Organizational Development: A Guide to Improving Company Performance
Organizational Development
Organizational development (OD) is a structured approach to improving and solving problems within a company. Implementing OD requires changing the culture of both workers and administrators. An external or internal agent is involved in the process to maintain objectivity and assess areas for improvement or problem-solving.
Phases of OD
1. Contact: This phase begins when a company seeks to implement OD with an external agent. Both parties, the company manager and the agent (consultant), assess whether to proceed and why. The consultant evaluates the information needed, the predisposition to share information (mutual trust), the required time, and the payment terms. The manager assesses empathy with the consultant, their capabilities (experience), and ultimately, a contract is established outlining the terms of their relationship.
2. Analysis of Documents and Interviews:
- Documents: Analyze information about the company’s history, including successes, failures, critical issues, and any documents that contribute to understanding the company’s mechanics. This includes newspapers, magazines, company worker murals, union agreements (to assess flexibility), and union worker requests to compare with other companies.
- Interviews: The number of interviews conducted depends on the company’s size and organizational level. Information is gathered internally and externally, as different models are used for analysis.
3. Problem Detection: After internal and external analysis, the results are presented to company representatives. This leads to feedback where everyone discusses the results. The consultant then conducts further analysis based on this new information and develops a proposal. This proposal identifies the company’s situation but does not provide solutions. The manager ultimately finds solutions to the problems raised by the consultant. These decisions often involve the consultant, but the administrator is the final decision-maker.
4. Control: The implementation of the solution to the problem must be evaluated. This is done by the administrator, not necessarily involving the consultant to avoid creating dependency.
30/08/2005
Diagnostic Models
1. Weisbord’s Six-Box Model (Internal Aspects Only)
This model is represented by six factors: purpose, structure, rewards, supporting mechanisms, relationships, and leadership.
- Purpose: Includes clarity in goals (mission and objectives) and the degree of agreement with those objectives. All purposes should contribute to each other, not contradict, and the mission should be defined in the general plan and long-term vision. It is possible to consider a change in the mission if necessary.
- Structure: It is important to determine if there is a correspondence between the purpose and the structure for achieving it. This includes work units and the activities taking place within the company. For example, if the activity is routine, a rigid structure is appropriate. Many authors emphasize the correspondence between the company’s activities and its structure. Conversely, if the business activity requires more creativity, the company structure should be more flexible.
- Relationships: This refers to the relationships between people, between units or departments performing different tasks, and the nature and demands of their jobs. Conflict is more likely when there is interaction between departments compared to an organization where work is done in teams. Therefore, relationships among individuals and between units are more important in team-based organizations. The requirement of their jobs relates to the autonomy of their decisions, meaning individuals define their work and are not dependent on others’ actions. In groups, there is more conflict because roles are not defined. A team is a group of people coming together to achieve a specific objective with defined roles. For example, a football team has defined positions, leading to less conflict compared to a group without defined positions.
- Rewards: It is necessary to diagnose the similarities and differences between what the organization formally rewards and what people in the organization feel brings rewards or punishments. This assesses whether there is a correspondence between what the company says it rewards and what it actually rewards. For example, a company might say it rewards commission per sale, but the seller who brings in clients and makes the sale might not be the one who receives the reward.
- Leadership: Determine the extent to which leaders define purposes, include purposes in programs, and maintain order regarding internal conflicts. This evaluates the work done by the leader, specifically whether they are fulfilling the tasks expected of them.
- Supporting Mechanisms: Determine which mechanisms help achieve the organization’s objectives and which seem to hinder them. These processes include planning, monitoring, budgeting, and information systems.
Budget: How tight are the budgets, and are the projections realistic?
Planning/Control: What type of control takes place, and when? Control within the company is more expensive when the error has been committed (back control). Audit controls what has already happened but try to prevent it from happening again. Advance control is cheaper.
Information System: Supports company management by delivering timely information. The information system can be assessed based on response times, timeliness, and understandability.
This model is useful when:
- No long-term data is available.
- The organization is simple in service delivery.
- The customer is not accustomed to thinking in terms of systems.
2. Nadler and Tushman Congruence Model
This model states that the organization is an open system with inputs, products, processes, and adjustments.
1. Inputs:
- Environment: Direct and indirect.
- Resources: Human, technological, financial, physical (infrastructure), and information.
- History: The organization’s history.
- Strategies: Strategies that develop and evolve over time.
2. Products:
- System Operation: Comprehensive assessment of company performance, including financial performance (financial ratios), profitability, debt percentage, and sales percentage.
- Group Behavior and Intergroup Relations: The working environment depends on the type of activity performed by workers and how they are organized.
- Individual Behavior: Consider aspects such as worker characteristics, not just technical skills. Observe whether behavior is accelerated or reassured, if workers are relaxed in their duties, responsible, and creative, as projected by the worker.
3. Processes:
- Component Task: The type of activity performed in the company.
- Individual Component: The type of knowledge the worker handles (expertise).
- Informal Organization: Affinity and friendship associations (age, taste, preferences).
4. Adjustments: Adaptation to organizational change.
Difficulties in Implementing OD
The greatest difficulty in applying OD is resistance to change. This resistance can be explicit, implicit, immediate, or deferred.
- Explicit and Immediate Resistance: This is the easiest to address as workers openly express their displeasure, such as through complaints, job delays, or strike threats.
- Implicit and Deferred Resistance: This is more difficult to address as it manifests as a loss of loyalty, motivation, increased errors, and absenteeism. Deferred resistance can emerge weeks, months, or even years later, as reactions to change accumulate and explode into a disproportionate response.
Sources of Resistance:
- Individual Resistance: Habit, economic security, fear of the unknown.
- Organizational Resistance: Structural inertia, limited change focus, threat to power relations, threat to resource allocations.
How to Overcome Resistance to Change:
- Education and communication
- Participation
- Facilitation and support
- Negotiation (incentives)
- Handling