Is Organization Development Dead?: A Quest of OD to Maintain …. For Web 1_2558/7. Is...

Volume 7 Number 1 January - June 2015 (2558)

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Is Organization Development Dead?: A Quest of OD to Maintain Relevance as an Approach to Change Management for Modern Organizations

ChaowatTantivivathanaphand*

Abstract

This article provides a literature review on the effectiveness of Organization Development (OD) as both an approach and tool for change management for modern organizations. Despite OD’s long history and legacy, OD’s ability to meet the demands of operating in the fast-changing environment of the 21st century has recently been questioned. With the main objective of maximizing shareholders’ values, organizations these days encounter the challenges of managing cross-culturally and adapting to rapid changes in technologies and consumer demands. Since OD’s most important goal is to create sustainable change in organization, OD seems to be an effective solution to these challenges. Nevertheless, management literature has shown that this is not always the case. For instance, as OD emphasizes open communication and honest exchange of information, it might not be very effective in countries where communication is highly indirect. Further, OD’s focus on long-term process change does not match management’s needs for short-term performance and profit gains. The author concludes by suggesting a few strategies for OD practitioners to meet the organizational demands in the current era such as possessing foundational knowledge about group dynamics and improvising interventions based on the knowledge about the client company. Key words: organization development, change management, modern organization,

cross-cultural management _______________________________________ * Master of Science (MSc) in Organizational and Social Psychology, London School of

Economics and Political Science, England, and MA Candidate, Department of Organization and Leadership, Teachers College, Columbia

University, USA.


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การพฒนาองคการจบสนแลวหรอ?: แนวคดการพฒนาองคการเพอการคงอย เสนอเปนแนวทางการจดการการเปลยนแปลงส าหรบองคกรยคใหม

เชาววฒน ตนตววฒนพนธ

บทคดยอ

บทความนเปนการทบทวนเอกสารเรองประสทธภาพของการพฒนาองคการในฐานะทเปนทงแนวทางและเครองมอในการบรหารการเปลยนแปลงส าหรบองคกรในยคสมยใหม ถงแมวาการพฒนาองคการจะเปนศาสตรซงมประวตและความส าเรจทยาวนาน ผเชยวชาญตางก าลงตงค าถามวาการพฒนาองคการสามารถตอบสนองตอความตองการของสภาพตลาดในศตวรรษท 21 ซงเปลยนแปลงอยางรวดเรวไดจรงหรอไม เปาหมายทส าคญทสดขององคกรในยคปจจบนคอการเพมมลคาของผถอหนใหสงทสด ในการทจะบรรลเปาหมายน องคกรในยคปจจบนตองเผชญกบความทาทายทส าคญสองประการคอ การบรหารจดการขามวฒนธรรมและการปรบตวเขากบเทคโนโลยและความตองการของลกคาซงเปลยนแปลงอยางรวดเรว เนองจากเปาหมายทส าคญทสดของการพฒนาองคการคอท าใหเกดการเปลยนแปลงทย งยน การพฒนาองคการจงนาจะตอบโจทยความทาทายสองประการนไดอยางมประสทธภาพ อยางไรกตาม การศกษาเอกสารและงานวจยทเกยวของกบการจดการพบวาไมเปนเชนนนเสมอไป เนองจากการพฒนาองคการเนนย าความส าคญของการสอสารอยางเปดเผยและแลกเปลยนขอมลอยางตรงไปตรงมา การใชการพฒนาองคการในประเทศทใชการสอสารโดยทางออมมกไมประสบความส าเรจ ยงไปกวานน เนองจากการพฒนาองคการใหความส าคญกบการพฒนากระบวนการในระยะยาว จงไมตอบโจทยความตองการของผบรหารทจะเพมผลผลตและก าไรในระยะส น ในตอนทายผเขยนไดแนะน ากลยทธส าหรบนกพฒนาองคการเพอทจะตอบสนองความตองการขององคกรในยคปจจบน เชน การศกษาความรพนฐานเกยวกบพลวตรของกลม และการเรยนรทจะใชเทคนคทเหมาะสมในเวลาทถกตองโดยตงอยบนพนฐานความเขาใจเกยวกบองคการทเปนลกคา ค าส าคญ: การพฒนาองคการ การจดการการเปลยนแปลง การจดการสมยใหม

การจดการขามวฒนธรรม


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Introduction “OD is dead. Long live OD!” (Mirvis, 2006)

