Organization development (OD) is the study of successful organizational change and performance. During human relations studies in the 1930’s, psychologists found that organizational structures and processes influence worker behavior and motivation.
The goal of OD is to increase organization effectiveness and health on a company-wide level. Information and statistics are gathered using methods like analytics, assessments, and KPIs. The data is then applied to change the organization’s processes through planning and implementing new procedures.Similar to how a doctor will check a patient’s heartbeat, OD is the process of diagnosing the “heartbeat” or health of an organization and finding ways to improve overall productivity and success.
Key concepts of OD include:
Organizational Climate - the mood or unique “personality” of an organization, which includes attitudes and beliefs that influence members’ collective behavior.
Organizational Culture - the deeply-seated norms, values, and behaviors that members share.
Organizational Strategies - how an organization identifies problems, plans action, negotiates change and evaluates progress.
The Human Resources department started out as a way to manage an organization’s development. However, when companies have a hard time making ends meet, the HR department is usually one of the first to be downsized. Due to recent recessions and a bad economy, HR has become a watered-down version of what it once was meant to be.
In the current state of things, HR has been sidelined into a mostly administrative role that manages the employment process from recruitment to termination. This process includes:
Hiring and recruiting employees (includes mitigating bias and improving diversity)
Ensuring compliance with government regulations (Employee Status/Classifications, I-9’s, W-2’s and other onboarding documents)
Employee Records and personnel policies
Employee training and growth
Employee safety in the workplace
Conflict Resolution and discipline
Employee payroll, benefits, and compensation.
In its current form, the Human Resources department is important to protecting the company from compliance and legal problems (and all associated fees and penalties). Now that the economy is improving, HR departments need to expand their focus to organizational development issues such as culture, retention, bias and more. There needs to be more emphasis on improving the organization’s heartbeat.HR responsibilities should slowly evolve from a compliance mindset to a more people-focused mindset. Where the laws and regulations took top priority before, we should now orient HR to improve the employee experience and retention rates while increasing the quality and skill level of all departments.
Using OD to Improve an Organization
An important part of OD is instigating changes at the company level to improve the organization’s ability to define and solve their own problems. This is done through implementing systems and processes that give more ability to cope with organizational problems of all kinds. Some examples of such systems include:
Improved employee training and development
More effective decision-making
Resources and support to help employees complete their jobs
Increasing employee motivation and trust
Returning to the doctor example, after a patient is diagnosed and takes the steps prescribed by the doctor, they become more healthy and are better able to fight off sicknesses in the future.
The hope is that changes prescribed by OD can affect real and long-term improvements using theory and methods from behavioral science, psychology, and sociology. These improvements should be self-sustaining and continually adapting to changing factors of the industry and organization.
One company that we worked with put most of its focus on its sales department. Although other employees such as customer service and technicians all played an important part in the success of the company, most of the perks, parties, and bonuses were given only to the sales department. This inequality made sales feel like they were the most important while all other employees felt overlooked.
The entire balance and “heartbeat” of the company was very negative and created a lot of office politics and high turnover. Salespeople that performed poorly were let go while non-sales employees felt there was no point in staying with the company long-term as there were no growth opportunities available to them. If the HR department used organizational development to diagnose the company’s heartbeat and divert resources to focus not only on sales, the climate, culture, and strategy of the entire company would improve.
Under-performing sales could be moved to other suitable roles in the organization while non-sales departments would have more growth opportunities made available. HR could be used to improve the health of the entire organization to fill gaps internally instead of constantly hiring externally and filing legal, onboarding, and compliance documents.
Human Resources and Organizational Development both have the same goal of improving the company and employees. Whereas Human Resources currently deals with tasks related to employee processes, it should be expanded to cover Organizational Development of the company processes and culture.
This can be done by implementing a CHRO position to directly communicate with C-level executives and expand the HR department’s authority and coverage to handle Organizational Development. The CHRO’s findings will allow a company to:
Assess what is happening within an organization
Implement processes to try and create positive change
Improve effectiveness while enhancing the organization’s culture and promoting its values.
Maximize employees’ potential and place them in the right positions to use their unique talents.
Align employee goals and milestones with the organization’s strategy, structures, processes, and business objectives to contribute to the organization’s success.