Organization Change /
Organization Development
Professor Alexander Settles
Structure should follow strategy
• Growth
– Concentration
– Diversification
• Stability
– No change
• Retrenchment
– Turnaround
– Divestment
– Liquidation
Definition of OD
Organization Development (OD) is a
planned process of change in an
organization’s culture through the
utilization of behavioral science
technology, research, and theory.
Definition of OD
OD refers to a long-range effort to
improve an organization’s problem-solving
capabilities and its ability to cope with
changes in its external environment with
the help of external or internal behavioralscientist consultants.
Definition of 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.
Organization Development is...
a systemwide application and transfer of
behavioral science knowledge to the
planned development, improvement, and
reinforcement of the strategies,
structures, and processes that lead to
organization effectiveness.
Action Research Model
Problem Identification
Consultation with a
behavioral scientist
Data gathering &
preliminary diagnosis
Feedback to Client
Joint diagnosis
Joint action planning
Action
Data gathering after
action
Positive Model
Initiate the Inquiry
Inquire into Best Practices
Discover Themes
Envision a Preferred Future
Design and Deliver Ways to
Create the Future
Comparison of
Planned Change Models
• Similarities
–
–
–
–
Change preceded by diagnosis or preparation
Apply behavioral science knowledge
Stress involvement of organization members
Recognize the role of a consultant
• Differences
– General vs. specific activities
– Centrality of consultant role
– Problem-solving vs. social constructionism
General Model of Planned Change
Entering
and
Contracting
Diagnosing
Planning
and
Implementing
Change
Evaluating
and
Institutionalizing
Change
Processes for Planned
Organization Change
• Process Model
– Planned organization change requires a
systematic process of movement from one
condition to another
• Unfreezing
– Process by which people become aware of the need
for change
• Change
– Movement from the old way of doing things to a new
way
• Refreezing
– Process of making new behaviors relatively
permanent and resistant to further change
Process of Organizational Change
Processes for Planned
Organization Change
• The Continuous Change Process Model
– Incorporates the forces for change, a problemsolving process, a change agent, and transition
management
– Takes a top management perspective
• Perceives forces and trends that indicate
need for change
• Determines alternatives for change
• Selects the appropriate alternative
Continuous Change Process Model of
Organization Change
Processes for Planned
Organization Change
• The Continuous Change Process Model
– Change agent: a person responsible for managing a
change effort
• Assists management with problem recognition/definition
• Can be involved in generating/evaluating potential action
plans
• Can be from inside or outside of the organization
• Implements the change
• Measures, evaluates, controls the desired results
– Transition management
• Process of systematically planning, organizing, and
implementing change
OD: Group and Individual
Change
Team Building Goals
To set team
goals and
priorities
To analyze
and allocate
the way work
is performed
To examine
how a group
is working
To examine
relationships
among those
doing the
work
Resistance to Change
• The Resistance to Change Paradox
– Organizations invite change when change offers
competitive advantage
– Organizations resist change when change threatens
the organization’s structure and control systems
– Organizations must balance stability (permanence)
with the need to react to external shifts (change)
– Resistance can warn of the need to reexamine the
need for change
Resistance to Change:
Sources of Resistance to Change
• Organizational
Sources
• Individual
Sources
– Overdetermination
– Habit
– Narrow focus of
change
– Security
– Group inertia
– Fear of the
unknown
– Threatened
expertise
– Threatened power
– Resource allocation
changes
– Economic factors
– Lack of
awareness
– Social factors
Managing Successful Organization
Change and Development
• Keys to Managing Change in
Organizations
– Consider international issues
– Take a holistic view
– Start small
– Secure top management support
– Encourage participation by those affected by
the change
– Foster open communication
– Reward those who contribute to change
Different Types of
Planned Change
• Magnitude of Change
– Incremental
– Quantum
• Degree of Organization
– Over organized
– Underorganized
• Domestic vs. International Settings
Diagnosing
Organizational Systems
• The key to effective diagnosis is…
– Know what to look for at each
organizational level
– Recognize how the levels affect each
other
Organization-Level
Diagnostic Model
Inputs
Design Components
Outputs
Technology