This statement interestingly describes the state of Organization Development (OD) profession (Mirvis, 2006). Since its birth in the 1950s, OD has evolved and undergone significant transformations with more or less success at different times in order to stay ‘relevant’ as an approach to managing change in organization, one of the all-time most hectic tasks of management (Mirvis, 2006). This article provides a thorough literature review of the arguments for and against the use of OD to successfully create organizational change in today’s hypercompetitive business environment. It will evaluate OD’s assumptions and values in light of the challenges that modern organizations face to assess whether OD’s claim as an effective solution to change management still holds. The author will first outline objectives of modern organizations and the important challenges they encounter. The following section defines OD and explains its assumptions and values. These characteristics of OD are then evaluated against the challenges of modern organizations. Lastly, the article concludes by providing recommendations on how OD should adapt to better serve the needs of management nowadays. Modern organizations and the challenges of operating in the 21st century

Since the concept of “organization” was first introduced around the time of industrialization, objectives of organization have changed significantly (Miller, 2014; Stacey, 2010). In the beginning of the last century, organization was seen as one of the institutions which helped facilitate the division of labor to maximize output from each worker (Cassidy & Kreitner, 2012; Miller, 2014). The goal was to ensure that labor was managed in the most efficient way and the society obtained maximum benefit (Cassidy & Kreitner, 2012; Miller, 2014). In the modern era of capitalism, however, the most important goal of every business organization is to maximize profits for their shareholders (Stacey, 2010). Other stakeholders such as employees and community are seen as secondary in importance to the firms (Stacey, 2010). Management is obsessed with numbers and wants to see numeric gains for all the investments they made even in


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the “soft” aspects of organizing such as the organizational climate change program (Stone, 2013). Nevertheless, after the latest American economic crisis and many corporate scandals of the 2000s, there has been a reverse trend (Miller, 2014; Stacey, 2010). Management now gives more attention to balancing demands of different stakeholders and maintaining a commitment to ethical business conduct (Cassidy & Kreitner, 2012). Despite these efforts, however, generating profit remains a priority for business organizations (Stacey, 2010).

In addition to differences in objectives, modern organizations also operate in a totally different environment from that of firms hundred years ago (Cateora & Graham, 2012; Phatak, Bhagat, & Kashlak, 2008). Outlined below are major challenges that organizations of the modern times are encountering.

The first challenge for modern organizations is the increasing need for cross-cultural management (Cateora & Graham, 2012; Phatak et. al., 2008). As the world has become more globalized, if organizations want to remain competitive, it has become inevitable for them to interact with those in other countries for various purposes such as outsourcing particular functions and forming a joint venture (Cateora & Graham, 2012; Phatak et. al., 2008). Nevertheless, working with people from different culture is highly challenging since one needs to understand both the culture of his own country, the “home culture”, and that of another party, the “host culture” (Cateora & Graham, 2012; Phatak et. al., 2008). Adding to the challenge is the fact that home and host cultures usually conflict. Hence, organizations need to find ways to compromise the differences while also adhering to its own values (Cateora & Graham, 2012; Phatak et. al., 2008).

Another challenge unique to organizations of today is to cope with the rapid pace of change in their competitive landscape (Phatak et. al., 2008). As a result of technological advancements, organizations in these days are experiencing unprecedented fast rate of change in the standards of manufacturing and production techniques, service delivery, and management practices (Phatak et. al., 2008). The market has never witnessed shorter product life cycle, as short as 4-6 months for information technology products (Phatak et. al., 2008). Modern organizations,


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thus, face a task of having to keep themselves updated with the current trends in their respective industries and respond appropriately to maintain their competitive position (Cateora & Graham, 2012; Phatak et. al., 2008).

Having outlined the purposes and challenges of modern organizations, the next section will define OD and explain the assumptions and values which are foundational to OD as a tool for change management. OD: The definition, assumptions, and values

There is a lack of consensus on the definition of OD as the field is informed by theoretical roots from many disciplines such as behavioral science, social psychology, and management (Burke, 2006; Gallos, 2006). Despite the disagreement, it is clear that the core idea of OD concerns “change” in organizational “processes” (Beckhard, 1969; Gallos, 2006; Schein, 1988) Presented below is the working definition which incorporates these cores:

“OD is a planned intervention to change organizational processes in order to increase organizational effectiveness and build capacity for adaptation and self-renewal.” (Beckhard, 1969; Schein, 1988) Inherent in the above definition are two following assumptions which lay a foundation for

