Management
2019
Vol. 23, No. 1
ISSN 1429-9321
DOI: 10.2478/manment-2019-0004
HANNA DOROSHUK
Organizational
development as
a modern management
tool for transformation
of the company (case
of Ukrainian energy
company)
“You never change things by fighting the existing reality.To
change something, build a new model that makes
the existing model obsolete”
Richard Buckminster Fuller
1. Introduction
Assoc. Prof. Hanna Doroshuk, Ph.D.,
Odessa National Polytechnic
University,
Department of Management,
Ukraine,
ORCID: 0000-0002-0340-7514.
Globalization processes in the world of
economics lead to a growing number of
interconnections
and
interdependencies
between different economical objects, make
the businesses and organizations structures
much more complicated and, as a result, it
becomes rather difficult to manage them. In
fact, organizational development as one of the
methods of changes management is becoming
more relevant, because of its impact on the
company’s activities and because it is a tool
that, for the sake of development, maximizes
human potential and uses modern managerial
technologies.
While organizational development can be
considered as one of changes management
methods, it also can be one of the organization
development directions. It is worth noticing that
organizational development, in comparison
with other methods of changes management,
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applies the behavioural approach, motivation and staff development, besides,
organizational development always deals with development of the entire
organization. As a whole this development is longer and larger in scale than
any other methods of changes management, it uses evolutionary approach of
organization development.
2. Methodology of organizational development
The issues of organizational changes can be found in foreign papers and in
works of our scientists. The researches proposed numerous methods, models
and techniques. The most popular directions of change are business process
reengineering and organizational development.
The both directions derive from the need for a fundamental revision of the
existing organization and conduct of business and the implementation of
radical changes that affect the entire organization. The difference between these
approaches is that in the case of reengineering the organization redesigns its
processes and systems on the basis of which the business practice, people and
organization culture change, while in the case of organizational development
at the beginning there must be first trainings and informing of people and only
after that the business conducting is started to be changed (Doroshuk, 2014).
The peculiarity of using organizational development as a modern management
method is that this method incorporates modern management theories,
psychology and sociology of management.
The concept of organizational development was introduced in the 1960s
(Beckhard, 1969; Margulies and Raia, 1972), however, it should be noted that the
first fundamental research in this field was done by Kurt Levin in the 1930s, in
particular, he studied the field theory.
Nowadays there exist several approaches to organizational development (Burke
and Noumair, 2015; French and Bell, 1998; Waclawski and Church, 2001) with
І.Adizes (1998) (Greiner, 1972) methodology as the most popular, the mentioned
theory provisions are used in the work taking into account the peculiarities of
the development of the branch-forming enterprise infrastructure.
There are used so-called «hard» methods in organizational development, as
well as in many other types of development: quality management, organizational
design, process management, implementation of the concept of lean
production, knowledge management, improvement of the management system,
technological process changes, automation of management and informatization
of management.
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Organizational development as a modern
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However, «soft» methods are of primary importance: it includes development
of competences and skills of personnel, formation of organizational culture
and values, of a management style, improvement of the remuneration system,
the peculiarities of the change leader, organizational behaviour, personnel
training, the formation of development teams, planning of staff’s life and career
(Doroshuk, 2015).
The concept of organizational development is successfully implemented both
in small and medium business, as well as large companies and even public
administration. Organizational development programs are different in different
organizations, which may be due to: the size of the organization, the complexity
of building the organization, industry affiliation, business characteristics, and
other factors that will be described in the section. The purpose of the article is
the formation of the approaches and stages of organizational development for
a large vertically integrated company, ensuring the country’s strategic security
in the field of energy.
3. Organizational development concept
Organizational development can be considered as one of directions of a company
development. Depending on the object of development there can be distinguished
the following point of views concerning organizational development:
organization as a social formation – an open socio-technical system,
organization as management function - spatial distribution and timing,
organization as a characteristic of management system – the improvement of
the system order can bring the increase of the company performance,
organization as a process of streamlining the organization’s activities or
manifestation of joint activities, which is expressed in the creation of new and
improved systems created and functioning of any kind,
organization as a structure - a set of stable links between objects and
management implemented in specific organizational forms that ensure the
integrity of management and preservation of the main features despite various
external and internal changes.
