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Eighth Edition An Experiential Approach to Organization Development Donald R. Brown Antelope Valley College Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Acquisitions Editor: Jennifer M. Collins Editorial Assistant: Meg O’Rourke Editorial Project Manager: Susie Abraham Director of Marketing: Patrice Jones Marketing Manager: Nikki Jones Senior Marketing Assistant: Ian Gold Operations Specialist: Renata Butera Creative Art Director: Jayne Conte Cover Designer: Bruce Kenselaar Full-Service Project Management: Mohinder Singh/Aptara®, Inc. Composition: Aptara®, Inc. Printer/Binder: Bind-Rite Graphics, Inc. Cover Printer: Lehigh-Phoenix, Hagerstown Text Font: Times Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page within text. Copyright © 2011, 2006, 2001 Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458. Many of the designations by manufacturers and seller to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Brown, Donald R. An experiential approach to organization development / Donald R. Brown.—8th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-13-610689-0 (alk. paper) ISBN-10: 0-13-610689-7 (alk. paper) 1. Organizational change. 2. Organizational effectiveness. I. Title. HD58.8.H37 2011 658.4'063—dc22 2009037710 10 9 8 7 6 5 4 ISBN 10: 0-13-610689-7 ISBN 13: 978-0-13-610689-0 BRIEF TABLE OF CONTENTS PART 1 Anticipating Change 1 Chapter 1 Chapter 2 Chapter 3 Organization Development and Reinventing the Organization 3 Organization Renewal: The Challenge of Change 32 Changing the Culture 62 PART 2 Understanding the OD Process 85 Chapter 4 Chapter 5 Chapter 6 Role and Style of the OD Practitioner 87 The Diagnostic Process 116 Overcoming Resistance to Change 144 PART 3 Improving Excellence in Individuals 173 Chapter 7 Chapter 8 Chapter 9 OD Intervention Strategies 175 Process Intervention Skills 198 Employee Empowerment and Interpersonal Interventions 223 PART 4 Developing High Performance in Teams 259 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Team Development Interventions 261 Intergroup Development 294 Goal Setting for Effective Organizations 319 Work Team Development 341 PART 5 Building Success in Organizations 371 Chapter 14 High-Performing Systems and the Learning Organization 373 Chapter 15 Organization Transformation and Strategic Change 398 Chapter 16 The Challenge and the Future for Organizations 420 iii This page intentionally left blank CONTENTS Preface xv Part 1 Anticipating Change 1 Chapter 1 Organization Development and Reinventing the Organization 3 Change Is the Challenge for Organizations 3 What Is Organization Development? 4 The Characteristics of Organization Development 5 Why Organization Development? 6 The Emergence of OD 6 The Only Constant Is Change 6 The Evolution of Organization Development 8 NTL Laboratory-Training Methods 9 Survey Research and Feedback 9 The Extent of OD Applications 9 Who Does Organization Development? 9 The Organization Culture 10 The Socialization Process 11 Expectations of New Employees 12 Encountering the Organization’s Culture 12 Adjusting to the Culture and Norms 12 Receiving Feedback 13 Psychological Contracts 14 A Model for Organizational Development 14 Stage 1: Anticipate a Need for Change 15 Stage 2: Develop the Practitioner-Client Relationship 15 Stage 3: The Diagnostic Process 16 Stage 4: Action Plans, Strategies, and Techniques 16 Stage 5: Self-Renewal, Monitor, and Stabilize 16 Continuous Improvement 16 Summary 17 • Review Questions 18 • Key Words and Concepts 18 • OD Skills Simulation 1.1 Auditioning for the Saturday Night Live Guest Host Spot 19 • OD Skills Simulation 1.2 The Psychological Contract 21 • Case: TGIF 28 • Chapter 1 Endnotes 30 Chapter 2 Organization Renewal: The Challenge of Change 32 The Challenges of Change 32 Renewal 32 Constant Change 33 Organization Renewal: Adapting to Change 34 Approaches to Change 34 A Model of Adaptive Orientation 36 Sluggish-Thermostat Management (Stable Environment, Low Adaptation) 36 Satisficing Management (Stable Environment, High Adaptation) 37 v vi Contents Reactive Management (Hyperturbulent Environment, Low Adaptation) 37 Renewing/Transformational Management (Hyperturbulent Environment, High Adaptation) 37 The Systems Approach: Finding New Ways to Work Together 38 The Organization as a System 38 Open Systems 39 The Sociotechnical System 40 THE GOALS AND VALUES SUBSYSTEM 40 THE TECHNICAL SUBSYSTEM 41 THE STRUCTURAL SUBSYSTEM 41 THE PSYCHOSOCIAL SUBSYSTEM (CULTURE) 41 THE MANAGERIAL SUBSYSTEM 41 High-Performance Systems 41 The Contingency Approach: No One Best Way 41 Future Shock and Change 42 Organization Transformation and Organization Development 43 Individual Effectiveness 45 Team Effectiveness 45 Organization Effectiveness 45 Summary 46 • Review Questions 46 • Key Words and Concepts 46 • OD Skills Simulation 2.1 OD Practitioner Behavior Profile I 47 • Case: The NoGo Railroad 56 • Chapter 2 Endnotes 60 Chapter 3 Changing the Culture 62 Creating a Climate for Change 62 Understanding Corporate Culture 62 What Is Corporate Culture? 63 The Corporate Culture and Success 65 The Impact of Key Factors 66 Cultural Resistance to Change 67 Tools for Change 67 Information 67 Support 67 Resources 68 Ethical, Value, and Goal Considerations 69 Ethical and Value Issues 70 OD Implementation Issues 70 Compatibility of Values 71 Imposed Change 71 Determining the Priority of the Goals 71 Summary 73 • Review Questions 73 • Key Words and Concepts 73 • OD Skills Simulation 3.1 Downsizing: A ConsensusSeeking Activity 74 • Case: The Dim Lighting Co. 81 • Chapter 3 Endnotes 84 Part 2 Understanding the OD Process 85 Chapter 4 Role and Style of the OD Practitioner 87 Haphazard versus Planned Change 87 External and Internal Practitioners 88 Contents The External Practitioner 89 The Internal Practitioner 89 The External-Internal Practitioner Team 90 OD Practitioner Styles 90 The Stabilizer Style 90 The Cheerleader Style 91 The Analyzer Style 91 The Persuader Style 91 The Pathfinder Style 92 The Intervention Process 92 The Readiness of the Organization for OD 92 The Intervention 93 Who Is the Client? 94 The OD Practitioner’s Role in the Intervention 94 OD Practitioner Skills and Activities 95 Forming the Practitioner-Client Relationship 96 Initial Perceptions 97 Practitioner Style Model 99 Developing a Trust Relationship 99 Creating a Climate for Change 100 Practitioner-Client Relationship Modes 100 The Formalization of Operating Ground Rules 102 Warning Signs in the Practitioner-Client Relationship 102 The Level of Commitment to Change 102 The Degree of Leverage or Power to Influence Change 103 The Client’s Manipulative Use of the Practitioner 103 Summary 103 • Review Questions 103 • Key Words and Concepts 104 • OD Skills Simulation 4.1 Practitioner Style Matrix 105 • OD Skills Simulation 4.2 Conflict Styles 110 • OD Skills Simulation 4.3 Perception 112 • Case: The Grayson Chemical Company 113 • Chapter 4 Endnotes 115 Chapter 5 The Diagnostic Process 116 Diagnosing Problem Areas 116 What Is Diagnosis? 117 The Process 118 The Performance Gap 118 The Data-Collection Process 120 The Definition of Objectives 121 The Selection of Key Factors 121 The Selection of a Data-Gathering Method 122 SECONDARY SOURCES OF DATA 122 EMPLOYEE SURVEYS AND QUESTIONNAIRES OTHER TYPES OF INSTRUMENTS 123 DIRECT OBSERVATION 124 INTERVIEWS 125 123 The Implementation of Data Collection 126 The Analysis of Data 126 Evaluating the Effectiveness of Data Collection 126 THE VALIDITY OF THE DATA 127 vii viii Contents THE TIME TO COLLECT DATA 127 THE COST OF DATA COLLECTION 127 THE ORGANIZATIONAL CULTURE AND NORMS 127 THE HAWTHORNE EFFECT IN DATA COLLECTING 127 Diagnostic Models 127 Differentiation-and-Integration Model 127 The Sociotechnical-Systems Model 129 The Force-Field Analysis Model 129 Warning Signs in the Diagnosis Process 130 Confidentiality 130 Overdiagnosis 131 The Crisis Diagnosis 131 The Threatening and Overwhelming Diagnosis 131 The Practitioner’s Favorite Diagnosis 131 The Diagnosis of Symptoms 131 Summary Concepts Decision Endnotes 133 • Review Questions 133 • Key Words and 133 • OD Skills Simulation 5.1 The Acquisition 134 • Case: The Old Family Bank 141 • Chapter 5 143 Chapter 6 Overcoming Resistance to Change 144 Change and Reinvent 144 The Life Cycle of Resistance to Change 145 Phase 1: Change Introduced 145 Phase 2: Forces Identified 145 Phase 3: Direct Conflict 145 Phase 4: Residual Resistance 145 Phase 5: Change Established 145 Leading Change 146 Advocates of Change 147 Degree of Change 147 Time Frame 147 Impact on Culture 148 EVALUATION OF CHANGE 148 A Change Model 148 Driving Forces Toward Acceptance of a Change Program 149 Dissatisfaction with the Present Situation 149 External Pressures Toward Change 150 Momentum Toward Change 151 Motivation by Management 151 Restraining Forces Blocking Implementation of Change Programs 151 Uncertainty Regarding Change: “The Comfort Zone” 152 Fear of the Unknown 152 Disruption of Routine 152 Loss of Benefits: “What’s in It for Me?” 152 Threat to Security 152 Threat to Position Power 153 Redistribution of Power 153 Contents Disturb Existing Social Networks 153 Conformity to Norms and Culture 153 Driving Forces and Restraining Forces Act in Tandem 153 Strategies to Increase Motivation 153 Climate Conducive to Change 154 Clearly Articulated Vision 154 Effective Communications 154 Leadership of Managers 156 Participation of Members 156 Reward Systems 157 Negotiation, Agreement, and Politics 157 Power Strategies 158 Summary 159 • Review Questions 159 • Key Words and Concepts 159 • OD Skills Simulation 6.1 Downsizing in the Enigma Company 160 • OD Skills Simulation 6.2 Driving and Restraining Forces 164 • OD Skills Simulation 6.3 Strategies for Change 166 • Case: The Hexadecimal Company 167 • Chapter 6 Endnotes 170 Part 3 Improving Excellence in Individuals 173 Chapter 7 OD Intervention Strategies 175 Organizational Change 175 Basic Strategies to Change 176 Structural Strategies 176 Technological Strategies 177 Behavioral Strategies 178 The Integration of Change Strategies 178 Stream Analysis 181 Selecting an OD Intervention 182 The Major OD Intervention Techniques: An Overview 183 Summary 185 • Review Questions 185 • Key Words and Concepts 185 • OD Skills Simulation 7.1 The Franklin Company 186 • Case: The Farm Bank 194 • Chapter 7 Endnotes 197 Chapter 8 Process Intervention Skills 198 A New Paradigm 198 Process Interventions 199 Group Process 200 Communications 200 Member Roles and Functions 200 Problem Solving and Decision Making 202 Group Norms and Growth 202 Leadership and Authority 203 Types of Process Interventions 203 Clarifying and Summarizing 204 Synthesizing and Generalizing 204 Probing and Questioning 204 ix x Contents Listening 204 Reflecting Feelings 204 Providing Support, Coaching, and Counseling 204 Modeling 205 Setting the Agenda 205 Feeding Back Observations 205 Structural Suggestions 205 Results of Process Interventions 205 Summary 206 • Review Questions 206 • Key Words and Concepts 206 • OD Skills Simulation 8.1 Apex Oil Spill 207 • OD Skills Simulation 8.2 Trust Building 213 • OD Skills Simulation 8.3 Process Interventions 217 • Case: The OD Letters 219 • Chapter 8 Endnotes 222 Chapter 9 Employee Empowerment and Interpersonal Interventions 223 Empowering the Individual 223 Employee Empowerment 223 Laboratory Learning 225 The Objectives of Laboratory Learning 226 The Use of Laboratory Learning in OD Programs 226 Results of Laboratory Learning 226 Interpersonal Style: The Johari Window Model 226 The Public Area 227 The Blind Area 227 The Closed Area 227 The Unknown Area 228 Transactional Analysis 228 Structural Analysis 228 Transactional Theory 229 Psychological Positions and Scripts 231 Authentic Communication and Relationships 232 Career Life Planning Interventions 232 Steps in a Typical Career Life Planning Program 233 The Results of Career Life Planning 233 Stress Management and Burnout 233 Major Sources of Stress 234 Job Burnout 235 Stress Management Interventions and Coping with Stress 236 Wellness Programs 236 Relaxation Techniques 237 Career Life Planning 237 Stress Management