Professional Documents
Culture Documents
APRIL 2002
www.corporateleadershipcouncil.com
Literature Review
Key Questions ! ! ! What is organizational development? What are the roles and responsibilities of the organizational development function? How does organizational development tie to the greater HR function?
Executive Summary The OD Function OD Roles and Responsibilities The OD/HR Relationship Appendices Research Methodology
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The interest in and prevalence of organizational development (OD) business units and personnel has grown greatly over the past two decades. Companies have come to recognize that the HR function goes far beyond its administrative objectives and that it serves as a force of strategic growth and change. The challenge at hand, however, comes as a result of this emergence and accelerated prevalence of the OD function. With succession management and workforce planning occupying the attention and concentration of HR personnel, the OD function has quickly become pigeonholed into solely being the provider of leadership development training. This study identifies this limiting assumption and goes further to state and provide examples of the many facets, roles, responsibilities and capabilities of organizational development.
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This project was researched and written to fulfill the specific research request of a single member of the Corporate Leadership Council and as a result may not satisfy the information needs of other members. In its short-answer research, the Corporate Leadership Council refrains from endorsing or recommending a particular product, service or program in any respect. That said, it is the goal of the Corporate Leadership Council to provide a balanced review of the study topic within the parameters of this project. The Corporate Leadership Council encourages members who have additional questions about this topic to assign short-answer research projects of 2002 Corporate Executive Board their own design.
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EXECUTIVE SUMMARY
OD Function
Organizational development (OD) is a long-term effort, led and supported by top management, to improve an organizations visioning, empowerment, learning and problem-solving processes. OD accomplishes this through an ongoing, collaborative management of organization culture, utilizing the consultant-facilitator role and the theory and technology of applied behavioral science, including action research. The purpose of the organizational development function is to align individual, business unit and corporate practices and to manage and facilitate change throughout the organization through internal consulting. OD typically focuses upon strategic initiatives rather than person-to-person transactions. The OD function does not offer a set regimen for company growth and development; rather, OD is an adaptive strategy that serves companies customized needs.
Although many HR professionals tend to pigeonhole the role of OD into a training-only box, organizational development goes far beyond leadership training and succession management. The specific missions of OD groups assist companies in determining what role OD should play within the organization and the areas upon which it should focus in order to add the most value. Conversely, the roles and foci of OD groups can also be driven largely by company needs and thus are not strictly defined before business units and the corporate function initiate projects. OD transforms the organizational culture of a company by working with social and technical systems such as culture, work processes, communication and rewards. Some responsibilities of OD, which exemplify its superior purpose include:
Add value, quality or services Create a culture of continuous improvement and alignment Empower leaders and individual employees Put the minds of all employees to work
OD/HR Relationship
OD is distinguished from human resource development (HRD) in that HRD focuses on the personal growth of individuals within organizations, while OD focuses on developing the structures, systems and processes within the organization to improve organizational effectiveness. OD groups are most often a part of HR, reporting to the leader of the HR function. In most cases, a close relationship between OD and HR is beneficial Companies differ in the organizational structure of their OD business units. OD can be centralized, decentralized or, in some cases, entirely independent from the HR department.
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OD Function
OD/HR Relationship
Organizational development (OD) is a long-term effort, led and supported by top management, to improve an organizations visioning, empowerment, learning and problem-solving processes. OD accomplishes this through an ongoing, collaborative management of organization culturewith special emphasis on the culture of intact work teams and other team configurationsutilizing the consultant-facilitator role and the theory and technology of applied behavioral science, including action 1 research. The purpose of the organizational development function is to align individual, business unit and corporate practices and to manage and facilitate change throughout the organization through internal consulting. OD typically focuses upon strategic initiatives rather than person-to-person transactions; consequently, the function serves groups rather than individuals and is best centrally positioned to leverage the expertise of its staff across the corporation. Such leveraging occurs both in terms of assigning OD personnel strategically and also in allowing them to 2 maintain a view of the entire corporation.
The OD function does not offer a set regimen for company growth and development; rather, OD is an adaptive strategy that serves companies customized needs.