This paper shall focus on the organization development as social formation
having a certain goal of existence, however not rejecting the possibility of
using other tools. That is, organizational development is the development of an
organization as an open socio-technical system.
So it can be proposed that organizational development as the continuous
multidimensional nonlinear process integrating multidimensional local
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changes in management technologies and employee behaviour, the process of
transition of the enterprise into a new qualitative state, due to changes in the
quantity, quality of its subsystems and links between them, which increases its
survivability and competitiveness within the global economic space.
4. Possibility to manage organizational development
Development involves multidimensional local changes, therefore, for the
management of development, one can use the concept of change management
and one of its methods - organizational development, which is proposed to
expand and consider not only the position of change in employee behavior, but
also from the point of view of the introduction in practice of the organization of
new management technologies , which will change it.
It should be noted that a number of authors, including the founders of the
concept of organizational development, adhere to the view that organizational
development cannot be managed, but it happens as it happens. However, there is
another opinion that the author of the work adheres to - it is possible to manage
the organizational development. This can be argued so.
The ability to manage organizational development is determined, first of
all, by the human factor, since a person deliberately seeks ways to improve the
situation; secondly, knowledge of the cyclical nature of the development of socioeconomic systems, which allows for the provision of growth reserves.
The need of management of organizational development is determined by the
goals of the organization and its employees, as well as the development of the
organization as its immanent feature.
5. Features of organizational development of a large energy company
As an object of organizational development the work considered a large
vertically integrated company. The study of the unique experience of the
organizational development of a large company, which forms the state
infrastructure in the field of energy, made it possible, on the one hand, to
highlight the peculiarities of the organizational development of such companies,
on the other hand, to allocate a general scheme of organizational development,
working for all types of organizations. In this section of work we will focus on
the peculiarities of the organizational development of large companies in the
energy sector. SE NAEK “Energoatom” is a large company with vertical integration
(Table 1), capable of self-sufficiency.
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Table 1. The staff of the state enterprise SE NAEK “Energoatom”
in 2014-2016, men
Index name
Men per year
2014
2015
2016
Accounting number of full-time employees of
the accounting staff
35149
35186
34947
Total women
11669
11687
11605
Total men
23480
23499
23342
Total managers
4873
4891
4870
of them women
680
667
663
of them men
4193
4224
4207
Source: http://www.energoatom.kiev.ua/ru/actvts-16/sustainable_development-98/
social-100/news-109/gender_policy-103 (28.01.2019 – access date)
The analysis of the gender of the workers of the SE NAEK “Energoatom” in
2014-2016 shows that the ratio of the number of both men and women during the
last three years remains practically stable: women - at the level of 33% and men
at the level of 67%.
The company consists of the directorate, which manages the entire complex of
the enterprise; separate structural subdivisions; service and auxiliary units. This
provides an opportunity to carry out organizational development by a cascade:
in the directorate, separate structural divisions and service departments,
structural units of separate structural divisions.
One of the tasks of NAEK Energoatom is to ensure the energy security of
the country. SE NAEK Energoatom is included in the List of objects of state
ownership of strategic importance for the economy and security of the state,
approved by the Decree of the Cabinet of Ministers of Ukraine No. 83 dated
March 4, 2015. According to the results of comparing key performance indicators
of NPP power units with the requirements established by international
standards, the company is completely safe and reliable, and therefore has
significant potential for further development. Taking into account the impact
on economy and welfare of the Ukrainian citizens, it is very important to
guarantee positive result of organizational development for the company and
for the country as well.
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SE NAEK “Energoatom” is a state unitary commercial enterprise; therefore,
with its development, one of its instruments is corporatization, it is important
to take into account the experience and forms of corporatization of large
enterprises in Ukraine that are of strategic importance to the country’s economy
and security; as well as streamline relations with the public, necessary for the
successful corporatization of Energoatom.
Influence of globalization (integration) processes, aimed at cooperation in the
field of ecology and safety of nuclear energy. In particular, it concerns issues of
mutually beneficial international cooperation, expansion of electricity exports to
the EU, investment attraction for the construction of new power units.
