Strategies for improving

Organizational Effectiveness
• Chapter 8
 Organizational Development

• Organization development (OD) is defined by Cummins and Worley (2005) as the ‘system
wide application and transfer of behavioural science knowledge to the planned development,
improvement and refinement of the strategies, structures and processes that lead to
organizational effectiveness.’
 Main Concept

• It aims to
• Help people work more effectively together.
• Improve organizational processes such as the formulation and implementation of strategy
• Facilitate the transformation of the organization and the management of change.
• As expressed by Beer (1980), OD operates as a ‘system wide process of data collection,
diagnosis, action planning, intervention and evaluation.’
 Main Concept

• OD is based on behavioural science concepts, but during the 1980s and 1990s the focus
shifted to a number of other approaches.
• Some of these, such as organizational transformation, are not entirely dissimilar to OD.
• Others such as team building, change management and culture change or management are
built on some of the basic ideas developed by writers on organization development and OD
practitioners.
• Other approaches such as high-performance work systems, total quality management, business
process re-engineering and performance management would be described as holistic processes
that attempt to improve overall organizational effectiveness from a particular perspective.
 OD STRATEGIES

• OD strategies concentrate on how things are done as well as what is done. They are concerned
with system-wide change and are developed as programs.
 Main Concept

• They are managed, or at least strongly supported, from the top but may make use of third
parties or ‘change agents’ to diagnose problems and to manage change by various kinds of
planned activity or ‘intervention’.
• The plans for organization development are based upon a systematic analysis and diagnosis of
the strategies and circumstances of the organization and the changes and problems affecting it.
• They use behavioural science knowledge and aim to improve the way the organization copes
in times of change through such processes as interaction, communications, participation,
planning and conflict management.
• They focus on ways of ensuring that business and HR strategies are implemented and change
is managed effectively
ASSUMPTIONS AND VALUES OF OD

• OD is based upon the following assumptions and values:

• Most individuals are driven by the need for personal growth and development as long as their
environment is both supportive and challenging.
• The work team, especially at the informal level, has great significance for feelings of
satisfaction, and the dynamics of such teams have a powerful effect on the behaviour of their
members.
• OD programs aim to improve the quality of working life of all members of the organization.
• Organizations can be more effective if they learn to diagnose their own strengths and
weaknesses.
• Managers often do not know what is wrong and need special help in diagnosing problems,
although the outside ‘process consultant’ ensures that decision making remains in the hands of
the client.
• The implementation of strategy involves paying close attention to the people processes
involved and the management of change.
 ACTIVITIES INCORPORATED IN THE
OD STRATEGY
• Action Research
• Survey Feedback
• Interventions
• Process Consultation
• Group Dynamics
• Inter Group Conflict Interventions
• Personal Interventions
• Integrated Strategic Change
 ORGANIZATIONAL
TRANSFORMATION
• Organizational transformation is defined by Cummins and Worley (2005) as a ‘process of
radically altering the organization’s strategic direction, including fundamental changes in
structures, processes and behaviours’. Transformation involves what is called ‘second-order’
or ‘gamma’ change involving discontinuous shifts in strategy, structure, processes or culture.
 Main Concept

• Transformation is required when:

• significant changes occur in the competitive, technological, social or legal environment;
• major changes take place to the product life cycle requiring different product development and
marketing strategies;
• major changes take place in top management;
• a financial crisis or large downturn occurs;
• an acquisition or merger takes place.
 Transformation strategies

• Transformation strategies are usually driven by senior management and line managers with
the support of HR rather than OD specialists.
• Four strategies for transformational change have been identified by Beckhard (1989):
• a change in what drives the organization, for example a change from being production-driven
to being market-driven would be transformational;
• a fundamental change in the relationships between or among organizational parts, for example
decentralization;
 Main Concept

• 3 .a major change in the ways of doing work, for example the introduction of new technology
such as computer-integrated manufacturing;
• 4. a basic, cultural change in norms, values or research systems, for example developing a
customer-focused culture.
 The Transformation program

• The eight steps required to transform an organization have been summed up by Kotter (1995)
as follows:
• Establishing a sense of urgency:
• – examining market and competitive realities;
• – identifying and discussing crises, potential crises or major opportunities.
• 2. Forming a powerful guiding coalition:
• – assembling a group with enough power to lead the change effort;
• – encouraging the group to work together as a team.
 Main Concept

• 3. Creating a vision:
• – creating a vision to help direct the change effort;
• – developing strategies for achieving that vision.
• 4. Communicating the vision:
• – using every vehicle possible to communicate the new vision and strategies;
• – teaching new behaviors by the example of the guiding coalition.
 Main Concept

• 5. Empowering others to act on the vision:

• – getting rid of obstacles to change;
• – changing systems or structures that seriously undermine the vision;
• – encouraging risk taking and non-traditional ideas, activities and actions.
• 6. Planning for and creating short-term wins:
• – planning for visible performance improvement;
• – creating those improvements;
• – recognizing and rewarding employees involved in the improvements.
 Main Concept