OD programs focus on facilitating both strategic and cultural change. The Role of the Human Resources Manager as an OD Practitioner notes that organizational development is an adaptive strategy, not a blueprint for how things should be 3 done. There is no set regimen for OD; rather OD programs capabilities and functions are custom-designed and determined by individual company needs. The figure below outlines general characteristics of the OD function: FIGURE 1: CHARACTERISTICS OF THE OD FUNCTION ! ! ! ! ! ! Accepts changes within its own structure and function Applies cultural and business change to an entire system Combines group dynamics with organizational strategy and structure Encompasses strategy, structure and process changes Improves organizational effectiveness by facilitating the gaining of knowledge within the company Involves the creation and reinforcement of change in different business processes
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OD Function
OD/HR Relationship
FIGURE 2: Company As Value Proposition Company A OD is dedicated to enabling its internal clients to fully realize their business growth potential and to increase their capability to make positive and lasting contributions to Company A as it becomes a world class technology and business solutions provider.
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OD Function
OD/HR Relationship
In addition, the vice president of HR Effectiveness identifies the six goals to which the human resources division has pledged commitment. This set of goals, presented below, provides the companys OD group with additional areas and objectives upon which to focus its work.
In addition, the vice president of HR Effectiveness outlines six objectives for the OD business unit
Achieve leadership and managerial excellence Achieve operational excellence Align reward and recognition systems with business strategy Ensure a productive work environment Focus upon meeting customer needs for learning and developmental opportunities Maintain open and honest two-way communication
ROLES AND RESPONSIBILITIES OF THE OD FUNCTION APRIL 2002 OD Function OD Roles & Responsibilities OD/HR Relationship
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Change is the intended goal. Development increased capacity and potential for effectivenessis the purpose [of OD].9
Rima Shaffer, What is Organizational Development?
Responding to an actual and perceived need for change on the part of the company Involving the client in the planning and implementation of the changes Leading to tangible changes in the organizations culture or systems
The figures below list several roles and responsibilities of the OD function 13 and OD personnel: FIGURE 4: ROLES OF THE OD FUNCTION AND OD PERSONNEL Change management Performance management Global influence Strategic & operational planning Internal consulting Succession planning & training Learning & development Team development & effectiveness FIGURE 5: RESPONSIBILITIES OF THE OD FUNCTION AND OD PERSONNEL Add value, quality or services Create a culture of continuous improvement and alignment around shared goals Empower leaders and individual employees Enhance the quality and speed of decisions Give leaders more control over results by giving employees more control over how they do their jobs Make change easier and faster Put the minds of all employees to work
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OD Function
OD/HR Relationship
Although OD may lack the objectivity and expertise of external consultants, OD personnel understand the business and company culture, leading to more successful partnerships with employees and solution implementation.
Advantages: Accountability for the project after its defined end date Measurable and significant cost savings Strong familiarity with current company practices
The OD function of Tucson Electric Power exhibits the significance of OD 15 serving as internal consultant: FIGURE 7: CASE STUDY TUCSON ELECTRIC POWERS OD INTERNAL CONSULTANCY
Due to poor performance, Tucson Electric Power threatened to eliminate its marketing department
Challenge: Tucson Electric Power faced a double challenge of deregulation and competition. Managers were concerned that the companys marketing group was unable to work together effectively. Unless the group succeeded at turning things around, it was in danger of being replaced or outsourced. The group was given 18 months to successfully market a new guaranteed energy-cost program that had been floundering. Action: The OD group proceeded to develop its own point of view about the managerial concerns by collecting data through a serious of personal interviews. OD found that marketers lacked a sense of personal accountability for the success of the whole group, with no clearly articulated vision or strategic direction. OD informed marketing about its research findings and gained managerial approval for coaching and group training.
After interviewing marketers, OD realized that lack of accountability, vision and strategic direction were to blame
With ODs help, marketing achieved more in the next fiscal quarter than in the previous six quarters combined
Results: The marketers learned more clearly what management expected of the department. OD helped the marketing group to discover its potential. With ODs help, marketing achieved more in the next fiscal quarter than in the previous six quarters combined.
