Jacob A business that grows stale is one destined to fail.
Why? It’s because markets always change. Consumers want new products, new technologies, and upgrades to what they already have. Their consumption culture also changes. Customers will develop new expectations on how a brand should present itself, and how its employees should interact with them. Also, employees are a factor to consider. Employee culture changes every generation, and their work environments and communication methods also change.
With all that in mind, any organization should constantly evaluate its systems. This is where organizational development comes in, which makes a business effective and adaptable to endless internal and external changes.
How Does Organizational Development (OD) Work?
It is not a random process. Organizational development relies on the following:
- Evidence-based scientific approach. Done through a multi-step process that we’ll discuss below.
- Systematic changes. It focuses on changing strategies, structures, and processes in a company.
- Heavy IT use. It allows businesses to collect data that lets them adapt to worldwide markets, thus expanding their opportunities to reach more customers.
- Adaptability to multiple business goals. This can range from improved financial performance to better employee engagement, capitalizing on new opportunities, or even customer satisfaction. It all comes down to making an organization more competitive, where it can establish itself uniquely in the marketplace.
In essence, OD builds a business’ ability to analyze its functioning. It then tweaks all of its systems to whatever goal has been set. Do note that organizational development is mostly implemented by consultants, whether they’re internal or external. The process followed can be applied to any goal, and they include the following FOUR steps:
- Defining the problem
- Diagnostics, data collection, and analysis
- Feedback and design of interventions
- Leading, managing, and evaluating levels of change
Step #1: Defining the Problem
The best way to do so is with the help of OD specialists. They’ll help you define the problem which needs solving. Those may be internal problems, such as employee conflicts, losses in profits, or high employee turnover. Those may also be external issues, such as frequent customer complaints, new market opportunities, etc.
Step #2: Diagnostics, Data Collection, and Analysis
After defining the problem, diagnostics become the next step. OD specialists will gather information about your organization and its problem through interviews and surveys. Their goal is to find patterns that might be contributing to the problem. The diagnostics stage normally follows an input-process-output chain, showing how different parts of a business system (individual, group, or organization) might be the source of the problem. The information is then presented in a cause-and-effect chain.
The data collection required for effective diagnostics is time-consuming. Yet, this is the most crucial factor in changing an organization’s system. The reason being, an OD specialist has to collect information over a large time span. This helps them avoid observer bias, where they can better evaluate the trajectory of a problem (how bad it gets over a period of time, etc.). It also ensures that specialists aren’t entering an organization (and judging it) based on extreme situations, which might give them an incorrect view of the business’ systems.
Step #3: Feedback and Design of Interventions
At this stage, the consultant should have developed a framework to fix the evaluated system.
It’s their job to inform their clients in a manner that’s comprehensible, and easy to implement. The information should be applicable to all levels of the organization. It should rely on visual examples, factual references, and interesting descriptions to convey meaning.
Next comes the design of interventions (or solutions). Consultants focus here on setting benchmarks or goals for change that can be measured over a period of time. The goals should be realistic to the organization’s capacity, focusing first on damage control (if the problems were negative, to begin with), before proceeding to positive outcomes.
There are many components to designing interventions, but they can be divided into four categories:
- Human Process. Those interventions focus on interpersonal relationships and employee or hierarchical dynamics. They can be individual interventions, which focus on improving communication. They can be group-based, which fixes the assignments and processes of a department. Or they can be third-party mediations, where specialists try to quickly resolve conflicts.
- Techno-structural. Here, the focus is on changing an organization’s technology. It can include structural changes, which include switching to divisional, to classical hierarchal, or even a network system. Quality control interventions are another component, which usually follows the six-sigma model. Redesigning employee work can be done to reach a certain outcome while making it more interesting and challenging for employees.
- Human Resource. Similar to human processes, except on a smaller scale. It focuses on managing the individual’s performance by improving goal setting, reward systems, developing their talents, and focusing on life wellness.
- Strategic Change. Focuses on interventions that change the core of the organization. This may involve continuous changes to reframe the company’s personality. Or, it may include incorporating another organization, through alliance, networking, or acquisitions.
Step #4: Leading, Managing, and Evaluating Levels of Change
The next step involves execution. Change is the responsibility of both OD specialists and business management. Its focus is on motivating employees, giving them a clear vision, and providing tools that put those changes into effect until they become habitual. This is the most difficult of the previous steps, where failure rates can range between 50 and 70%.
Assuming that a business manages to commit to the new changes, the evaluation phase comes into effect. The business should check how well it performs based on the benchmarks it has set. Clear signs of improvement should manifest, which act as proof that the interventions did solve the problems defined earlier on.
Organizational Development: A Never-Ending Process
The change is never over with a single implementation. Organizational development is something your business has to practice for the rest of its existence. It applies to all organizations, and on all its levels. In fact, it’s necessary to keep your business afloat in light of shifting and ambiguous markets. But done correctly, changes should be smooth and with minimal problems!