Training 237 Seminars on Job Burnout 237 Summary 238 • Review Questions 238 • Key Words and Concepts 239 • OD Skills Simulation 9.1 SACOG 240 • OD Skills Simulation 9.2 Johari Window 246 • OD Skills Simulation 9.3 Career Life Planning 251 • Case: The Sundale Club 253 • Chapter 9 Endnotes 256 Contents Part 4 Developing High Performance in Teams 259 Chapter 10 Team Development Interventions 261 Organizing Around Teams 261 The Team Approach 262 Interdependence 262 Team Building 262 Virtual Teams 263 The Need for Team Development 264 Categories of Team Interaction 265 SIMPLE SITUATIONS 265 COMPLEX SITUATIONS 266 PROBLEM SITUATIONS 266 Operating Problems of Work Teams 266 GOALS 267 MEMBER NEEDS 267 NORMS 267 HOMOGENEOUS MEMBERS 267 DECISION MAKING 267 LEADERSHIP 267 SIZE 267 Cohesiveness and Groupthink 268 The Purpose of Team Development 269 The Team Development Process 271 Step 1: Initiating the Team Development Meeting 272 Step 2: Setting Objectives 272 Step 3: Collecting Data 272 Step 4: Planning the Meeting 272 Step 5: Conducting the Meeting 272 Step 6: Evaluating the Team Development Process 273 Results of Team Development Meetings 273 Outdoor Experiential Laboratory Training 273 The Outdoor Lab Process 275 Cautions When Using Outdoor Labs 276 Results of Outdoor Labs 276 Role Analysis and Role Negotiation 276 Summary 278 • Review Questions 278 • Key Words and Concepts 278 • OD Skills Simulation 10.1 Organization Task and Process 279 • OD Skills Simulation 10.2 Team Development 285 • OD Skills Simulation 10.3 Role Analysis Team Development 288 • Case: Steele Enterprises 289 • Chapter 10 Endnotes 292 Chapter 11 Intergroup Development 294 Changing Relationships 294 Collaboration and Conflict 295 Intergroup Operating Problems 297 Suboptimization 298 Intergroup Competition 298 Perceived Power Imbalance between Groups 299 Role Conflict, Role Ambiguity 299 xi xii Contents Personality Conflict 299 Cooperation versus Competition 299 Managing Conflict 300 Intergroup Techniques 301 Third-Party Consultation 302 ENSURING MUTUAL MOTIVATION 302 ACHIEVING A BALANCE IN SITUATIONAL POWER 302 COORDINATING CONFRONTATION EFFORTS 302 DEVELOPING OPENNESS IN COMMUNICATION 302 MAINTAINING AN APPROPRIATE LEVEL OF TENSION 302 Organization Mirror 303 Intergroup Team Building 303 STEP 1: MAKE INTROSPECTIVE LISTS 303 STEP 2: GROUPS MEET TOGETHER 303 STEP 3: GROUPS MEET SEPARATELY 304 STEP 4: CROSS GROUPS MEET 304 STEP 5: FOLLOW-UP MEETING 304 Summary 304 • Review Questions 305 • Key Words and Concepts 305 • OD Skills Simulation 11.1 The Disarmament Game 306 • OD Skills Simulation 11.2 Intergroup Team Building 313 • Case: The Exley Chemical Company 314 • Chapter 11 Endnotes 317 Chapter 12 Goal Setting for Effective Organizations 319 Goal Setting Can Drive the Bottom Line 319 Goal-Setting Theory 319 More Difficult Goals Produce Better Performance 320 Specific Hard Goals Are Better than “Do Your Best” Goals 321 People May Abandon Goals If They Become Too Hard 321 Participation in Setting Goals Increases Commitment and Attainment of Goals 321 Feedback and Goals Improve Performance 321 Individual Differences Tend Not to Affect Goal Setting 322 Goal Setting in Teams Deserves Special Consideration 322 Managerial Support Is Critical 322 A Model for Goal Setting 323 Results of Goal Setting 324 Management by Objectives 324 The Purposes of MBO Programs 324 The MBO Process 325 Criticisms of MBO 326 The Results of MBO 327 Summary 327 • Review Questions 327 • Key Words and Concepts 327 • OD Skills Simulation 12.1 Organization Goal Setting 328 • OD Skills Simulation 12.2 Managing by Objectives 335 • Case: Valley Wide Utilities Company 337 • Chapter 12 Endnotes 339 Chapter 13 Work Team Development 341 Continuous Improvement Processes 341 Job Design 342 Job Characteristics Theory 342 Contents Job Enrichment Theory 344 Results of Job Design Programs 345 Total Quality Management (TQM) 345 The Characteristics of TQM 346 Quality 347 Malcolm Baldrige National Quality Award 347 Compatibility of TQM and OD 348 Self-Managed Work Teams 349 The Characteristics of Self-Managed Work Teams 350 The Design of Jobs 350 New Organizational Structures 351 Management and Leadership Behavior 351 The Reward System 352 Role of Labor Unions 353 Warning Signs 353 Results of Self-Managed Teams 353 Summary 354 • Review Questions 354 • Key Words and Concepts 354 • OD Skills Simulation 13.1 Paper House Production 355 • OD Skills Simulation 13.2 TQM in The University Setting 361 • Case: Wengart Aircraft 364 • Chapter 13 Endnotes 367 Part 5 Building Success in Organizations 371 Chapter 14 High-Performing Systems and the Learning Organization 373 System-Wide Interventions 373 Survey Research and Feedback 374 The Steps in Survey Feedback 374 The Results of Survey Research and Feedback 375 The Learning Organization 375 Learning Organizations Are Pragmatic 376 Core Values and Behaviors 377 Characteristics of Learning Organizations 377 Reengineering: A Radical Redesign 379 System 4 Management 379 High-Performing Systems 381 HPS Criteria 381 HPS Characteristics 382 The Grid OD Program 382 Phase 1: Grid Seminars 384 Phase 2: Teamwork Development 384 Phase 3: Intergroup Development 384 Phase 4: Development of an Ideal Strategic Model 385 Phase 5: Implementing the Ideal Strategic Model 385 Phase 6: Systematic Critique 385 Summary 386 • Review Questions 386 • Key Words and Concepts 386 • OD Skills Simulation 14.1 Brentwood Division 387 • Case: Tucker Knox Corporation 392 • Chapter 14 Endnotes 397 xiii xiv Contents Chapter 15 Organization Transformation and Strategic Change 398 Strategy and Transformation 398 Organization Transformation 399 Strategies of Change 400 Results of Organization Transformation 402 The Corporate Culture 403 The Strategy-Culture Fit 403 Core Characteristics 404 Sharing the Vision 404 Strong versus Weak Cultures 405 The Strategy-Culture Matrix 406 MANAGE THE CHANGE (MANAGEABLE RISK) 407 REINFORCE THE CULTURE (NEGLIGIBLE RISK) 407 MANAGE AROUND THE CULTURE (MANAGEABLE RISK) 407 CHANGE THE STRATEGY (UNACCEPTABLE RISK) 407 Strategic Change Management 408 Changing the Corporate Culture 409 Summary 410 • Review Questions 410 • Key Words and Concepts 410 • OD Skills Simulation 15.1 The GenTech Company 411 • Case: The Space Electronics Corporation 417 • Chapter 15 Endnotes 419 Chapter 16 The Challenge and the Future for Organizations 420 The Organization of the Future 420 Monitor and Stabilize the OD Program 421 Feedback of Information 421 Stabilize and Monitor Change 422 Evaluate the OD Program 423 Terminate Practitioner and Client Relationship 423 Self Renewal 423 Emerging Issues and Values 424 OD: Fad or Discipline? 425 The Role of Values 426 THE PROFESSIONALISM OF OD 426 THE CERTIFICATION OF OD PRACTITIONERS 426 OVEREMPHASIS ON HUMAN AND SOCIAL INTERVENTION 426 CONTROVERSY OVER WHAT ARE OD TECHNIQUES 426 DEALING WITH POWER 426 LIMITATIONS OF TIME AND TERMINALITY 426 Conclusion for the Future 426 Future Trends in Organization Development 427 Macrosystem Trends 428 Interpersonal Trends 428 Individual Trends 428 The Future of OD 429 Summary 430 • Concepts 431 • Behavior Profile II Practitioner 437 Endnotes 444 Index 445 Review Questions 431 • Key Words and OD Skills Simulation 16.1 OD Practitioner 432 • OD Skills Simulation 16.2 The OD • The Bob Knowlton Case 438 • Chapter 16 PREFACE The first edition of this text appeared over three decades ago, and what changes have taken place! We live in a world that has been turned upside down. Fortune 500 companies are pouring money, technology, and management expertise into regions that were once off limits, acquiring new enterprises, forming joint ventures, and creating new global businesses from the ground up. Many major companies are going through significant changes, including outsourcing, downsizing, breaking into smaller companies, radically transforming themselves, reengineering, using selfmanaged work teams, flattening their organizations, and doing routine jobs with automation and computers. And some other major companies have gone into bankruptcy or no longer exist. Some experts contend that if you can describe a job precisely or write rules for doing it, the job will probably not survive. The added stress on people makes it increasingly a challenge to create and maintain a culture that motivates and satisfies human potential. In the past, managers aimed for success in a relatively stable and predictable world. In the hyperturbulent environment of the twenty-first century, however, managers are confronting an accelerating rate of change. They face constant innovation in computer and information technology and a chaotic world of changing markets and consumer lifestyles. Today’s organizations must be able to transform and renew themselves to meet these changing forces. This is a book about organization development (OD): the management discipline aimed at improving organizational effectiveness by increasing use of human resources. OD is an emerging behavioral science discipline that provides a set of methodologies for systematically bringing about high-performing organizations. The goals of OD are to make an organization more effective and to enhance the opportunity for the individuals to develop their potential. OD is also about effectively managing in a changing world. Much like the changing world we live in, this eighth edition has undergone changes. This text offers a practical and realistic approach to the study of OD. Through the application of a new paradigm—the OD process model—each of the OD stages is described from the standpoint of its relationship to an overall program of change. The book is written primarily for those who are learning about OD for the first time. You will learn of the real world through the use of concepts, theories, and numerous illustrations and company examples that show how OD is being applied in today’s organizations. An Experiential Approach to Organization Development differs from most OD texts in providing both conceptual and experiential approaches to the study of OD. A revolution is under way in how individuals use education to improve their performance. The approach in this text focuses on the development of interpersonal skills. You are provided with the conceptual framework necessary for understanding the relevant issues in OD. In addition, you will actively participate in individual and team exercises that require the application of chapter content to specific organizational situations. This approach is aimed at developing the critical interpersonal skills needed to manage in a changing world. The word that best summarizes the text’s approach to teaching and learning is experiencing. Experiencing captures the importance of engaging with new ideas and new personalities. It also implies a deeper involvement in the learning process that will produce a lasting impact or meaning. This text is the first to relate directly student learning experiences in OD with skills judged to be essential for OD practitioners and managers. Recent studies have been critical of today’s business graduates for their deficiencies in a number of areas, including communication skills, problem solving, decision-making ability, and leadership potential. This text covers OD topics and also develops student skills in a “learn by doing” context. NEW TO THIS EDITION Some of the significant additions, changes, and revisions in this edition include: • Approximately 35 percent of the material is new or revised. • OD Applications and examples of organizations are fresh and reflect current business practices. • Links are provided to Internet locations of organizations used in the applications. xv xvi Preface • New material reflects current academic research in OD topics. • Illustrations have been added to provide a better overview of the OD process. • New material, including illustrations, better describes and introduces the five parts of the book. • Enhanced documentation and suggested material for further reading and research is included in the references. • New design for illustrations enhances their use. • Simulations including instructions, forms, and tables are revised to improve readability. • Some of the chapters are reordered to improve the flow for learning OD concepts. • Material within chapters is reorganized to improve the continuity. THE EXPERIENTIAL APPROACH TO LEARNING To learn OD techniques, a manager or student needs both the knowledge of content material and the experience of putting theory into practice. Consequently, to create a learning environment for the field of OD at either the undergraduate or graduate level, the emphasis should be on experience. In this book, you will be experiencing OD techniques by means of simulations and cases while at the same time you are learning OD theories. You will perhaps discover a different approach to the study of organizational change. Many courses in OD approach change in a structured and traditional manner. By means of lectures and readings, useful concepts and theories are presented to the student, whose role is largely passive. This book utilizes an innovative and significantly different approach to teaching OD: the experiential approach. It is based on learning OD techniques by experiencing simulated organizational situations. You will experience situations in which you are developing relationships with other students and diagnosing problems rather than simply reading about them. Experiential learning is based upon three basic concepts: 1. You learn best when you are involved in the learning experience. 