2002 Corporate Executive Board
ROLES AND RESPONSIBILITIES OF THE OD FUNCTION APRIL 2002 OD Function OD Roles & Responsibilities OD/HR Relationship
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OD serves as learning and development specialists, furthering company strategic business goals; however, without proper managerial buy-in OD personnel can become no more than glorified trainers
Advantage:
Senior management must lead the charge of metamorphosing OD from a training function to strategic partner status
ROLES AND RESPONSIBILITIES OF THE OD FUNCTION APRIL 2002 OD Function OD Roles & Responsibilities OD/HR Relationship
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The HR function develops and deploys discreet HR programs while OD partners with clients to transform the entire organization to achieve higher levels of operational performance.17
Vice President, OD Large high-technology company
Structure of OD Business Unit Companies differ in the organizational strucutre of their OD business units. OD can be centralized, decentralized or, in some cases, entirely independent from the HR department. The following figure outlines the benefits and drawbacks to each of the aforementioned possible OD organizational structures. TABLE 1: BENEFITS AND DRAWBACKS TO OD STRUCTURES Structure Centralized Decentralized Benefits Allows OD employees to provide internal customers with projects analyzing the companys strategy Allows OD employees to work closely with specific line groups and individual business units Business/ OD Knowledge:
OD function is staffed with employees expert in specific business related issues
May not allow solutions to be provided with insight into the companys broader strategic goals and plans Competing Demand for Services:
Several line groups want to utilize ODs services within their own departments
Independent
Culture Change:
OD can develop a stronger influence in shifting the companys culture
Keeping Current:
OD department must adapt to changes within the business to provide innovative and strategic value to internal clients
ROLES AND RESPONSIBILITIES OF THE OD FUNCTION APRIL 2002 OD Function OD Roles & Responsibilities OD/HR Relationship
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HR typically concentrates its effort upon the day-to-day transactions of managing the function
Past Council research has shown that companies typically divide 22 responsibility of HR and OD in the following ways: TABLE 2: DIVISION OF RESPONSIBILITIES BETWEEN HR AND OD FUNCTIONS
Responsibilities Associated with HR Only Benefits planning/ administration Compensation and wages Employee relations Government reporting HRIShires, changes Risk management
Responsibilities Associated with OD Only Advanced training and employee development Organizational design Performance management Succession planning Workforce planning
Communication Policy and procedures Recruitment and staffing Reward and recognition
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APPENDICES
Appendix 1: Roles and Foci of OD Groups at Profiled Companies Past Council research profiling five United States corporations outlines the roles and focus areas of the companies OD functions. The table immediately below provides background information about the profiled companies. The subsequent chart illustrates the detailed roles and foci of 23 the OD functions. TABLE 3: BACKGROUND INFORMATION ON PROFILED CORPORATIONS Number of Company Revenues Industry Employees $5 billion Company A 20,000 60,000 High Technology $10 billion More than Company B 20,000 60,000 Telecommunication $10 billion More than More than Company C Heavy Manufacturing 60,000 $10 billion More than More than Company D Financial Services 60,000 $10 billion More than Company E 20,000 60,000 Financial Services $10 billion
Change management and organizational design and alignment are two commonly shared foci of OD.
Business scenario enactment Change management Organization capability assessment and alignment
Company A
Building HR capability Business consulting to line executives Designing and implementing different types of interventions to rectify business problems Hiring the best external consultants to work for the company and leading their efforts Research and development for HR and client issues Tweaking external consultants expertise to the companys culture
Change management Leadership development Organization design/business strategy Process improvement Succession planning Team development
Company B
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APPENDICES (CONTINUED)
TABLE 4: ROLES AND FOCI OF OD GROUPS AT PROFILED COMPANIES (CONTINUED) Roles Foci Company C
Creating career paths for job functions Designing process reengineering strategies Educating, training and developing individual employees Improving operational effectiveness of company and individual employees Providing work and personal development perspectives; career management Change management Organizational strategy Training and development
Organizational Effectiveness Consulting: Corporate programsresponding proactively to survey feedback and action planning; initiatives typically rolled out to most of organization Direct consultingproviding reactive assistance based upon client requests Indirect consultingdesigning programs proactively for clients to implement on their own Senior staff workworking with the companys chairman and senior executives on specific initiatives
Company D
Company Ds OD group focuses upon two main areas of strategic thought and development: organizational effectiveness consulting and HR research and measurements.