Strategy
Structure
Industry
Structure
HR
Systems
Measurement
Systems
Organization
Effectiveness
General
Environment
Organization Environments
and Inputs
• Environmental Types
–
–
–
–
General Environment
Task Environment and Industry Structure
Rate of Change and Complexity
Enacted Environment
• Environmental Dimensions
– Information Uncertainty
– Resource Dependency
Organization Design Components
• Strategy
– the way an organization uses its resources
(human, economic, or technical) to gain
and sustain a competitive advantage
• Technology
– the way an organization converts inputs
into products and services
• Structure
– how attention and resources are focused
on task accomplishment
Organization Design Components
• Human Resource Systems
– the mechanisms for selecting, developing,
appraising, and rewarding organization
members
• Measurement Systems
– methods of gathering, assessing, and
disseminating information on the activities of
groups and individuals in organizations
Organization Design Components
• Organization Culture
– The basic assumptions, values, and norms
shared by organization members
– Represents both an “outcome” of organization
design and a “foundation” or “constraint” to
change
Outputs
• Organization Performance
– e.g., profits, profitability, stock price
• Productivity
– e.g., cost/employee, cost/unit, error rates,
quality
• Stakeholder Satisfaction
– e.g., market share, employee satisfaction,
regulation compliance
Group-Level Diagnostic Model
Inputs
Design Components
Outputs
Goal Clarity
Organization
Design
Task
Structure
Group
Composition
Group
Functioning
Performance
Norms
Group
Effectiveness
Group-Level Design Components
• Goal Clarity
– extent to which group understands its objectives
• Task Structure
– the way the group’s work is designed
• Team Functioning
– the quality of group dynamics among members
• Group Composition
– the characteristics of group members
• Performance Norms
– the unwritten rules that govern behavior
Group-Level Outputs
• Product or Service Quality
• Productivity
– e.g., cost/member, number of decisions
• Team Cohesiveness
– e.g., commitment to group and
organization
• Work Satisfaction
Possible Effects of Feedback
Feedback occurs
No
Change
Energy
to deny or
fight data
Anxiety,
resistance,
no change
NO
Is the energy created
by the feedback?
Energy to use
data to identify and
solve problems
YES
What is the direction
of the feedback?
Failure,
frustration,
no change
NO
Do structures and
processes turn energy
into action?
YES
Change
The Design of
Effective Interventions
• Contingencies Related to the
Change Situation
•
•
•
•
Readiness for Change
Capability to Change
Cultural Context
Capabilities of the Change Agent
The Design of
Effective Interventions
• Contingencies Related to the
Target of Change
•
•
•
•
Strategic Issues
Technology and structure issues
Human resources issues
Human process issues
Intervention Overview
• Human Process Interventions
• Technostructural Interventions
• Human Resources Management
Interventions
• Strategic Interventions
Human Process Interventions
• Process Consultation and Team
Building
• Third-party Interventions (Conflict
Resolution)
• Organization Confrontation Meeting
• Intergroup Relationships
• Large-group Interventions
Technostructural Interventions
• Structural Design
• Downsizing
• Reengineering
• Parallel Structures
• High Involvement Organizations
• Total Quality Management
• Work Design
Human Resources Management
Interventions
• Goal Setting
• Performance Appraisal
• Reward Systems
• Coaching and Mentoring
• Career Planning and Development
• Management and Leadership
• Managing Work Force Diversity
• Employee Wellness Programs
Strategic Interventions
• Transformational Change
– Integrated Strategic Change
– Organization Design
– Culture Change
• Continuous Change
– Mergers and Acquisitions
– Alliances and Networks
Strategic Interventions
• Transorganizational Change
– Self-designing Organizations
– Organization Learning and Knowledge
Management
– Built to Change Organizations
Change Management Activities
Motivating Change
Creating Vision
Developing
Political Support
Managing the Transition
Sustaining Momentum
Effective
Change
Management
Motivating Change
• Creating Readiness for Change
– Sensitize the organization to pressures for change
– Identify gaps between actual and desired states
– Convey credible positive expectations for change
• Overcoming Resistance to Change
– Provide empathy and support
– Communicate
– Involve members in planning and decision making
Creating a Vision
• Discover and Describe the
Organization’s Core Ideology
– What are the core values that inform
members what is important in the
organization?
– What is the organization’s core purpose or
reason for being?
• Construct the Envisioned Future
– What are the bold and valued outcomes?
– What is the desired future state?