2. As a learner, you have to experience or discover concepts, if they are to change your behavior. 3. Your commitment to learning will be greatest when you are responsible for setting your own learning objectives. In the experiential approach, the major responsibility for learning is placed upon you, the learner. You will determine your own learning objectives and influence how the class goes about achieving these objectives. You set your own goals, decide which theories you want to learn, practice the skills or techniques you want to improve, and develop the behavioral style you want to develop. Concurrently, you will be receiving feedback from class members pertaining to what you do that is effective and ineffective. Experiential learning also involves an active, rather than a passive role. Often you may sit in a class, listen, take notes, or perhaps daydream while the instructor lectures. In this class, you will be actively deciding what to do and how to do it. You will be doing, communicating, and participating in learning. You will find that you cannot learn in isolation. As in a job situation, you are dependent upon others and they upon you for ideas, reactions, experiences, and feedback about behavior. The same will be true in this class. Experiential learning is also the method most corporations use to teach OD concepts to their employees. So, you will be experiencing the same kinds of activities that occur in most “real world” OD programs. What is different about the experiential learning process? First, you will generate from your own experiences in this class a set of concepts that will guide your behavior. These concepts will be continually modified over time and in various managerial situations to improve your effectiveness. The experiential learning process, depicted in Figure 1, can be presented as a four-stage cycle: 1. Gaining conceptual knowledge and theories—you will be reading about OD concepts and theories and doing preclass preparation. 2. Activity in a behavioral simulation—you will be problem solving, making decisions, communicating, and actively practicing the concepts and theories. 3. Analysis of activity—you will be analyzing, critiquing, and discussing the way you solved problems, and comparing the results of different approaches. 4. Connecting the theory and activity with prior on-the-job or life situations—you will be connecting your learning to past experiences, receiving feedback, reflecting upon the Preface xvii 1. Concepts OD Theories Model Prior Theories 2. Activity Communicating Problem Solving Decision Making 3. Analysis Analyzing Comparing Critiquing 4. Connecting Reflecting Generalizing FIGURE 1 Experiential Learning Process results, and generalizing into the future. The end result should be improved skill and performance in applying these things learned to life and job situations. “Student-centered” learning places the learning responsibility upon you. There will be an opportunity in the class for a high level of participation and for a challenging learning experience. Small-group learning environments will be formed wherein you may share learning with others, thus encountering feedback. Each of the learning units presents a conceptual background and a framework for a behavioral simulation. The focal point for each chapter is the actionoriented behavioral simulation. As part of the experiential learning model in OD, feelings and emotions represent important data for learning. Open and authentic relationships in which you share your feelings with others and provide honest feedback are a necessary part of the learning situation. Each chapter is organized to help you learn concepts and skills, and chapters provide cases, simulations, and diagnostic instruments to help you learn more about OD. Although experiential learning can be stimulating and is often fun, it is important to remember that you learn from the combination of theory and experience. ORGANIZATION OF THIS TEXTBOOK Both the theory and practice of OD is presented in this text. The material has been selected to provide you with most of what is known at this time about the field of OD. This includes issues, critiques, and controversy as well, for the field of OD is itself evolving and being questioned. The book is intended to assist the student, manager, and future OD practitioner in understanding the strategies and techniques of OD and moves from the more basic elements to the more complex. The five parts of the text are: Part 1: Anticipating Change. This introduces the concepts and techniques of organization development and organization renewal. This includes understanding planned change, what OD is, why it has emerged, and the nature of changing the corporate culture. Part 2: Understanding the OD Process. In this part, the basic roles and styles of the OD practitioner are presented. Then the diagnostic process and overcoming resistance to change are discussed. Part 3: Improving Excellence in Individuals. The text moves into a discussion of OD on an individual level. This covers an overview of intervention strategies, personal intervention skills, and employee empowerment. Part 4: Developing High Performance in Teams. This part focuses on team development, interteam interventions, and goal-setting strategies. Part 5: Building Success in Organizations. This last part focuses on system-wide OD approaches. Specific areas discussed are high-performing organizations, organization transformation, and strategic change. Part 5 concludes with a discussion of the challenge and the future for organizations. xviii Preface Part 1 Anticipating Change Understanding the need for planned change Building an OD background and developing an increased knowledge of OD Chapter 1 Organization Development and Reinventing the Organization Chapter 2 Organization Renewal—The Challenge of Change Chapter 3 Changing the Culture Part 2 Understanding the OD Process Chapter 4 Role and Style of the OD Practitioner Chapter 5 The Diagnostic Process Chapter 6 Overcoming Resistance to Change Part 3 Improving Excellence in Individuals Personal and interpersonal OD concepts Chapter 7 OD Intervention Strategies Chapter 8 Process Intervention Skills Chapter 9 Employee Empowerment and Interpersonal Interventions Part 4 Developing High Performance in Teams Team and interteam OD concepts Chapter 10 Team Development Interventions Chapter 11 Intergroup Development Interventions Chapter 12 Goal Setting for Effective Organizations Chapter 13 Work Team Development Part 5 Building Success in Organizations Organization and system-wide OD concepts FIGURE 2 Chapter 14 High-Performing Systems and the Learning Organization Chapter 15 Organization Transformation and Strategic Change Chapter 16 The Challange and the Future for Organizations Organization of This Text The five parts are, in turn, divided into a total of 16 chapters. Figure 2 illustrates how the text progresses from establishing a need for planned change in organizations to establishing fundamental knowledge of OD. The text then discusses OD in more depth by showing how effectiveness and high performance is built on an individual basis, into teams and between teams, and finally into organization-wide systems. The 16 chapters of the text are designed to fit a one-semester course, and it has been thoroughly edited to improve readability. It is one of the most “user-friendly” texts on OD available. Illustrations and figures add to the book’s visual appeal. Tables, facts, figures, references, and current examples are provided within the text materials. LEARNING AIDS This book presents many learning aids to help you learn about OD. The main ones are: Chapter Objectives. Each chapter presents a brief list of objectives that prepare you for the chapter material and point out learning goals. Premeeting preparation. This section is on the first page of a chapter and specifically lists what you need to do to prepare for that chapter before class meeting time. This section is especially helpful when you refer to it near the conclusion of the preceding chapter. It specifies if teams need to be formed prior to the class meeting, the number of participants in a team, and role assignments that need to be made. Additional premeeting preparations are clearly specified. Illustrations including figures and tables. Throughout a chapter, key concepts, theories, and applications are illustrated with strong, visual materials. Illustrations have been redrawn to improve their visual appeal and clarity. Preface OD Applications. Within each chapter are one to three OD Applications that provide information about how large organizations such as Google and P&G as well as smaller, less well known organizations such as Setpoint Systems and the Chugach School District are applying the OD concepts or interventions discussed in that chapter. Issues such as culture, economic impact, globalization, joint ventures, and approaches to change are featured. The material comes from business publications such as Business Week, Fortune, and the Wall Street Journal. Applications are well-documented, including Internet Web site addresses, so that you can conduct additional research. Current Examples of Business Practices. A concerted effort has been given to bridge OD theory with actual examples from businesses and other organizations. Interwoven throughout the text are brief and current examples of good and poor business practices. A cartoon strip in each chapter helps to illustrate OD concepts. Many examples are quotes from company managers that illustrate a specific point. As in the OD Applications, examples are derived from business publications and are referenced so that you may do additional research. The objective is to show how OD theory is relevant and used in organizations. Summaries. Each chapter concludes with a summary that wraps up the main points and concepts. Review Questions. A set of review questions covering the main chapter points are provided to test your understanding of some of the primary topics. Key Words. Key terms are highlighted within each chapter, and a list of the terms is provided near the end of the chapter. OD Skills Simulations (Exercises). These self-learning, experiential exercises include both individual and team learning. The exercises take theories and principles covered in the text and bring them to life in team activities. The hands-on, team interaction serves to generate feedback, lively discussions, testing of personal ideas, and sharing of information. The simulations are often fun and engaging, and always present a very real learning opportunity. Case Studies. Cases are provided at the end of each chapter for class discussion or written assignment. The cases challenge you to apply OD principles to organizations. References. This