HR Research and Measurements: Advanced analyticsdetermining and assessing root causes through surveys and research Benchmarking HR practicesbenchmarking with other companies to determine best practices HR metrics and scorecardsdesigning one-time and ongoing measurement systems to track statistics such as turnover rates, training outcomes, etc. Strategic researchexamining various HR topics (e.g., Why do good employees leave?) and providing clientele with obtained information Survey researchresearching issues such as employee morale, climate, workplace efficiency, etc. Working with clients on change management initiatives Consulting with clients regarding process evaluation and improvement Researching best practices for benchmarking purposes Providing strategic development services for the organization and its employees Increasing the companys and employees productivity Improving the companys ability to attract and retain talent Developing strategies to help the company sustain its employer of choice status
Company E
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APPENDICES (CONTINUED)
Appendix 2: Organizational Development Competencies Toolpack Consulting, LLC provides a list, found below and on the following pages, of almost 150 competencies for OD personnel, divided into 17 focal 24 areas: TABLE 5: ORGANIZATIONAL DEVELOPMENT COMPETENCIES OD Focal Area Effective OD Personnel Can: Be aware of systems wanting to change Be known to those in need of OD services Match skills with potential client profile Marketing Convey qualifications in a credible manner Quickly grasp the nature of the system Determine appropriate decision makers Determine appropriate processes Build trusting relationships Present the theoretical foundations of change Deal effectively with resistance Enrolling Help the client trust the process Help the client manage emotionally changes feelings Collaboratively design the change process Contract psychologically for collaboration Help the client reflect on motivation Clarify outcomes Build realistic expectations Conduct a mini-assessment Identify the boundary of systems to be changed Contracting Articulate an initial change process to use Explicate ethical boundaries Confirm commitment of resources Identify critical success factors for the intervention Clarify the role of consultant Clarify the role of client Begin to lay out an evaluation Further clarify real issues Be aware of how ones biases influence interaction Link change effort into ongoing organizational Assessment processes Identify formal power Identify informal power Determine an appropriate data collection process Determine the type of data needed Determine the amount of data needed Utilize appropriate mix of methods to ensure Data Gathering efficiency, objectivity and validity Utilize appropriate mix of data collection methods Clarify boundaries for confidentiality Select a process that will facilitate openness Gather data to identify future states
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APPENDICES (CONTINUED)
TABLE 5: ORGANIZATIONAL DEVELOPMENT COMPETENCIES (CONTINUED) OD Focal Area Efficient OD Personnel Can: Gather data to identify initial first steps of transition Watch for deeper issues as data is gathered Suspend judgment while gathering data Use statistical methods when appropriate Recognize what is relevant Know how data from different parts of the system Diagnosis impact each other Communicate implications of systems theory Continuously assess the issues as they surface Stay focused on the purpose of the consultancy Utilize a solid conceptual framework based on research Prepare leadership for the truth Involve participants so they begin to own the process Feedback Synthesize the data gathered into themes Create a non-threatening atmosphere Facilitate complex emotional patterns Distill recommendations from the data Focus action that generates high impact at lowest cost Planning Consider creative alternatives Mentally rehearse adverse consequences Mentally rehearse potential gains Facilitate a participative decision-making process Obtain direction from leadership Obtain commitment from leadership Co-create an implementation plan that is rooted in the data Co-create an implementation plan that is concrete, Participation simple and clear Co-create an implementation plan that has logically sequences activities Co-create an implementation plan that is results-oriented Co-create an implementation plan that is measurable Co-create an implementation plan that is rewarded Reduce dependency upon consultant Instill responsibility for follow through Intervene at the right depth Pay attention to the timing of activities Intervention Facilitate concurrent interventions Help manage impact to related systems Re-design intervention or mindfully respond to new dynamics
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APPENDICES (CONTINUED)