Developing Political Support
• Assess Change Agent Power
• Identify Key Stakeholders
• Influence Stakeholders
Change as a Transition State
Current
State
Transition
State
Desired
Future
State
Implementation and Evaluation
Feedback
Diagnosis
Design and
Implementation
of Interventions
Alternative
Interventions
Implementation of
Intervention
Clarify
Intention
Plan for
Next Steps
Implementation
Feedback
Evaluation
Feedback
Measures of
the Intervention
and Immediate
Effects
Measure of
Long-term
Effects
Institutionalization Framework
Organization
Characteristics
Institutionalization
Processes
Intervention
Characteristics
Indicators of
Institutionalization
Organization Characteristics
• Congruence
– Extent to which an intervention supports or
aligns with the current environment, strategic
orientation, or other changes taking place
• Stability of Environment and Technology
• Unionization
Intervention Characteristics
•
•
•
•
•
Goal Specificity
Programmability
Level of Change Target
Internal Support
Sponsor
Institutionalization Processes
•
•
•
•
•
Socialization
Commitment
Reward Allocation
Diffusion
Sensing and Calibration
Indicators of Institutionalization
• Knowledge
• Performance
• Preferences
• Normative
Consensus
• Value Consensus
Contingencies Influencing
Structural Design
Environment
Organization
Size
Technology
Structural
Design
Worldwide
Operations
Organization
Goals
The Downsizing Process
• Clarify the organization’s strategy
• Assess downsizing options and make
relevant choices
• Implement the changes
• Address the needs of survivors and those
who leave
• Follow through with growth plans
Downsizing Tactics
Tactic
Workforce
Reduction
Characteristics
 Reduces headcount
 Short-term focus
 Fosters transition
 Attrition
 Retirement/buyout
 Layoffs
 Changes
 Eliminate functions,
Organization organization
Redesign  Medium-term focus
 Fosters transition &
transformation
Systemic
Examples
 Changes culture
 Long-term focus
 Fosters
transformation
layers, products
 Merge units
 Redesign tasks
 Change
responsibilities
 Foster continuous
improvement
 Downsizing is normal
The Reengineering Process
• Prepare the organization
• Specify the organization’s strategy and
objectives
• Fundamentally rethink the way work gets
done
– Identify and analyze core business
processes
– Define performance objectives
– Design new processes
• Restructure the organization around the
new business processes.
Characteristics of
Reengineered Organizations
 Work units change from functional departments to process
teams
 Jobs change from simple tasks to multidimensional work
 People’s roles change from controlled to empowered
 The focus of performance measures and compensation shifts
from activities to results.
 Organization structures change from hierarchical to flat
 Managers change from supervisors to coaches; executives
change from scorekeepers to leaders
Characteristics of
Transformational Change
• Triggered by Environmental and Internal
Disruptions
• Aimed at Competitive Advantage
• Systemic and Revolutionary Change
• Demands a New Organizing Paradigm
• Driven by Senior Executives and Line
Management
• Involves Significant Learning
Integrated Strategic Change
(ISC)
Integrated Strategic Change ………
is a deliberate coordinated process that
leads to gradually or radically systemic
realignments between the environment
and a firm’s strategic orientation
resulting
in improvement in performance and
effectiveness.