OD as an approach to managing change. Firstly, OD professionals believe that people are the source of potential and competitive

advantage for organizations (Gallos, 2006). This humanistic assumption has its root in the birth of OD in the 1950s (Gallos, 2006; Miller, 2014; Mirvis, 2006). During that time, there was a human relations movement which was a response to workers’ resentment towards managers for using scientific management to set work standards (Cassidy & Kreitner, 2012; Miller, 2014). Popularized by Frederic Taylor, the principle of scientific management indicates that each task has one best way to perform. Therefore, if the workers follow the instructions strictly, they would be able to achieve the production goal set by the scientific method (Cassidy & Kreitner, 2012; Miller, 2014). Movement and motion study was conducted to determine the most efficient way to perform


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a task and the unit of output workers should produce in an hour or a day (Cassidy & Kreitner, 2012; Miller, 2014). The output goal was then set as standards for compensation (Cassidy & Kreitner, 2012; Miller, 2014). This management approach was heavily criticized for dehumanizing workers by viewing them as a cog which could be easily replaced (Miller, 2014). As a result, human relations movement was initiated. New work practices such as a concrete employee welfare system and organizational social events were designed and implemented to respond to both workers’ personal and social needs (Cassidy & Kreitner, 2012; Miller, 2014). OD was one of the tools invented for this purpose of improving interpersonal relationships in organizations. The assumption was that human elements contributed to organizational outcomes and, therefore, could not be ignored (Gallos, 2006; Schein, 2006). This assumption holds until today (Schein, 2006). Strategies cannot be designed in a management vacuum as, ultimately, it is the employees who deliver those strategies (Stone, 2013).

The second assumption of OD concerns the importance of “processes” in organization (Schein, 1988, 2006). OD is a technique which could be employed in any organization regardless of industry (Schein, 1988). Whether the organization is a manufacturing firm, a service company, or a non-profit institution, every organization has a set of basic processes which they all go through in their everyday functioning (Schein, 1988, 2006). These processes are, for example, decision-making process, communication process, team building process, feedback provision process, and conflict management process (Schein, 1988). Members of organizations engage in these processes on a daily basis. They, however, often do so unconsciously, not even being aware of aware of the assumptions behind their conduct in each process (Schein, 1988). Therefore, the job of OD practitioner is to “bring the assumptions to the surface”, so that organizational members are aware of the reasoning behind their action (Schein, 1988). Consequently, they could collectively identify ways to improve the various processes which would lead to the more efficient functioning of their organization (Schein, 1988, 2006).

Flowing from these two assumptions are a set of values which OD generally endorses. These are:


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Shared commitment and participation All organizational members should share a common goal to collectively find solutions to improve the processes and, in turn, organizational effectiveness (Beckhard, 1969; Gallos, 2006).

Openness in communication Members from different levels of the managerial hierarchy should feel comfortable and secure to exchange “honest information” with each other (Beckhard, 1969; Gallos, 2006).

Acknowledgement of feelings and emotions in workplace The dominant discourse on management pays little attention to feelings and emotions in the workplace, considering that they should be kept personal and should not interfere with work processes (Schein, 1988; Stacey, 2010; Ybema, Yanow, Wels, & Kamsteeg, 2009). The reality, however, is that feelings and emotions are unavoidable facts of organizational life (Ybema et. al., 2009). Additionally, people usually spend a lot of time and energy being involved and “caught up” in emotional conflicts (Beckhard, 1969; Ybema et. al., 2009). For instance, the engineering and the marketing departments might dislike each other and engage in destructive actions to compete for resources and support from management without never trying to sit down together and discuss how they could improve their relationship (Crawford & Di Benedetto, 2014). Therefore, it is necessary that organizational members first go through processes designed to “work out their feelings and emotions” before they perform other rational and logical tasks (Beckhard, 1969; Schein, 1988). According to Beckhard (1969), if the “dysfunctional energy” spent in inappropriate actions such as disliking, gossiping about, and attacking one another could be turned into positive energy used to improve collaboration, organization would immediately see dramatic improvement in productivity and performance.

Empowerment Decisions should be made by people who are closest to the problem regardless of their positions in the managerial hierarchy (Beckhard, 1969). It is widely accepted in management and organization discourse that bureaucratic


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management leads to significant productivity loss (Cassidy & Kreitner, 2012). When approval from higher-level managers is always needed for the subordinates to take action, decision making is slowed down and the problems cannot be solved quickly (Cassidy & Kreitner, 2012). Normally, the employees who perform the task on a regular basis have the best knowledge about task process and also possible problems. Thus, they should be empowered to make decisions when problems related to their task arise. Management should plays a more consultative role to allow employees to develop both task-specific skills and problem-solving skills.