The peculiarity of the organizational development of SE NAEK “Energoatom”
as an infrastructure of the state will be not only changes in the company itself,
but also a change in the structure of the electricity market. The electricity market
model, created by analogy with the British pool, will be replaced by a balancing
system in conditions of liberalization of the electricity market.
The company is a town-forming enterprise, since the number of employees
of the nuclear power plant is not less than half of the population of the
administrative-territorial units in whose territory the nuclear power plants are
located. Therefore, the city-forming function must be preserved in the course of
organizational development and in the process of corporatization.
6. Stages of organizational development of the energy company
Stage 1 - Team formation. Organizational development can be most effectively
implemented through process counseling, first proposed by K. Levin (1951).
The tool for managing change and organizational development involves the
involvement of a third-party consultant - the agent of change, the facilitator, the
consultant. An agent of change can provide expert counseling, independently
defining development paths and offering them for implementation, or process
counseling, when the agent changes, using knowledge of the organizational
development and change management methodology, as well as knowledge
and skills of working with group dynamics, and has diplomatic skills and is
able to build trusting relationships, direct the process of change into the right
direction.
Organizational development is a complex and multi-faceted process involving
a large number of participants, because organizational development is not
a spectator’s sport, it involves a team, each member of which develops in the
process of change (table 2).
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Table 2. Subjects of organizational development management
of SE NAEK “Energoatom”
Type of the
subject of
changes
First stage
subjects
Internal
External
Agents of changes, consultants - Areva, Deloitte and others.
Supervising and regulating organs IAEA, ENVSEC (the Environment and Security Initiative)
Managers of
project,
the company
Supreme Council of Ukraine (Verkhovna Rada), the Cabinet
and its separate
of Ministers of Ukraine, Ministry of Energy and Coal
Industry of Ukraine, the National Commission for State
subdivisions,
middle-management Regulation of Energy and Public Utilities of Ukraine (NCER),
State Nuclear Regulatory Inspectorate of Ukraine
Changes Donor - European Bank for Reconstruction and
Development
Company workers,
the team on changes
Second stage
implementation,
subjects
cross-functional
teams
External participants and their expectations (i.e. the
consumers expect quality products at optimal prices;
international partners expect opportunities for cooperation,
provided the new model of the electricity market is
implemented)
Source: own study
Stage 2 - Dynamics of the Life Cycle. The starting point of organizational
development can be considered the definition of the current stage of the company’s
life cycle. This gives an opportunity to describe the main achievements, as
well as typical problems of growth, and, most importantly, to understand the
direction of development - the transition to the next stage of development. In
addition, in the diagnostic of organizational development, significant tools are
used: from diagnostic interviews and questionnaires to analyzing key indicators
of the company and identifying the mathematical dependencies of development
indicators. It should be noted that in the diagnostics of organizational
development, the qualitative research methods prevail: questionnaires,
interviews, graph-analytical method, method of logical-semantic modeling,
analysis of managerial mistakes, etc.
At the moment, Ukraine’s nuclear energy is in the fourth stage of the life
cycle «adolescence». This stage is characterized by good administration of
organizational processes, control, which, however, holds back the search and
selection of development areas due to the too rigid system of regulations. That
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is, emerging development ideas are hampered by excessive administration.
The problems of this stage are the emergence of stiffness («aristocracy») and
unfulfilled entrepreneurship, when the owner and management do not
support new ideas for business development, which leads to its disappearance.
Overcoming these problems is possible by generating new ideas, as well as by
maximizing the involvement of personnel in the process of ongoing reforms
through training, development of competences, formation of development
teams, and so on. The transition to the next stage of the life cycle opens the
prospects for innovation, the development of new technologies, and investment.
The transition to the next stage of «prime» is possible due to strategic planning,
organizational innovation, non-bureaucratic planning procedures, structural
reorganization, delegation, and some decentralization.
Stage 3 - management of value. From the point of view of the author, it is
recommended to add the analysis of the life cycle by analyzing the level of the
company on the theory of spiral dynamics K. Graves (1970). The universality of
the theory of spiral dynamics lies in the fact that it can be applied to countries,
organizations and individuals. This theory makes it possible to describe not
only the level of development of the entire company, but also of its individual
elements, subcultures. Thus, HR-services is in the green level of development,
while the values of production units and marketing services are described by
the red level.