The Integrated Strategic Change Process
Strategy
S1
Organization
O1
Strategic Analysis
Strategic
Change
Plan
Implementation
Strategy
S2
Organization
O2
Strategic Choice
ISC Application Stages
• Strategic Analysis
– Assess the readiness for change and top
management’s ability to carry out change
– Diagnose the Current Strategic Orientation
• Strategic Choice
– Top management determines the content of the
strategic change
• Designing the Strategic Change Plan
– Development of a comprehensive agenda to
achieve the change
• Implementing the Strategic Change Plan
Organizational Design
Conceptual Framework
•
•
•
•
•
Strategy
Structure
Work Design
Human Resources Practices
Management and Information Systems
Key Point
• Fit, Congruence, Alignment among
Organizational Elements
Organization Design Model
Organization Strategy
Strategic Fit
Organization Design
Management
and Information
Systems
Structure
Design Fit
Human Resource
Practices
Work
Design
Organization Designs
Organization Design
Application Stages
• Clarifying the Design Focus
– Create the overall framework, begins with examining strategy
and objectives and determining organization capabilities
needed
• Designing the Organization
– Results in an overall design for the organization, detailed
designs for the components, and preliminary plans for how to
implement
• Implementing the Design
– Puts the new structures, practices and systems into place,
draws heavily leading and managing change methods
The Concept of Organization Culture
Artifacts
Norms
Values
Basic
Assumptions
Diagnosing Organization Culture
• Behavioral Approach
– Pattern of behaviors (artifacts) most related
to performance
• Competing Values Approach
– Pattern of values emphasis characterizing
the organization
• Deep Assumptions Approach
– Pattern of unexamined assumptions that
solve internal integration and external
adaptation problems well enough to be
taught to others
Competing Values Approach
Internal Focus & Integration
Flexibility & Discretion
Clan
Adhocracy
Hierarchy
Market
Stability & Control
Culture Change Application Stages
•
•
•
•
•
Establish a clear strategic vision
Get top-management commitment
Model culture change at the highest level
Modify the organization to support change
Select and socialize newcomers; downsize
deviants
• Develop ethical and legal sensitivity
Self-Designing Organizations
• Systemic change process altering most
features of the organization
• Process is ongoing, never finished—
continuous improvement and change
• Learning as You Go—on-site innovation
• Need support of multiple stakeholders
• All levels of the organization adopt new
strategies and change behaviors
Organization Learning &
Knowledge Management
• Organization Learning interventions
emphasize the structures and social
processes that enable employees and
teams to learn and share knowledge
• Knowledge Learning focuses on the
tools and techniques that enable
organizations to collect, organize, and
translate information into useful
knowledge
Organization Learning:
An Integrative Framework
Organization Learning
Knowledge Management
Competitive
Strategy
Organization
Characteristics
Organization
Learning Processes
Organization
Knowledge
Structure
Information
Systems
HR Practices
Culture
Leadership
Discovery
Invention
Production
Generalization
Tacit
Explicit
Organization
Performance
Characteristics of a
Learning Organization
• Structures emphasize teamwork, information
sharing, empowerment
• Information systems facilitate rapid acquisition
and sharing of complex information to manage
knowledge for competitive advantage
• Human resources reinforce new skills and
knowledge
• Organization culture encourages innovation
• Leaders model openness and freedom to try
new things while communicating a compelling
vision
Organization Learning Processes
• Single loop learning
– Most common form of learning
– Aimed at adapting and improving the status
quo
• Double loop learning
– Generative learning
– Questions and changes existing assumptions
and conditions
• Deuterolearning
– Learning how to learn
– Learning how to improve single and double
loop learning
Knowledge and Performance
• Organization knowledge must be
relevant and applied effectively to the
competitive strategy
• Link organization learning processes to
organization performance
• Growing emphasis on the value of
intellectual assets and services
Knowledge Management
Interventions
• Generating Knowledge
– Identify knowledge for competitive strategy
– Develop ways to acquire or create that
knowledge
• Organizing Knowledge
– Put knowledge into a usable form
– Codification and Personalization
• Distributing Knowledge
– Making knowledge easy to access, use &
reuse
Built-To-Change Organizations
• Organizations are designed with the
ability to change constantly to create
the best sustainable source of
competitive advantage.
• Organizations operate in complex
and rapidly changing environments
Built to Change
Application Stages
•
•
•
•
Create a Change-Friendly Identity
Pursue Proximity
Build an Orchestration Capability
Establish Strategic Adjustment a Normal
Condition
• Seek Virtuous Spirals
Application Stages for
Transorganizational Development
Identification
Convention
Organization
Who should
belong to the
transorganizational
System (TS)?
• Relevant skills,
knowledge,
and resources
• Key stakeholders
Should a TS
be created?
• Costs and
benefits
• Task
perceptions
How to organize
for task
performance?
• Communication
• Leadership
• Policies and
procedures
Evaluation
How is the TS
performing?
• Performance
outcomes
• Quality of
interaction
• Member
satisfaction
Mergers and Acquisitions
• Merger - the integration of two previously
independent organizations into a completely
new organization
• Acquisition - the purchase of one organization
by another for integration into the acquiring
organization.
• Distinct from transorganizational systems,
such as alliances and networks, because at
least one of the organizations ceases to exist.
