
  20. Collecting and Analyzing Diagnostic information:Methods for Collecting Data, Observations
  21. Collecting and Analyzing Diagnostic information:Sampling, The Analysis of Data
  22. Designing Interventions:Readiness for Change, Techno-structural Interventions
  23. Leading and Managing Change:Motivating Change, The Life Cycle of Resistance to Change
  24. Leading and managing change:Describing the Core Ideology, Commitment Planning
  25. Evaluating and Institutionalizing Organization Development Interventions:Measurement
  26. Evaluating and Institutionalizing Organization Development Interventions:Research Design
  27. Evaluating and Institutionalizing Organization Development Interventions
  28. Interpersonal and Group Process Approaches:Group Process
  29. Interpersonal and Group Process Approaches:Leadership and Authority, Group Interventions
  30. Interpersonal and Group Process Approaches:Third-Party Interventions
  31. Interpersonal and Group Process Approaches:Team Building, Team Building Process
  32. Interpersonal and Group Process Approaches:Team Management Styles
  33. Organization Process Approaches:Application Stages, Microcosm Groups
  34. Restructuring Organizations:Structural Design, Process-Based Structures
  35. Restructuring Organizations:Downsizing, Application Stages, Reengineering
  36. Employee Involvement:Parallel Structures, Multiple-level committees
  37. Employee Involvement:Quality Circles, Total Quality Management
  38. Work Design:The Engineering Approach, Individual Differences, Vertical Loading
  39. Performance Management:Goal Setting, Management by Objectives, Criticism of MBO
  40. Developing and Assisting Members:Career Stages, Career Planning, Job Pathing
  41. Developing and Assisting Members:Culture and Values, Employee Assistance Programs
  42. Organization and Environment Relationships:Environmental Dimensions, Administrative Responses
  43. Organization Transformation:Sharing the Vision, Three kinds of Interventions
  44. The Behavioral Approach:The Deep Assumptions Approach
  45. Seven Practices of Successful Organizations:Training, Sharing Information