Willingness to learn Unless organizational members are encouraged to take risk to experiment with new ideas they collectively derive at to improve task and interpersonal processes, it is impossible for real change to occur and, in effect, for behavioral transformation to take place (Beckhard, 1969; Schein, 1988).

This list is not exhaustive, yet it explains the macro values of the OD profession in general. The author will proceed to assess the effectiveness of these aforementioned assumptions and values in responding to the challenges of organizing in the modern times. OD’s standing in tackling the challenges of modern organizations

The discussion in this section explains how OD’s assumptions and values help or hinder modern organizations to overcome the challenges they are encountering in their operating environment. Values and approaches required to deal with the challenges outlined in the earlier section will be presented and compared against those of OD.

Firstly, to apply OD principles to aid in the process of managing cross-culturally, OD practitioners are facing a significant challenge since OD is not perceived the same way in different cultures (Mirvis, 2006; Schein, 2006). Most theories of OD are developed in the Western part of the world, mainly North America and Western Europe, and are obviously influenced by socio-economic events that happened in these regions during the time of the theories’ conception (Burke, 2006). Additionally, values of the OD profession are heavily influenced by the Western


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culture which may not hold in the non-Western parts of the globe (Catora & Graham, 2005; Phatak et. al., 2008; Schein, 2006). Success in using OD techniques to improve organizational processes, therefore, depends largely on whether the values of the other cultures align with OD’s (Schein, 2006).

An example could be demonstrated using Hall’s (1976) classifications of national cultures into “low-context” and “high context.” In low-context cultures such as American and Canadian, communication is more direct and meaning is derived from the utterances spoken (Cateroa & Graham, 2005; Hall, 1976). On the contrary, in countries with high-context culture such as Thailand and Japan, people usually communicate indirectly and meanings need to be inferred from other cues apart from the utterances (Cateroa & Graham, 2005; Hall, 1976). OD’s championing of open and honest information exchange obviously has a better chance of success in low-context cultures (Beckhard, 2006). For workers in high-context cultures, sharing information could be highly difficult and might be perceived as an interference of personal space (Cateora & Graham, 2012).

With regards to the challenges of coping with the fast pace of change, although fostering transformative change in organization is a core task of OD, there are a number of factors which could prohibit OD practitioners to accomplish this mission successfully (Bradford & Burke, 2006; Stone, 2013). According to Beckhard (1969), OD is a long-term process. Familiarizing people with OD’s principles of questioning the underlying assumptions behind their behaviors and developing their skills in self-diagnosis and problem solving usually take at least two years (Bechkard, 1969). Nevertheless, since most organizations give priority to improvement in performance and profit indicators in a short time period, OD encounters the challenge of demonstrating accountability and “hard results” using numbers (Stone, 2013). This is the same problem for the departments which deal with the “soft/humanistic side” of the organization such as human resource management and human resource development (Stone, 2013).

Described are challenges OD has to deal with to remain an effective change management tool. The remainder of the article suggests strategies OD practitioner could adopt to facilitate


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improvement of organizational processes more effectively. How could OD adapt to stay relevant as an approach to change management?

As explained, OD today is heavily challenged by a changing operating environment and needs of organizations. This section offers several strategies to help OD professionals keep up with organizational demands and deliver their promises of creating meaningful transformation.

Despite the different interpretations and variations in the use of OD principles, the cores of OD have stood the test of time (Schein, 2006). Although there have been additions of theories and techniques to the OD field, the ultimate goal of OD has never changed; to improve organizational processes which will lead to greater organizational effectiveness (Schein, 2006). Nevertheless, according to the earlier discussion, it is also clear that OD practitioners will need to change the way they manifest OD assumptions and values to address challenges of the modern days (Austin & Bartunek, 2006; Schein, 2006).

In current literature, several metaphors have been used to portray OD to demonstrate how new understanding of OD could be reached (Mirvis, 2006). OD has been compared in analogy to theatrical performance, spirituality, and even jazz music (Bastien & Hostager, 2001; Mirvis, 1997; Torbert, 1989). Strange this might seem, however, one could see that in all metaphors for OD mentioned, there is a shared property that the practitioner must be able to “master the basics” and “improvise according to the situations” (Bastien & Hostager, 2001). As an instance, a jazz musician must have a good foundational knowledge of music theory and chord progression (Bastien & Hostager, 2001). He must also practice to be able to play the instruments well (Bastien & Hostager, 2001). Nonetheless, in a live concert, as the performance progresses, he might choose to improvise the song in a particular way according to his mood, the atmosphere in the hall, and other factors (Bastien & Hostager, 2001). For OD, the “basics” and “improvisations” are as the followings:

Basics: OD practitioners need to be well equipped with knowledge in change theories, group dynamics, and psychology of human behavior and motivation (Austin


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& Bartunek, 2006). They should also be skillful in change techniques such as storytelling and dialogue facilitation (Shaw, 2002). Equally important is that they must spend enough time to understand the culture of the organization they are working with to ensure that they could “speak the same language” as the organizational members (Schein, 2010).