text is thoroughly documented to allow you to do additional research. At the conclusion of each chapter are endnotes that include the referenced material. The references also point to books and articles that you can read to gain additional information. Internet Web site addresses are provided so that you may conduct your own research. In addition, by using Internet search engines and academic data base services that are typically available at a library, it is relatively easy to conduct research. Index. A subject and name index helps you quickly find information and examples in the book. ACKNOWLEDGMENTS I am grateful to the many people who have contributed to this eighth edition. Many students, users of the text, colleagues, and managers for over 30 years have been involved in the development of the simulations and cases. My thanks to all of them for their contributions. I want to especially acknowledge and thank Kent Nealis of Harvard-Westlake School, Los Angeles, for his assistance in preparing and reading the manuscript. My thanks also goes to Janice Schnorr for her assistance in the preparation of the instructor’s material that accompanies this text. For the team at Prentice Hall, I want to acknowledge the assistance of Jennifer Collins, acquisitions editor, who moved the text through to completion. She successfully solved some challenging problems in getting this book to print. Susie Abraham, assistant editor, and Debbie Ryan, the production editor, got everyone working together and took care of all the big and little things that got this book published. I will greatly appreciate hearing from you and receiving your suggestions for how the text can be improved—what worked and what did not. Best wishes for your future. xix This page intentionally left blank PART ONE Anticipating Change Part 1 Anticipating Change Understanding the need for planned change Building an OD background and developing an increased knowledge of OD Chapter 1 Organization Development and Reinventing the Organization Chapter 2 Organization Renewal—The Challenge of Change Chapter 3 Changing the Culture Part 2 Understanding the OD Process Chapter 4 Role and Style of the OD Practitioner Chapter 5 The Diagnostic Process Chapter 6 Overcoming Resistance to Change Part 3 Improving Excellence in Individuals Personal and interpersonal OD concepts Chapter 7 OD Intervention Strategies Chapter 8 Process Intervention Skills Chapter 9 Employee Empowerment and Interpersonal Interventions Part 4 Developing High Performance in Teams Team and interteam OD concepts Chapter 10 Team Development Interventions Chapter 11 Intergroup Development Interventions Chapter 12 Goal Setting for Effective Organizations Chapter 13 Work Team Development Part 5 Building Success in Organizations Organization and system-wide OD concepts Chapter 14 High-Performing Systems and the Learning Organization Chapter 15 Organization Transformation and Strategic Change Chapter 16 The Challange and the Future for Organizations The successful twenty-first-century manager must deal with a chaotic world of new competitors and constant innovation. In the future, the only winning companies will be the ones that respond quickly to change. Preparing managers to cope with today’s accelerating role of change is the central concern of this book. Modern managers must not only be flexible and adaptive in a changing environment, they must also be able to diagnose problems and implement change programs. Many of the ways of managing and doing things in the past will not work in the organizations of the future. Managers and their organizations must anticipate the future and become proactive players. To wait and let the marketplace change and then stabilize is not a strategy for managing change. The first decade of this century painfully taught many companies—big and small—the lessons of not managing for the future. Once-powerful companies like Lehman Brothers and General Motors who saw themselves as too powerful to fail did fail. Other large companies and even industries, such as the U.S. financial and auto industry, found themselves looking to the government for assistance in order to survive. In Part 1: Anticipating Change, we will study what organization development is and how it plays a part in helping organizations to reinvent themselves. We will examine different approaches to changing an organization and the effectiveness of these approaches in a range of situations. Part 1 will conclude with a study of what organization culture is and how it plays a role in shaping and changing an organization. 2 CHAPTER 1 Organization Development and Reinventing the Organization LEARNING OBJECTIVES Upon completing this chapter, you will be able to: 1. Define the concept of organization development and recognize the need for change and renewal. 2. Describe organization culture and understand its impact on the behavior of individuals in an organization. 3. Understand the expectations of the psychological contract formed on joining an organization. 4. Describe the five stages of organization development. PREMEETING PREPARATION 1. Read Chapter 1. 2. Read and prepare analysis for Case: TGIF. CHANGE IS THE CHALLENGE FOR ORGANIZATIONS Change is coming down upon us like an avalanche, and most people are utterly unprepared to cope with it. Tomorrow’s world will be different from today’s, calling for new organizational approaches. Organizations will need to adapt to changing market conditions and at the same time cope with the need for a renewing rather than reactive workforce. Every day managers confront massive and accelerating change. As one writer comments, “Call it whatever you like—reengineering, restructuring, transformation, flattening, downsizing, rightsizing, a quest for global competitiveness—it’s real, it’s radical and it’s arriving every day at a company near you.”1 Global competition and economic downturns have exposed a glaring weakness in American organizations: the fact that many of them have become overstaffed, cumbersome, slow, and inefficient. To increase productivity, enhance competitiveness, and contain costs, organizations have changed and continue to change the way they are organized and managed. Organizations are never completely static and they do not exist in isolation of other entities. They are in continuous interaction with external forces including competitors, customers, governments, stockholders, suppliers, society, and unions. Their interactions with their environment are illustrated in Figure 1.1. The conditions facing today’s organizations are different from those of past decades. Many companies face global as well as domestic competitors. Changing consumer lifestyles and technological breakthroughs all act on the organization to cause it to change. Government regulation and deregulation are continually changing, while at the same time, international trade agreements present both new opportunities and obstacles. Stockholders are demanding more accountability. Suppliers, providing both products and services to organizations, come more and more from the world economy. The society within which an organization operates influences the modes, values, and norms that are developed within the organization. The employees and unions have a direct and substantial influence on how well an organization functions. The CEO of Intel Corporation, Paul Otellini, expressed his frustration with operating in an environment of unknowns in a Wall Street Journal interview. “The problem is that there used to be one set of rules out there— U.S. antitrust laws were the de facto rules of the world. Now with globalization, we have different sets of rules for different regions, such as the EU, written around entirely different philosophies. It would sure make things easier if we decided on a single set of rules once again—whatever they are. Then we’d know how to behave and we could plan better for the future.”2 The type and degree of external forces vary from one organization to another, but all organizations face the need to adapt to these forces. Many of these changes are forced upon the organization, whereas others are generated internally. Because change is occurring so rapidly, there is a need for new ways to manage it. General Mills is one of a number of 3 4 Part 1 • Anitcipating Change Competitors Employees and Unions Customers An Organization Society Governments Suppliers Stockholders FIGURE 1.1 The Organization Environment companies that has recognized the challenges confronting it. As the economy unraveled during the first few years of the 2000s, General Mills looked far afield to come up with ways to cut costs. “We can’t get by doing what we did yesterday,” says retired CEO Stephen Sanger.3 Organizations are changing and will continue to do so in order to survive in this complex environment. This book has been written to help managers and would-be managers learn about organization development (OD) and the part it can play in bringing about change in organizations. The purpose is twofold: (1) to create an awareness of the changing environmental forces confronting the modern manager and (2) to provide the techniques and skills needed for dealing with change in organizations. Organizations are using OD techniques to increase their effectiveness and their adaptability to changing conditions. In this chapter, you will learn about this exciting field: What OD is, why it has emerged, and some basic concepts pertaining to the process of organization change. The chapter concludes with a model for organizational change describing the stages of the organization development process. WHAT IS ORGANIZATION DEVELOPMENT? What makes one organization a winner, whereas another fails to make use of the same opportunities? The key to survival and success lies not in rational, quantitative approaches, but rather in a commitment to irrational, difficult-to-measure things like people, quality, customer service, and, most important, developing the flexibility to meet changing conditions. Employee involvement and commitment are the true keys to successful change. Organization development (OD) comprises the long-range efforts and programs aimed at improving an organization’s ability to survive by changing its problem-solving and renewal processes. OD involves moving toward an adaptive organization and achieving corporate excellence by integrating the desires of individuals for growth and development with organizational goals. According to a leading authority on OD, Richard Beckhard, “Organization development is an effort: (1) planned, (2) organization-wide, (3) managed from the top, (4) to increase organization effectiveness and health, through (5) planned interventions in the organization’s processes using behavioral science knowledge.”4 Organization development efforts are planned, systematic approaches to change. They involve changes to the total organization or to relatively large segments of it. The purpose of OD efforts is to increase the effectiveness of the system and to develop the potential of all the individual members. It includes a series of planned behavioral science intervention activities carried out in collaboration with organization members to help find improved ways of working together toward individual and organizational goals. Another way of understanding OD is to explain what it is not: • OD is not a micro approach to change. Management development, for example, is aimed at changing individual behavior, whereas OD is focused on the macro goal of developing an organization-wide improvement in managerial style. Chapter 1 • Organization Development and Reinventing the Organization • OD is not any single technique. OD uses many different techniques, such as total quality management or job enrichment, and none of them by itself represents the OD discipline. • OD does not include random or ad hoc changes. OD is based on a systematic appraisal and diagnosis of problems, leading to planned and specific types of change efforts. • OD is not exclusively aimed at raising morale or attitudes. OD is aimed at overall organizational health and effectiveness. Participant satisfaction may