The main values of the SE NAEC “Energoatom” are safety; professionalism;
safety culture; openness, truthfulness and reputation; preservation of human
resources; knowledge management; corruption prevention; social responsibility.
Such a list of values makes it possible to attribute this company to the blue
level, which is not surprising, since the company ensures the country’s energy
security (having a fundamental idea) and has regulated activity (this is due to
strict adherence to technology and security achievement). However, in the long
run, the use of only such values will restrain the growth of the company, since
the growth of the company’s efficiency, motivation and personal interest in the
final results are the values of the next orange level.
The company is already transitioning from blue to orange level, which is reflected
in the company’s orange vision, which includes: a market-oriented company,
increasing market share, pursuing a decent international level, building new
capacities.
The actual implementation of this transition is the preparation and conduct
of the corporatization of the company with a change in the organizational
and legal form and an increase in the efficiency and market orientation of the
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company. Corporatization is possible in two ways: priority - creation of a single
enterprise based on all the property that is on the balance sheet of SE NAEC
“Energoatom”; alternatively - the creation of several separate public joint-stock
companies.
The experience of the functioning of the energy organizations of the yellow
level (according to K. Graves) or the so-called turquoise, described in (Laloux,
2014; Bakke, 2005) is interesting. AES (Applied Energy System) was founded in
1982 in the USA by Roger Sant and Dennis Bakke. The company quickly grew to
one of the world’s largest electricity producers and suppliers, with 40 thousand
employees in 2000. The enterprises are located in 31 countries on all continents from Argentina to El Salvador, from Hungary to Kazakhstan, from South Africa
to Tanzania.
The founders of the company tried to ensure that the number of employees
in one enterprise did not exceed 300-400 people, who were divided into 15-20
teams of 15-20 people each. The team was in charge of budgeting, allocation of
work, safety, planning, maintenance, hiring and fi ring employees, counting
working hours, training, evaluating the quality of employees, salaries,
capital expenditures, supplies, product quality control, except for the team
determined the long-term strategy , relationships with local communities,
charity. A “rule 80-20” was introduced in the company: every AES employee
from a cleaner to an engineer, on average, must spend 80% of his working
time on basic duties and be ready to join one or several working groups in
the remaining 20% of the time. The history of AES, among other things,
demonstrates how, after a change in leadership, a company can return to
traditional management.
Stage 4 - implementation tools. Improving the efficiency of the company and
maximum involvement in the company’s development processes is achieved
through the formation of a strategy map in the balanced scorecard. Key
Performance Indicators (Key Performance Indicators, KPI) are performance
indicators of a business unit or enterprise that helps an organization achieve its
strategic and operational goals. The use of key performance indicators gives the
organization the opportunity to assess their condition the implementation of the
strategy. KPIs allow controlling the business activity of employees, departments
and the company as a whole. This allows maximizing the involvement of all
personnel in the achievement of the company’s goals. Part of the performance
indicators are given in table. 3
The data in Table 3 show a significant increase in indicators already at the end
of 2018 in the case of successful implementation of the development strategy.
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Managing a company on the basis of a balanced scorecard allows clearly
formulating goals based on the SMART principle and form a system of personnel
interest in achieving goals.
Strategic methods and organizational development tools are aimed at
changing the qualitative characteristics of the enterprise in the long run: creation
of a new enterprise, mergers, diversification, modernization, restructuring,
reengineering, liquidation of divisions.
7. Conclusions
Organizational development provides an opportunity to find the most
suitable tools for finding further ways of functioning, development and how to
increase the overall company performance. The paper suggests simultaneous
use and analysis of the life cycle, and the theory of spiral dynamics, allows
for the most complete idea of the company’s visions, missions and values, that
is, the guidelines for setting goals and development strategies. The process
consulting applied on organizational development ensures that the opinions
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Table 3. Examples of performance indicators for SE NAEK “Energoatom”
development strategy
Fact
Forecast
Index name
Calculation meth
Measurement Unit
2016
2017
2018
2019
Capitalization
ratio
Loan capital / Total cost of
capital (reflects the use of
personal capital)
Coeff.