Merger and Acquisition Rationale
• Diversification
• Vertical integration
• Gaining access to global markets,
technology, or other resources
• Achieving operational efficiencies,
improved innovation, or resource sharing
Merger and Acquisition
Application Stages
• Pre-combination Phase
– The organization must identify a candidate
organization, work with it to gather information
about each other, and plan the implementation
and integration activities
• Legal Combination Phase
– The two organizations settle on the terms of the
deal, gain approval from regulatory agencies
and shareholders, and file appropriate legal
documents
• Operational Combination Phase
– Implementing the operational, technical and
cultural integration activities
Strategic Alliances
• When two organizations formally agree to
pursue a set of goals
• There is sharing of resources, intellectual
property, people, capital, technology,
capabilities or physical assets
• Common alliances are licensing
agreements, franchises, long-term
contracts, and joint ventures
Alliance Intervention
Application Stages
• Alliance Strategy Formulation
– Clarify the business strategy and why an alliance is
needed
• Partner Selection
– Leverage similarities and differences to create
competitive advantage
• Alliance Structuring and Start-up
– Build and leverage trust in the relationship
• Alliance Operation and Adjustment
Network Interventions
• Involves three or more companies joined
together for a common purpose
• Each organization in the network has goals
related to the network as well as those
focused on self-interest
• Characterized by two types of change:
creating the initial network
(transorganizational development) and
managing change within an established
network
Cultural Context for Change
•
•
•
•
•
Context Orientation
Power Distance
Uncertainty Avoidance
Achievement Orientation
Individualism
Context
• The extent to which meaning in
communication is carried in the words
• Organizations in high context cultures
tend to value ceremony and ritual, the
structure is less formal, there are fewer
written policies, and people are often late
for appointments
Power Distance
• Extent to which members of a society
accept that status and power are
distributed unequally in an organization
• Organizations in these cultures tend to be
autocratic, possess clear status
differences, and have little employee
participation
Uncertainty Avoidance
• The extent to which members of a
society tolerate the unfamiliar and
unpredictable
• Organizations in these cultures tend to
value experts, prefer clear roles, avoid
conflict, and resist change
Achievement Orientation
• The extent to which people in a society
value assertiveness and the acquisition of
material goods
• Organizations in these cultures tend to
associate achievement with wealth and
recognition, value decisiveness, and
gender roles are clearly differentiated.
Individualism
• The extent to which people in a society
believe they should be responsible for
themselves and their immediate family
• Organizations in these cultures tend to
encourage personal initiative, value time
and autonomy, accept competition, and
autonomy is highly valued
International Strategic
Orientation
• Characteristics of the International Design
– Sell existing products/services to nondomestic
markets
– Goals of increased foreign revenues
• Implementing the International Orientation
– OD facilitates extending the existing strategy
into the new market
– Cross-cultural training and strategic planning
The Global Strategic Orientation
• Characteristics of the Global Design
– Centralized with a global product structure
– Goals of efficiency through volume
• Implementing the Global Orientation
– OD supports career planning, role clarification,
employee involvement, conflict management and
senior management team building to help achieve
improved operational efficiency
– OD helps the organization transition to global
integration from local responsiveness
The Multinational
Strategic Orientation
• Characteristics of the Multinational Design
– Operate a decentralized organization
– Goals of local responsiveness through
specialization
• Implementing the Multinational Orientation
– OD helps with intergroup relations, local
management selection and team building
– OD facilitates management development,
reward systems, and strategic alliances
Transnational Strategic
Orientation
• Characteristics of the Transnational Design
– Tailored products
– Goals of learning and responsiveness through
integrations
• Implementing the Transnational Orientation
– Extensive selection and rotation
– Acquire cultural knowledge and develop intergroup
relations
– Build corporate vision
Global Social Change Organizations



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Their primary task is a commitment to serve as an agent of
change in the creation of environmentally and socially
sustainable world futures
They have discovered and mobilized innovative socialorganizational architectures
They hold values of empowerment in the accomplishment of
their global change mission
They are globally-locally linked in structure, membership, or
partnership and thereby exist as entities beyond the nationstate
They are multi-organizational and often cross-sectoral
Application Stages of
Global Social Change Organizations
• Build the local organization
– Using values to create the vision
– Recognizing that internal conflict is often a function of external
conditions
– Understanding the problems of success
• Create horizontal linkages
– Build a network of local organizations with similar views and
objectives
• Develop vertical linkages
– Create channels of communication and influence upward to
governmental and policy-level, decision-making processes