be one aspect of the change effort, but it includes other effectiveness parameters as well. Organization development is an emerging discipline aimed at improving the effectiveness of the organization and its members by means of a systematic change program. Chester Barnard and Chris Argyris, among other management theorists, have noted that a truly effective organization is one in which both the organization and the individual can grow and develop. An organization with such an environment is a “healthy” organization. The goal of organization development is to make organizations healthier and more effective. These concepts apply to organizations of all types, including schools, churches, military forces, governments, and businesses. Change is a way of life in today’s organization, but organizations are also faced with maintaining a stable identity and operations in order to accomplish their primary goals. Consequently, organizations involved in managing change have found that the way they handle it is critical. There is a need for a systematic approach and for the ability to discriminate between features that are healthy and effective and those that are not. Erratic, short-term, unplanned, or haphazard changes may introduce problems that did not exist before or result in side effects that may be worse than the original problem. Managers should also be aware that stability or equilibrium can contribute to a healthy state. Change inevitably involves the disruption of that steady state. Change just for the sake of change is not necessarily effective; in fact, it may be dysfunctional. The Characteristics of Organization Development To enlarge upon the definition of OD, let us examine some of the basic characteristics of OD programs (see Table 1.1). • Change. OD is a planned strategy to bring about organizational change. The change effort aims at specific objectives and is based on a diagnosis of problem areas. • Collaborative approach. OD typically involves a collaborative approach to change that includes the involvement and participation of the organization members most affected by the changes. • Performance orientation. OD programs include an emphasis on ways to improve and enhance performance and quality. • Humanistic orientation. OD relies on a set of humanistic values about people and organizations that aims at making organizations more effective by opening up new opportunities for increased use of human potential. • Systems approach. OD represents a systems approach concerned with the interrelationship of divisions, departments, groups, and individuals as interdependent subsystems of the total organization. • Scientific method. OD is based upon scientific approaches to increase organization effectiveness. TABLE 1.1 Major Characteristics of the Field of OD Characteristics Focal Areas 1. Change Change is planned by managers to achieve goals. 2. Collaborative Approach Involves collaborative approach and involvement. 3. Performance Orientation Emphasis on ways to improve and enhance performance. 4. Humanistic Orientation Emphasis upon increased opportunity and use of human potential. 5. Systems Approach Relationship among elements and excellence. 6. Scientific Method Scientific approaches supplement practical experience. 5 6 Part 1 • Anitcipating Change In more general terms, organization development is based on the notion that for an organization to be effective (i.e., accomplish its goal), it must be more than merely efficient; it must adapt to change. An OD practitioner is a person in an organization responsible for changing existing patterns to obtain more effective organizational performance. People using organization development have come to realize that conventional training techniques are no longer sufficient for achieving the types of behavioral changes needed to create adaptive organizations. Going to a company’s management class and listening to someone lecture about the need to change or the importance of effective organizations may be a good beginning, but speeches will not produce exceptional organizational performance. New techniques have been developed to provide organization members with the competence and motivation to alter ineffective patterns of behavior. There are many OD techniques, and any individual using OD may rely on one or a combination of approaches. Regardless of the method selected, the objectives are to work from an overall organization perspective, thus increasing the ability of the “whole” to respond to a changing environment. Organizations have objectives, such as making profits, surviving, and growing; but individual members also have desires to achieve, unsatisfied needs to fulfill, and career goals to accomplish within the organization. OD, then, is a process for change that can benefit both the organization and the individual. In today’s business environment, managers must continuously monitor change and adapt their systems to survive by staying competitive in a turbulent arena. Why Organization Development? Why has such a fast-growing field emerged? Organizations are designed to accomplish some purpose or function and to continue doing so for as long as possible. Because of this, they are not necessarily intended to change. But change can affect all types of organizations, from giants like IBM, GE, and Google to the smallest business. The year 2008 can lay claim to some of the greatest failures or near-failures of corporations blindsided by fast-developing economic and market conditions. The lists include some of the titans of American capitalism: American International Group (AIG), General Motors, Chrysler, and Lehman Brothers. No organization or person can escape change, and change is everyone’s job. Managers at all levels must be skilled in organization change and renewal techniques. Typical factors for an organization to initiate a large-scale change program include a very high level of competition, concern for survivability, and declining performance. Goals for change include changing the corporate culture, becoming more adaptive, and increasing competitiveness. In today’s business environment, managers must continuously monitor change and adapt their systems to survive by staying competitive in a turbulent arena. Kodak, for example, is trying to change by focusing on consumers who use digital cameras instead of film cameras. “If they don’t invest in digital, that’s the end of Kodak,” according to Frank Romano, professor of digital printing at the Rochester Institute of Technology.5 In the coming decades, changes in the external environment will occur so rapidly that organizations will need OD techniques just to keep pace with the accelerating rate of innovation. The Emergence of OD Organization development is one of the primary means of creating more adaptive organizations. Warren Bennis, a leading OD pioneer, has identified three factors as underlying the emergence of OD. 1. The need for new organizational forms. Organizations tend to adopt forms appropriate to a particular time; the current rate of change requires more adaptive forms. 2. The focus on cultural change. Every organization forms its own culture—a distinctive system of beliefs and values; the only real way to change is to alter the organizational culture. 3. The increase in social awareness. Because of the changing social climate, tomorrow’s employee will no longer accept an autocratic style of management; therefore, greater social awareness is required in the organization.6 THE ONLY CONSTANT IS CHANGE Although many organizations have been able to keep pace with the changes in information technology, fewer firms have been able to adapt to changing social and cultural conditions. In a dynamic environment, change is unavoidable. The pace of change has become so rapid that it is Chapter 1 • Organization Development and Reinventing the Organization difficult to adjust to or compensate for one change before another is necessary. Change is, in essence, a moving target. The technological, social, and economic environment is rapidly changing, and an organization will be able to survive only if it can effectively anticipate and respond to these changing demands. The first decade of the twenty-first century has seen change in political, not-for-profit, and business institutions that were hardly imaginable in the last decade of the previous century. As we move into the second decade, there will, undoubtedly, be additional changes that will provide both challenges and opportunities for corporations to compete effectively. Given this increasingly complex environment, it becomes even more critical for management to identify and respond to forces of social and technical change. In attempting to manage today’s organizations, many executives find that their past failures to give enough attention to the changing environment are now creating problems for them. In contrast, 3M Corporation has developed an outstanding reputation for innovation. 3M is big but acts small. 3M’s 15 percent rule allows its people to spend up to 15 percent of the work week on anything as long as it is product related. The most famous example to come out of this is the Post-it note. General Electric (GE), another company that cultivates a climate for change, has a Leadership Center, a tool that GE uses to spread change throughout the company. For more information about GE’s Leadership Center, see OD Application: GE’s Epicenter of Change. OD Application: GE’s Epicenter of Change7 General Electric Company is well known the world over for its light bulbs, jet engines, refrigerators, locomotive engines, NBC, wind turbines, and toasters. But one of its most successful and important accomplishments is their “university” that it operates the world over. It is headquartered at the John F. Welch Leadership Center at Crotonville, located in Ossining, N.Y. Here, GE turns out the internal leaders it needs, which was the center’s initial mission when it was founded over 50 years ago. Through the years and particularly during the tenure of CEO Jack Welch, now retired, the center evolved to become much more than a training center for future GE managers. The center is now the tool to spread change throughout GE. The company’s Web site says the center “has been at the forefront of real-world application for cutting-edge thinking in organizational development, leadership, innovation and change.” With the current CEO, Jeff Immelt, the center is branching out by inviting its customers to join with GE employees to discuss and solve big issues. GE invests about $1 billion world-wide every year on training and education for its people. This has been the case even in the recessionary years of 2008 and 2009. “We have always believed that building strong leaders is a strategic imperative,” says CEO Immelt. “When times are easy, leadership can be taken for granted. When the world is turbulent, you appreciate great people.” An indication of Immelt’s personal commitment to leadership and learning is that he spends approximately 30 percent of his time on leadership development. The Leadership Center at Crotonville is the epicenter for GE learning, but the students are not just top executives. It hosts around 10,000 employees and customers ranging from entrylevel to the highest-performing executives. For many, it is a defining career event. The courses, typically running one to three weeks, cover a broad range of topics including: • Essential skills courses such as hiring, team building, and presentations. • Leadership courses for new managers. • Executive courses in leadership, innovation, strategy, and manager development. • Customer programs including change management and integration. The classes have a broad functional and global mix with courses typically having 50 percent non-U.S. participation. With GE having such a large worldwide presence, there are now leadership courses that are taught in places that include Shanghai, Munich, India, Africa, and, Dubai. A recent program at the Leadership Center was Leadership, Innovation, and Growth (LIG). The program brought together all the senior managers of a business unit for four days with the expressed