• 7. Consolidating improvements and producing still more change:

• – using increased credibility to change systems, structures and policies that don’t fit the
vision;
• – hiring, promoting and developing employees who can implement the vision;
• – reinvigorating the process with new projects, themes and change agents.
• 8. Institutionalizing new approaches:
• – articulating the connections between the new behaviours and corporate success;
• – developing the means to ensure leadership development and succession.
 Knowledge management strategy

• Knowledge management strategies aim to capture an organization’s collective expertise and

distribute it to ‘wherever it can achieve the biggest payoff’ (Blake, 1988). This is in
accordance with the resource-based view of the firm, which, as argued by Grant (1991),
suggests that the source of competitive advantage lies within the firm (ie in its people and their
knowledge), not in how it positions itself in the market
 THE PROCESS OF KNOWLEDGE
MANAGEMENT
• A successful company is a knowledge-creating company.
• Knowledge management is ‘any process or practice of creating, acquiring, capturing, sharing
and using knowledge, wherever it resides, to enhance learning and performance in
organizations’ (Scarborough et al 1999)
 Main Concept

• Knowledge management is concerned with both stocks and flows of knowledge. Stocks
included expertise and encoded knowledge in computer systems.
• The purpose of knowledge management is to transfer knowledge from those who have it to
those who need it in order to improve organizational effectiveness.
• It is concerned with storing and sharing the wisdom and understanding accumulated in an
organization about its processes, techniques' and operations. It treats knowledge as a key
resource.
 SOURCES AND TYPES OF
KNOWLEDGE
• As argued by Nonaka (1991) and Nonaka and Takeuchi (1995), knowledge is either explicit or
tacit.
• Explicit knowledge can be codified – it is recorded and available and is held in databases,
corporate intranets and intellectual property portfolios.
• Tacit knowledge exists in people’s minds. It is difficult to articulate in writing and is acquired
through personal experience.
• Hansen et al (1999) suggest that it includes scientific or technological expertise, operational
know-how, insights about an industry, and business judgement. The main challenge in
knowledge management is how to turn tacit knowledge into explicit knowledge.
 APPROACHES TO THE
DEVELOPMENT OF KNOWLEDGE
MANAGEMENT STRATEGIES
• Two approaches to knowledge management have been identified by Hansen et al (1999).
• The first is the codification strategy – knowledge is carefully codified and stored in databases
where it can be accessed and used easily by anyone in the organization.
 Main Concept

• The second is the personalization strategy – knowledge is closely tied to the person who has
developed it and is shared mainly through direct person-toperson contacts. This is a ‘person-
to-person’ approach, which involves sharing tacit knowledge. The exchange is achieved by
creating networks and encouraging face-to-face communication between individuals and
teams by means of informal conferences, communities of practice, workshops, brainstorming
and one-to-one sessions
 Commitment Strategy

• Commitment to work or work commitment is defined as the level of enthusiasm an employee

has towards his/her tasks assigned at a workplace. It is the feeling of responsibility that a
person has towards the goals, mission, and vision of the organization he/she is associated with.
• High-commitment management emphasizes personal responsibility, independence, and
empowerment of employees across all levels instead of focusing on one higher power.
 How do you Build employee
commitment?
• Construct career growth opportunities. ...
• Respect your employees needs. ...
• Provide Feedback. ...
• Clear Communication. ...
• Encourage Team Bonding. ...
• Create Clear Strategies for Employee Engagement.
 How to improve organizational
commitment?
• Create a strong teamwork culture. ...
• Communicate clear goals and expectation to the employees. ...
• Be transparent and encourage open communication. ...
• Maintain work ethics. ...
• Foster a positive work culture. ...
• Develop trust. ...
• Encourage innovation. ...
• Provide constructive feedback and not criticism.
 Quality Management

• STQM is defined as a quality management philosophy that views quality from the overall
performance of a firm. It defines quality as being driven by customer and environmental needs
and looks to identify critical factors that will determine the survivability and competitiveness
of a firm in the near future..
 Why is strategic planning
important in quality management?
• Total Quality Management focuses the organization's goals on a system of quality and meeting
the needs of the customer. Strategic planning is a tool that helps to prioritize the efforts of the
organization in the implementation of a Total Quality Management approach.
 Continuous improvement

• “Continuous improvement, sometimes called continual improvement, is the ongoing

improvement of products, services or processes through incremental and breakthrough
improvements. These efforts can seek “incremental” improvement over time or
“breakthrough” improvement all at once.”
 Customer Service

• A customer service mentality in HR requires all HR staff members to deal with employees of
the company as internal customers and to see the mission of the HR department as a customer
service mission.
How important is customer service
in Human resources?
• While employees at every level work to satisfy the customer, human resources is responsible
for making employees happy and productive. They deliver important services that can affect
employee satisfaction, motivation and the company's ability to attract and retain talent.