TABLE 5: ORGANIZATIONAL DEVELOPMENT COMPETENCIES (CONTINUED) OD Focal Areas Efficient OD Personnel Can: Integrate research with theory and practice Initiate ongoing feedback in client-consultant relationship Choose appropriate evaluation methods to collect evaluation information (i.e., interviews, instruments, financial sheets, etc.) Evaluation Determine level of evaluation (i.e., reaction, learning, behavioral change, organizational impact, societal impact, etc.) Ensure evaluation method is valid Ensure evaluation method is reliable Ensure evaluation method is practical Establish method to monitor change during the intervention Establish method to monitor change after the intervention Follow-Up Use information to reinforce positive change Use information to correct negative change Use information to take next steps Link evaluation with expected outcomes Transfer change skills to internal consultant so learning is continuous Maintain/increase change of momentum Link change process to daily life of system Mobilize additional internal resources to support continued change Determine the parts of the organization that warrant a Adoption special focus of attention Pay attention to movement back to old behaviors Move away from project-driven change to strategydriven change Be sure customers and stakeholders are satisfied with interventions results Plan renewal/reunion events Recognize when separation is desirable Process any left over relationship issues between consultant(s) and clients Separation Ensure that learning will continue Leave the client satisfied Plan for post-consultation contact Clarify personal values Clarify personal boundaries Manage personal biases Manage personal defensiveness Recognize when personal feelings have been affected Self-Awareness Remain physically healthy while under stress Resolve ethical issues with integrity Avoid getting personal needs met at the expense of the client Work within limits of your capabilities Perform effectively in an atmosphere of ambiguity Perform effectively in the midst of chaos
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APPENDICES (CONTINUED)
TABLE 5: ORGANIZATIONAL DEVELOPMENT COMPETENCIES (CONTINUED) OD Focal Area Efficient OD Personnel Can: Develop mutually trusting relationships with others Solicit feedback from others about the impact of OD Energize others Collaborate with internal/external OD professional Balance the needs of multiple relationships Interpersonal Listen to others Pay attention to the spontaneous and informal Consistently maintain confidentiality Interpersonally relate to others Use humor effectively Interpret cross-cultural influences in a helpful manner Handle diversity and diverse situations skillfully Communicate directions clearly to large groups Use the latest technology effectively Use the Internet effectively Facilitate small group interventions (up to 70 people) Facilitate larger group interventions Other (70 - 2,000 people) Apply the skills of international OD effectively Function effectively as an internal consultant Demonstrate ability to conduct trans-organizational development Demonstrate ability to conduct community development Be aware of the influences of cultural dynamics on interactions with others
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1 Corporate Leadership Council, Creating a Value-Added Organization Development Function, Washington: Corporate Executive Board (December 1997). 2 Corporate Leadership Council, Centralization/Decentralization of the HR Function, Washington: Corporate Executive Board (April 1998). 3 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations, Washington: Corporate Executive Board (March 1998). 4 Brian G. Costello, et al., The Role of Human Resources Manager as an OD Practitioner, Society of Human Resources Management (SHRM) White Paper, www.shrm.org/whitepapers/documents/odfinal.asp. 5 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations. 6 ibid. 7 ibid. 8 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations. 9 ibid. 10 Author Unknown, Organizational Development, Toolpack Consulting, LLC www.toolpack.com [Accessed 9 April 2002]. 11 Rima Shaffer, What is Organizational Development? Training & Development (August 2000). (Obtained through Dow Jones Interactive). 12 ibid. 13 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations; Rima Shaffer, What is Organizational Development?; Author Unknown, Organizational Development, Toolpack Consulting, LLC www.toolpack.com [Accessed 9 April 2002]. 14 Corporate Leadership Council, Creating a Value-Added Organizational Development Function. 15 Kevin Herring, HR Takes a Hands-On Approach to Business and Delivers Results, Workforce (October 2001). (Obtained through Dow Jones Interactive). 16 Allison Rossett, Training and Organizational Development: Separated at Birth? Training (April 1996). (Obtained through Dow Jones Interactive). 17 Corporate Leadership Council, Creating a Value-Added Organizational Development Function. 18 Rima Shaffer, What is Organizational Development? 19 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations. 20 Corporate Leadership Council, Creating a Global Organizational Development Strategy, Washington: The Advisory Board Council (January 1997). 21 Corporate Leadership Council, Organizational Development: Structure and Function. 22 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations. 23 Corporate Leadership Council, Creating a Value-Added Organizational Development Function at Large Organizations. 24 Author Unknown, Organizational Development, Toolpack Consulting, LLC www.toolpack.com [Accessed 9 April 2002].