purpose of expanding GE’s businesses and creating new opportunities. GE calls this “filling in the white spaces.” Attending each session were several teams from around the world. This was a new approach at the Leadership Center as it brought in existing teams at one time to work on a specific issue. In addition to intensive work sessions, there were external speakers who frequently came from a university and internal speakers who were GE managers and had applied the concepts that the teams were learning. On the last day, all the teams at the session delivered a 20-minute presentation to CEO Immelt that covered what the team members had decided they should do to optimize growth. Once back at their home office, they had to refine their presentation into a letter to Immelt that was no longer than two pages. From 2006 to 2008, 2,500 people and their 260 teams went through the program with a follow-up in 2009. GE discovered over 50 years ago when the CEO at that time, Ralph Cordiner, established the Leadership Center that their success depended upon having well-trained and developed leaders. Though GE has experienced some critical challenges during recent recessionary times, their success for the future will in part depend upon how well their employees learned their lessons at the Leadership Center. Questions 1. How does the Leadership Center serve as a center for change at GE? 2. Visit GE’s Web site to learn about the Leadership Center’s current programs at www.ge.com/ and www.ge. com/company/culture/leadership_learning.html. 7 8 Part 1 • Anitcipating Change Competitive Uncertainty • Regulations • Prices • Suppliers New Competitors • Domestic • Multinational The Organization of the Twenty-First Century • Faster • Quality Conscious • Employee Involvement • Customer Oriented • Smaller Technology • New Products • New Technologies Changing Consumers • Lifestyles • Trends FIGURE 1.2 The Changing Organization of the Twenty-First Century The fundamental nature of managerial success is changing. The pace of this change is relentless, and increasing past sources of competitive advantage, such as economies of scale and huge advertising budgets, are no longer as effective in the new competitive landscape. Moreover, the traditional managerial approach can no longer lead a firm to economic leadership. Today’s managers need a new mind-set—one that values flexibility, speed, innovation, and the challenge that evolves from constantly changing conditions. Virtual organizations can spring up overnight as networks of free agents combine expertise for a new project or product. Management theorists believe that to be successful in the twenty-first century, organizations will require changes of the kind shown in Figure 1.2. They suggest that predictability is a thing of the past, and that the winning organization of today and tomorrow will be based upon quality, innovation, and flexibility.8 Yogi Berra, foreshadowing this sentiment, reportedly once said, “The future ain’t what it used to be.” These successful firms will share certain common traits. They will all be: • • • • • Faster—more responsive to innovation and change. Quality conscious—totally committed to quality. Employee involved—adding value through human resources. Customer oriented—creating niche markets. Smaller—made up of more autonomous units. THE EVOLUTION OF ORGANIZATION DEVELOPMENT It is not within the scope of this book to provide a detailed history of organization development, but a brief explanation of the evolution of the field may give you a better understanding of its application today. OD has evolved over the past 55 years from its beginnings as the application of behavioral science knowledge and techniques to solving organizational problems. What has become OD started in the late 1940s at MIT and is deeply rooted in the pioneering work of applied social scientists like Kurt Lewin. It is also strongly influenced by the work of psychologists like Carl Rogers and Abraham Maslow. The term “organization development” is widely attributed to Robert Blake and Jane Mouton (the originators of the Managerial Grid9) and Herbert Shepard (a leading OD pioneer); but Richard Beckhard10 claims this distinction as well. Regardless of who first coined the term, it emerged in about 1957 and is generally conceded to have evolved from two basic sources: the application of laboratory methods by the National Training Laboratories (NTL) and the survey research methods originated by the Survey Research Center. Both methods were pioneered by Kurt Lewin around 1946.11 Chapter 1 • Organization Development and Reinventing the Organization NTL Laboratory-Training Methods In the late 1940s and early 1950s, laboratory-training methods were developed and applied by a group of behavioral scientists in Bethel, Maine. Douglas McGregor (the originator of Theory X and Theory Y12), working with Richard Beckhard, began applying laboratory-training methods to industry at General Mills in 1956 and at Union Carbide in 1957. At Union Carbide, McGregor and his colleague John Paul Jones formed the first internal OD group. About the same time, Herbert Shepard and Robert Blake were initiating a series of applied behavioral science interventions at Esso (the international trade name for ExxonMobile), mainly using laboratory-training techniques to improve work team processes (see Chapter 9). These early training sessions provided the basis for what Blake and Mouton later developed as an instrumented training system, which they called the Managerial Grid (see Chapter 14). The success of these programs led to the dissemination of such efforts to other corporations. Survey Research and Feedback Meanwhile, a group at the Survey Research Center at the University of Michigan began to apply Kurt Lewin’s action research model to organizations. Rensis Likert and Floyd Mann administered an organization-wide survey at Detroit Edison Co. involving the systematic feedback of data to participating departments. They used what is termed an “interlocking series of conferences,” feeding data back to the top management group and then down to work teams throughout the organization. Since that time, many organizations have used the survey feedback approach. In summary, the major sources of current OD practice were the pioneering work at NTL (laboratory-training techniques) and the Survey Research Center (survey feedback methods). This brief look at the past is important because OD is a new and still developing field, and in the future, you may build upon these earlier foundations in pioneering other new OD approaches. The Extent of OD Applications From these early beginnings, OD has experienced rapid growth. A growing number of organizations worldwide are applying OD techniques. The OD Network,13 an organization of people practicing or advocating OD, was started in 1964 and now has more than 3,000 members from all over the world. The NTL, the American Psychological Association, the American Society for Training and Development, Outward Bound, and the Academy of Management all have professional divisions related to organization development. The first doctoral program for training OD specialists, called the Organizational Behavior Group, was started by Shepard in 1960 at what is now the Organizational Behavior Department at Case Western Reserve University. In addition to OD programs at small to large organizations in the United States, OD programs abound globally in both developed and developing economies with democratic and authoritarian governments.14 Organization development is an exciting and rapidly growing field. OD efforts have grown into a multitude of different approaches and are now applied in organizations around the world by a growing number of people practicing OD.15 WHO DOES ORGANIZATION DEVELOPMENT? The people who do OD, OD practitioners, come primarily from two areas. The first area consists of OD specialists, who are professionals that have specialized and trained in organization development and related areas, such as organization behavior, applied social sciences, interpersonal communications, and decision making. These specialists are often referred to as OD practitioners and consultants. They may be members of the organization, internal practitioners, or come from outside the organization, external practitioners. Historically, OD programs were established in organizations by external practitioners. These practitioners were usually individuals, perhaps a university professor who had written in the area and had assisted other organizations in developing OD programs. In some cases, specialists joined together to form a small business offering their consulting expertise. OD external practitioners are still used extensively by organizations, particularly with upper management, to help design and implement OD programs. The OD program may not use the term “organization development” or “OD,” but nevertheless it is likely to encompass many of its values and methods. Instead of using external practitioners, an organization may have its own team of internal practitioners. They are employed by the organization and are an 9 10 Part 1 • Anitcipating Change ongoing part of it. Some organizations have a group or division solely responsible for implementing OD; in other organizations the OD program may be part of the human resource department. In some cases, the OD program reports directly to the CEO or president. The second area of people doing OD consists of people in a managerial or leadership position who apply OD to their work. With growth in the use of OD, the way it is used in organizations has also evolved. It is increasingly common to find people in different parts of organizations—team leaders, supervisors, and managers at all levels—practicing and applying OD. They may have picked up OD concepts and ideas in a college course or a leadership program offered by their company. They probably do not call what they are doing OD. As they see it, organization development is not a noun but an action verb. That is to say, OD is not so much a program as an activity; it is managing and leading. These OD practitioners include team leaders who practice planned change, act as coaches to their team, develop effective and efficient teams, and build leaders. They are also CEOs who build effective management teams by doing many of the same things that a team or group leader does. As CEOs operate organization-wide, they are OD practitioners by building learning organizations, implementing total quality management programs, creating boundaryless organizations, and implementing organization development programs. This text will generally use the term “OD practitioner.” OD practitioners are the people who use, advocate, and assist others to implement OD.16 Practitioners are the internal and external specialists who are professionally trained in OD and related fields. Also, they are the people who use and apply OD to their work. “Change agent” is another term frequently used to describe an OD practitioner. A change agent is a person attempting to bring about planned change to an organization or system. The organization that is the subject of the change is the client system. Just as an OD practitioner is external or internal to the organization, so too is the change agent. Some of the subjects discussed in this text are aimed more at OD specialists, but in most cases these subjects can be adapted by the manager and team leader practicing OD. For example, there is a discussion in Chapter 4 on the initial intervention into an organization that OD specialists typically will go through. It describes a more formal and lengthy process that a manager practicing OD will need to follow when introducing team development to a work team. The ideas and procedures, though, can be adapted by the manager. THE ORGANIZATION CULTURE One element of an organization system that a manager needs to understand is the organization culture.17 The term “culture” refers to a specific civilization, society, or group and its distinguishing characteristics. As B. F. Skinner commented: “A culture is not the behavior of the people ‘living in it’; it is