1.67
7.63
15.25
26.08
Activity costeffectiveness
Net profit / Net income
Coeff.
4.9
5.7
6.3
8.7
Net profit
The difference between the
financial result of non-operating
activities and income tax (the
difference between all income
and all expenses)
UAH mln
1 719
2 192
2 795
3564
Source: own study: http://www.energoatom.kiev.ua/files/file/tep_12_2017_balans.pdf
(28.01.2019 – access date)
of the majority of executives and influencers of the company will be taken into
consideration, and consequently it becomes possible to work out a collective
decision and to implement it in the company, which facilitates the growth of the
company’s human and social capital. This approach allows not only achieving
the development goals, but also moving to a new level of organization structure
based on self-governance, integrity and the existence of an evolutionary goal.
All this will allow turning from changes forecasting and control of the future
and building a company that organically shapes the goals and independently
chooses the level of development it wants to achieve. Prospects for research
in this direction is the decision of the question of the choice of organizational
development tools and methods of work with the personnel.
Summary
Organizational development as a modern management tool for
transformation the company (case of Ukrainian energy company)
The article is aimed at formation of the approaches and stages
of organizational development for a large vertically integrated
company, ensuring the country’s strategic security in the field
of energy. The methodological basis of this work is the theory of
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the company’s life cycle, and it is proposed to complement the
mentioned theory with the theory of spiral dynamics, reflecting
the evolution of the company’s values.
The approaches to organizational development are analysed and
organizational development is defined. The possibility and necessity
of management of organizational development are substantiated.
As a result of the study, there were described the features of the
organizational development of large energy company, and this is
for the first time. The analysis of publications and world experience
in the development of energy companies allowed proposing four
basic stages of organizational development: team building and life
cycle dynamics, value management and implementation tools.
There is offered the use of organizational development as an
instrument of management, which enables to achieve not only
company development goals, but also to manage its values,
achieve maximum employee involvement in development, and to
shift from the management of the company to team work. Further
research in this area it is advisable to carry out in detail the stage of
organizational development and description of each stage’s tools.
Keywords:
Streszczenie
organizational development, change management, company values,
country’s strategic security, transformation the energy company.
Rozwój organizacyjny jako nowoczesne narzędzie zarządzania
transformacją firmy (na przykładzie firmy energetycznej
Ukrainy)
Celem artykułu jest kształtowanie się podejść i etapów
rozwoju organizacyjnego dużej pionowo zintegrowanej firmy,
zapewniającej strategiczne bezpieczeństwo kraju w energetyki.
Podstawę metodologiczną artykułu stanowi teoria cyklu życia
firmy, korzystanie z której proponuje się uzupełnić teorią dynamiki
spiralnej, odzwierciedlająca zmiany wartości firmy.
Przeanalizowano podejścia do rozwoju organizacyjnego
i zdefiniowany jest rozwój organizacyjny. Uzasadniono możliwość
i konieczność zarządzania rozwojem organizacyjnym. W wyniku
badania po raz pierwszy zostały opisane właściwości rozwoju
organizacyjnego poważnych firm energetycznych. Analiza
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publikacji i międzynarodowego doświadczenia rozwoju firm
energetycznych pozwoliła zaproponować cztery główne etapy
rozwoju organizacyjnego: kształtowanie zespołu, dynamika cyklu
życiowego, zarządzanie wartościami, narzędzi wdrożeniowe.
Korzystanie z rozwoju organizacyjnego jako narzędzia zarządzania
pozwala nie tylko na realizację osiągnięcia celów rozwoju
firmy, ale również na zarządzanie jej wartościami i osiągnięcie
maksymalnego zaangażowania pracowników do rozwoju. Co
w perspektywie doprowadzi do tego, że zarządzanie firmą zastąpi
praca zespołowa. Późniejsze badania w tym kierunku docelowo
przeprowadzać w fazie szczegółów rozwoju organizacyjnego
i opisu instrumentów każdego z etapów.
Słowa
kluczowe:
rozwój organizacyjny, zarządzanie zmianami, wartości firmy,
strategiczna bezpieczeństwo kraju, przekształcenie firmy energetycznej.
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