Improvisations: During the OD facilitation process, having familiarized themselves with the culture, structure, and nature of interpersonal relationships in the client organization, OD practitioners must be alert for opportunities to improvise to create desirable results as the situations unfold (Bastien & Hostager, 2001; Shaw, 2002). For example, they should know who to include or exclude in a particular conversation at different times (Shaw, 2002). In a conversation, they should realize when to keep quiet and when to intervene with questions (Shaw, 2002; Schein, 1988). A combination of skills, intuition, and experience is required for successful improvisation (Bastien & Hostager, 2001). Skillful and experienced OD practitioner will be able to appropriately assess “who” needs to talk to “whom” about “what” (Schein, 1988; Shaw, 2002).

Apart from “mastering the basics” and “knowing how to improvise”, OD practitioners would benefit from learning the following subjects

“Learn” the national culture of the client organization: In addition to learning the culture of the organization one is working to change, it is also important to possess knowledge of how that organization is influenced by the national culture of the country it operates in (Hofstede, Hofstede, & Minkov, 2010; Phatak et. al., 2008). Even multinational firms which have global standards need to make some variations in their work practices to accommodate the host country’s demand (Hofstede et. al., 2010; Phatak et. al., 2008).

“Learn” the business: OD practitioners should have basic knowledge of business functions such as accounting, finance, and research and development to ensure that


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they are not “caught up in human fantasy” (Bradford & Burke, 2006). OD practitioners’ lack of business knowledge could easily lead them to conclude that all organizational symptoms are results of human problems while, in fact, they might not be (Bradford & Burke, 2006).

“Learn” to show numbers: Although results of OD interventions may not be seen in a short time period, OD practitioners could satisfy management’s appetite for figures using appropriate measurement tools (Stone, 2013). For example, surveys could be conducted to measure participants’ attitudes towards their own productivity before, during, and after the OD program (Stone, 2013).

“Learn” to leverage small changes to create system-wide effect: This notion comes from the theory of complex adaptive system (CAS) which has also been used as one of the metaphor for OD (Stacey, 2010). In a CAS, the smallest units of the system are interacting with each other all the time, each time with slightly different patterns (Stacey, 2010). This diversion in interaction pattern is also imitated by the units nearby (Stacey, 2010). If this pattern is strong enough to impact an adequately large number of units in the system and break the previous pattern, the behavior of the whole system will eventually shift to the new pattern or “attractor” (Stacey, 2010).

A number of studies shows an example of how small changes in the organization eventually lead to a transformation in the total organizational system (Pascale, Millemann, & Gioja, 2000). A current example which could demonstrate this OD process is the story about the turnaround of Japan Airline (BBC, 2012; Layne, 2012). After declaring one of the largest bankruptcies in the history of Japan in 2010, Japan Airline came back as the second most profitable airline in the country just 2 years later (BBC, 2012; Layne, 2012). The strategy which its new president, Kazuo Inamori, employed in making a turnaround was simple. He organized for the managers from different departments to meet monthly and discuss about how to improve the company’s cost structure and operating efficiency (BBC, 2012; Layne, 2012). Surprisingly, this


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conversation never happened before the 2010 bankruptcy (BBC, 2012; Layne, 2012). Soon afterwards, this behaviors is imitated in the other parts of the organization including customer services and marketing (BBC, 2012; Layne, 2012). Staffs engaged in conversation with each other about how they could function more efficiently (BBC, 2012; Layne, 2012). By 2012, the company’s $25 billion debt was cleared and customer satisfaction soared (BBC, 2012; Layne, 2012). It is not known whether Inamori has ever learned about OD but his strategy is definitely a good demonstration of effective application of OD principles. Conclusion

In conclusion, despite many challenges posed by the currently turbulent operating environment, OD still has a strong promise as an approach and tool for managing change. The core purpose of OD to create transformative and sustainable change has never been more relevant to organizations than today when the speed of change has skyrocketed. Nevertheless, although the philosophical underpinning in fostering change of OD remains strong, OD practitioners need to adapt to the current organizational demands of managing cross-culturally and dealing with the fast pace of change. Success in such missions will strengthen relevance of OD in the current world of management and prepare the profession for the upcoming challenges of the post-capitalism era.


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