the ‘it’ in which they live—contingencies of social reinforcement, which generate and sustain their behavior.”18 One company, Unum Group (formerly Unum Provident), gave out “Hungry Vulture” awards for top performers. The award carried the motto “Patience my foot... I’m gonna kill something.” Unum Group, the largest disability insurer worldwide, has been investigated by 45 states in regard to how it handles claims. A senior vice president says the award was never given to workers for denying claims but was given in recognition of good performance. However, plaintiffs’ attorneys and former employees who have seen company files paint a picture of an aggressive corporate culture.19 The term “organization culture” refers to a system of shared meanings, including the language, dress, patterns of behavior, value system, feelings, attitudes, interactions, and group norms of the members. Examine the patterns of behavior on your campus or in your company. How do people dress? What jargon or unique terms do they use? These are the elements that make up a culture: the accepted patterns of behavior.20 This provides a set of values and behavioral norms for the organization. For an example of learning the jargon of an organization, see Figure 1.3. Norms are organized and shared ideas regarding what members should do and feel, how this behavior should be regulated, and what sanctions should be applied when behavior does not coincide with social expectations. The values and behaviors of every organization are unique. Some patterns of behavior may be functional and may facilitate the accomplishment of organizational goals. Other patterns of behavior or cultural norms may actually inhibit or restrict their accomplishment. Chapter 1 • Organization Development and Reinventing the Organization FIGURE 1.3 It’s Important to Learn the Jargon Source: B.C. by permission of Johnny Hart and Creators Syndicate, Inc. A look at the types of norms that exist in an organization will help in gaining a better understanding of the organization’s culture. Norms are generally enforced only for the behaviors viewed as most important by most group members.21 Norms essential to accomplishing the organization’s objectives are called pivotal norms. Norms that support and contribute to the pivotal norms but are not essential to the organization’s objectives are called peripheral norms. For example, dress codes that are enforced Monday through Thursday are probably peripheral in light of Friday’s being a casual dress day. Pivotal and peripheral norms constantly confront individuals in an organization, and they must decide whether or not to conform. The pressure to conform to norms varies, allowing individuals some degree of freedom in responding to these organizational pressures, depending on how they perceive the rewards or punishments. The organization also has latitude in the degree of conformity it requires of its members. THE SOCIALIZATION PROCESS Even if an organization does an effective job of recruiting, new employees must still adjust to the organizational culture. Because they are not aware of the culture, new employees are likely to disagree with or question the customs and values that exist. Socialization may be defined as the process that adapts employees to the organization’s culture. For a new employee, the socialization process evolves through four stages: entering an organization with initial expectations, encountering the organization’s culture, adjusting to the culture and norms, and receiving feedback. This is illustrated in Figure 1.4.22 The socialization of employees at Procter and Gamble Co. (P&G) starts at an early age because employees often begin their careers there and grow up together. The culture is one of being resistant to new ideas and even being insular. P&G is, by many measures, a 11 12 Part 1 • Anitcipating Change Adjusts to Culture and Norms Encounters Culture Expectations Receives Feedback FIGURE 1.4 The Socialization Process family company and only promotes from within. It is located in a relatively small city, Cincinnati, where employees live near one another, go to the same social functions, and eat at the same restaurants. Chairman of the Board and retired CEO A. G. Lafley admits, “I am worried that I will ask the organization to change ahead of its understanding, capability, and commitment.”23 Expectations of New Employees To function effectively, managers and members must be aware of the organization’s norms. They must recognize how sharply norms are defined and how strongly they are enforced. Entry into a new situation often results in some degree of anxiety or stress. The less an individual can relate the new situation to previous situations, the greater the feelings of anxiety and discomfort. The more the individual can meet expectations, the less the feelings of anxiety and discomfort. Some organizations assign current employees to act as mentors to new employees. W. L. Gore & Associates assigns each person hired by the company a sponsor who acts as a mentor. Twenty percent of Gore’s associates (employees) are sponsors, and the sponsor is typically the person who has the most at stake in making the new associate successful. The Gore philosophy is that if you sponsor someone, you want them to be successful, and therefore, will offer them opportunities, such as sitting in on meetings. If the new associate is successful, the team will be successful, and Gore will be successful.24 Encountering the Organization’s Culture The organizational culture provides a way for organization members to meet and get along. Three important aspects of socialization when joining an organization are: 1. Deciding who is a member and who is not. 2. Developing an informal understanding of behavioral norms. 3. Separating friends from enemies. To work together effectively, individuals need to understand things like power, status, rewards, and sanctions for specific types of behaviors. For instance, what behavior gets one a good grade, and so on. While the individual employees are experiencing a new situation, the organization may be attempting to influence them. If new members come to an organization expecting to find a certain set of norms, they are looking for their expectations to be affirmed. If their expectations reflect the actual norms of the organization, the integration process for both the new members and the organization is relatively painless. Adjusting to the Culture and Norms New members often find that the norms are unclear, confusing, and restrictive. As a result, they may react in different ways when entering an organization. This is illustrated in Figure 1.5. At one extreme, a new member may choose to conform to all the norms of the organization, resulting in uniformity of behavior and complete acceptance of organizational values. This conformity may result in stagnation, nonresponsiveness, and a loss of creativeness. At the other extreme, a new member may choose to rebel, to reject all the values, or to leave the organization altogether.25 Rebellion Creative Individualism Conformity Rejection of All Values and Norms Acceptance Only of Pivotal Values; Rejection of All Others Acceptance of All Values and Norms FIGURE 1.5 Basic Responses to Socialization Chapter 1 • Organization Development and Reinventing the Organization 13 A less obvious alternative is for new members to accept the pivotal norms and seriously question the peripheral norms, which can be termed creative individualism. This is the ideal behavior for a healthy and effective organization, but it is often difficult for a newcomer to correctly determine which norms are peripheral and which are pivotal. What may be a pivotal norm in one department may be a peripheral norm or not a norm at all in another department of the same organization. Since norms are changing and dynamic, the organization member must have the awareness to discern the differences between pivotal and peripheral norms. Receiving Feedback Only the more healthy organizations allow their members to challenge their norms. The aim of OD is to develop an organizational climate that is appropriate to the organization’s mission and members. In a sense, OD involves changing the culture of organizations and work groups so that a more effective means of interacting, relating, and problem solving will result. OD seeks to develop the organization to the point that it feels comfortable about allowing its members to openly examine the norms, both pivotal and peripheral, with the ultimate goal of building a more effective organization. The reaction of the individual to the norms results in the formation of an unwritten agreement with the organization. For example, at one organization, employees believe that it is their responsibility to innovate and be creative. They develop new and improved products, processes, and ways to serve their customers. They believe that team discussion, challenging ideas, and taking risks are appropriate behaviors for achieving goals. However, another organization’s employees believe that following procedures, reaching numerical outcome targets, doing no more or less than what is required, and not saying anything that the boss does not want to hear are the appropriate behaviors. These two organizations have very different types of cultures. In both of these organizations, each person tends to do the following: 1. Separate more important from less important goals. 2. Develop ways to measure his or her accomplishments. 3. Create explanations for why goals may not always be met. For an example of how Starbucks Coffee Company uses socialization to integrate new employees into their organization, see OD Application: Leave No One Behind at Starbucks. OD Application: Leave No One Behind at Starbucks26 Howard Schultz’s vocabulary, at least in formal interviews, makes him sound like a college professor of management. The interviews are peppered with words like “collaborative,” “teams,” “empowerment,” “empathetic,” “vision,” and “partners.” Schultz just happens to be one of the founders, chairperson of the board, president, CEO, and chief strategist of Starbucks Coffee Company. The firm has more than 176,000 partners who handle approximately 50 million transactions every week in nearly 17,000 retail stores in 49 countries. Starbucks has one of the highest frequencies of customer visits than just about any other retailer in the U.S. Besides a good cup of Joe, what is the Starbucks formula for success? Perhaps it is the firm’s vision. Says former U.S. Senator and current Starbucks board member Bill Bradley, “Howard is consumed with his vision of Starbucks. That means showing the good that a corporation can do for its workers, shareholders, and customers.” On Starbucks’ six-point mission statement is “We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard.” Central to Starbucks is the philosophy “Leave no one behind.” This philosophy shows up in new employees receiving 24 hours of in-store training, higher-than-average salaries, and benefit packages. All employees who work more than 20 hours a week receive stock options and full health care benefits. Schultz says, “The most important thing I ever did was give our employees stock options. That’s what sets us apart and gives a higherquality employee, an employee that cares more.” Starbucks consistently shows up on Fortune’s annual lists of “100 Best Companies to Work For” and “America’s Most Admired Companies.” In employee surveys, Starbucks ranks ahead of other companies. Starbucks employees show an 82 percent job-satisfaction rate compared to a 50 percent rate for all employers. It has the lowest employee turnover rate of any restaurant or fast-food company. Another survey found that the two principal reasons people work for Starbucks are “the opportunity to work with an enthusiastic team” and “to work in a place where I feel I have value.” A Starbuck spokesperson says, “We look for people who are adaptable, self-motivated, passionate, creative team players.” Maintaining this spirit is not easy in a company with over 170,000 employees. “Getting big and staying small” is the Starbucks objective, says Schultz. (continued) 14 Part 1 • Anitcipating Change Starbucks is also confronted with some challenges. Like most retailers operating in a recession, Starbucks sales and profits have been negatively affected. This has especially been the situation with Starbucks, which offers a premium product at a premium price. Competition for the coffee consumer has intensified with McDonalds’ strategy of opening coffee and beverage stations with Starbucks-style baristas in their restaurants. McDonalds’ premium coffees are priced an average of 60 cents less per drink than Starbucks’. In response to declining sales, Starbucks has closed underperforming stores and reduced the number of new store openings within the U.S. To help solve the problem, Schultz is focusing on “reigniting” the connection with consumers through better products and better store design. In a press release for Starbucks, Shultz says, “Our customers are telling us they want value and quality and we will deliver that in a way that is both meaningful to them and authentic to Starbucks.” Questions 1. What do you think Schultz meant when he said that Starbucks’ objective is “Getting big and staying small?” 2. If possible, interview a present or former employee of Starbucks to get his or her impression of the company. 3. If you have visited a Starbucks, did you see any examples of teamwork among its employees? 4. Research the current lists of Fortune’s “100 Best Companies to Work For” and “America’s Most Admired Companies.” Information is available at www.money.cnn.com/magazines/ fortune/fortune_archive/. 5. Research current information about Starbucks’ sales and revenue. Information and their annual report can be found at www.starbucks.com/. PSYCHOLOGICAL CONTRACTS A psychological contract may be defined as an unwritten agreement between individuals and the organization of which they are members. It describes certain expectations that the organization has of the individual and the individual’s expectations of the organization.27 Because the two parties are growing and changing, the contract must be open-ended, so that old issues and new issues can be renegotiated. An organization has certain expectations of its members. If it is a business organization, its expectations of member behavior will probably be spelled out very clearly. It undoubtedly expects its members to be on the job during certain hours of the day. It is probably concerned with the quality and quantity of the work they do, their loyalty, their appearance, and various other things unique to the organization. For the organization to be satisfied, the individual will need to comply to some degree with its expectations. In other words, the organization has certain requirements, and the individual must do certain things to meet them if there is to be a lasting and healthy relationship. In many instances, unfulfilled expectations result in high turnover, absenteeism, sabotage, and worker alienation. Research into the effectiveness of psychological contracts has shown that the obligations of both the employee and the organization are important determinants of organizational commitment.28 Similarly, the individual has certain expectations of the organization. An individual may expect to gain work experience, security, and advancement. The individual probably expects to have an opportunity to meet people, make friends, and form social relationships and undoubtedly expects remuneration from the organization. For the individual to be satisfied and stay, the organization will have to meet the individual’s expectations. When either the organization’s or the individual’s expectations are not being satisfied adequately by the other party, friction and difficulties may develop. If these problems cannot be solved, they may culminate in the individual leaving the organization, either voluntarily or by the organization’s choice. All too often, the problem is solved by not solving it: it takes too much effort to reach a real solution, so both parties must continue with a tenuous and unharmonious relationship. Sometimes, the psychological contract between the organization and the individual does not even address certain key expectations. One or both parties may assume that the other party agrees to some unstated expectations. The phrase “it is intuitively obvious to the most casual observer” may be the underlying assumption of one or both parties. Unstated or assumed expectations can lead to an organization of individuals who feel cheated or of managers who are disappointed in their subordinates. To avoid such misunderstandings, both parties—the members and the representatives of the organization—should formulate a psychological contract that can be continually renegotiated. A MODEL FOR ORGANIZATIONAL DEVELOPMENT Organization development is a continuing process of long-term organizational improvement consisting of a series of stages, as shown in Figure 1.6. In an OD program, the emphasis is placed on a combination of individual, team, and organizational relationships. Chapter 1 • Organization Development and Reinventing the Organization STAGE 1 Anticipate Need for Change STAGE 5 Self-Renewal, Monitor, and Stabilize STAGE 2 Develop the Practitioner– Client Relationship STAGE 4 Action Plans, Strategies, and Techniques STAGE 3 The Diagnostic Phase FIGURE 1.6 Organization Development’s Five Stages The primary difference between OD and other behavioral science techniques is the emphasis upon viewing the organization as a total system of interacting and interrelated elements. Organization development is the application of an organization-wide approach to the functional, structural, technical, and personal relationships in organizations. OD programs are based upon a systematic analysis of problems and a top management actively committed to the change effort. The purpose of such a program is to increase organizational effectiveness by the application of OD values and techniques. Many organization development programs use the action research model. Action research involves collecting information about the organization, feeding it back to the client system, and developing and implementing action programs to improve system performance. The manager also needs to be aware of the processes that should be considered when one is attempting to create change. This section presents a fivestage model of the total organization development process. Each stage is dependent on the preceding one, and successful change is more probable when each of these stages is considered in a logical sequence. Stage 1: Anticipate a Need for Change Before a program of change can be implemented, the organization must anticipate the need for change. The first step is the manager’s perception that the organization is somehow in a state of disequilibrium or needs improvement. The state of disequilibrium may result from growth or decline or from competitive, technological, legal, or social changes in the external environment. There must be a felt need, because only felt needs convince individuals to adopt new ways. Managers must be sensitive to changes in the competitive environment, to “what’s going on out there.” Stage 2: Develop the Practitioner–Client Relationship After an organization recognizes a need for change and an OD practitioner enters the system, a relationship begins to develop between the practitioner and the client system. The client is the person or organization that is being assisted. The development of this relationship is an important determinant of the probable success or failure of an OD program. As with many interpersonal relationships, the exchange of expectations and obligations (the formation of a psychological contract) depends to a great degree upon a good first impression or match between the practitioner and the client system. The practitioner attempts to establish a pattern of open communication, a relationship of trust, and an atmosphere of shared responsibility. Issues dealing with responsibility, rewards, and objectives must be clarified, defined, or worked through at this point. The practitioner must decide when to enter the system and what his or her role should be. For instance, the practitioner may intervene with the sanction and approval of top management 15 16 Part 1 • Anitcipating Change and either with or without the sanction and support of members in the lower levels of the organization. At one company, OD started at the vice presidential level, and by using internal OD practitioners, the OD program was gradually expanded to include line managers and workers. At another company, an external practitioner from a university was invited in by the organization’s industrial relations group to initiate the OD program. Stage 3: The Diagnostic Process After the OD practitioner has intervened and developed a working relationship with the client, the practitioner and the client begin to gather data about the system. The collection of data is an important activity providing the organization and the practitioner with a better understanding of client system problems: the diagnosis. One rule of operation for the OD practitioner is to question the client’s diagnosis of the problem, because the client’s perspective may be biased. After acquiring information relevant to the situation perceived to be the problem, the OD practitioner and client together analyze the data to identify problem areas and causal relationships. A weak, inaccurate, or faulty diagnosis can lead to a costly and ineffective change program. The diagnostic phase, then, is used to determine the exact problem that needs solution, to identify the forces causing the situation, and to provide a basis for selecting effective change strategies and techniques. Although organizations usually generate a large amount of “hard” or operational data, the data may present an incomplete picture of organizational performance. The practitioner and client may agree to increase the range or depth of the available data by interview or questionnaire as a basis for further action programs. One organization, for instance, was having a problem with high employee turnover. The practitioner investigated the high turnover rate by means of a questionnaire to determine why the problem existed, and from these data designed an OD program to correct it. The firm’s employees felt it had become a bureaucratic organization clogged with red tape, causing high turnover. OD programs have since reduced employee turnover to 19 percent, compared with 34 percent for the industry. At a major food company, a new executive vice president needed to move quickly to improve the division’s performance. With the help of an external practitioner, data were gathered by conducting intensive interviews with top management, as well as with outsiders, to determine key problem areas. Then, without identifying the source of comments, the management team worked on the information in a 10-hour session until they were able to hammer out the problems and develop a plan of action. Stage 4: Action Plans, Strategies, and Techniques The diagnostic phase leads to a series of interventions, activities, or programs aimed at resolving problems and increasing organization effectiveness. These programs apply such OD techniques as total quality management (TQM), job design, role analysis, goal setting, team building, and intergroup development to the causes specified in the diagnostic phase (all of these techniques are discussed in detail in subsequent chapters). In all likelihood, more time will be spent on this fourth stage than on any of the other stages of an OD program. Stage 5: Self-Renewal, Monitor, and Stabilize Once an action program is implemented, the final step is to monitor the results and stabilize the desired changes. This stage assesses the effectiveness of change strategies in attaining stated objectives. The system members need to know the results of change efforts in order to determine whether they ought to modify, continue, or discontinue the activities. Once a problem has been corrected and a change program is implemented and monitored, means must ...
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