Organizational Development: Everything You Need to Know
Published: 26 November, 2022
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When companies undertake steps toward innovation, one of the key areas they investigate is their Organizational Structure and where they can make improvements. Indeed, few initiatives have such a wide-ranging impact as your Organizational Development, so it makes good sense to devote the time and resources necessary for making good decisions.
Organizational Development empowers businesses to optimize their structures, resources, and strategies, fostering a culture of continuous improvement and forward-thinking. We at Digital Leadership provide Talent Management Consulting, which plays a pivotal role in the realm of organizational development. It ensures that an organization’s most valuable asset, its people, is strategically aligned with the company’s goals and values, and facilitates talent acquisition, development, and retention, ultimately enhancing the organization’s capacity to implement organizational development strategies effectively.
In this article, we aim to give you a complete overview of Organizational Development and how you can use it to drive innovation, expansion, and transformation. We advocate creating an innovation culture that values new ideas and recognizes opportunities for growth as part of its baked-in daily activities. Undertake Organizational Development with that in mind.
What is Organizational Development?
At its core, Organizational Development describes the actions taken to boost an organization’s capabilities via the realignment of its people, strategy, and authoritative structure.
When we think about Organizational Development, it’s helpful to consider each of the elements as separate pieces that work together to support the whole. In other words:
- People: What jobs they do and how they do them
- Pens and Paper: How organizational information is transmitted, stored, and recorded
- Plans: the vision for the company’s future, with an eye toward the strategies necessary to make it a reality
The change in your organizational design should have an impact on your business capabilities, and improve its flexibility and profit margin. Otherwise, what’s the bother?
Organizational Development (OD) vs. Human Resources (HR)
Misunderstandings commonly occur when people within a company confuse Human Resources and Organizational Development. Human Resource specialists typically work to maximize the positive effects employees can have on the company. Organizational Development focuses more on how employees can reach their greatest potential in relation to the company’s goals and values.
Ideally, Organizational Development and Human Resources initiatives are working in conjunction with each other in order to maximize the total overall positive impact they can have on a company, especially in terms of innovation and growth. In fact, it’s not hard to see how OD and HR programs can work in cooperation with each other to achieve some very important goals. For example:
(1) Improve Productivity & Efficiency
Through Organizational Development, we identify the skills and experience our workforce needs in order to best reach its strategic goals.
Human Resource management then helps ensure we address areas where our staffing is lacking, or perhaps has redundancies. Gearing up for innovation includes hiring the right people necessary to complete the work while keeping workloads and expertise in mind so as to enhance efficiencies.
(2) Creating a Culture of Innovation & Change
Organizational Development can create a company’s culture through the arrangement of responsibility and authority. How offices report and are aligned can strengthen or break down barriers between team members in a way that encourages or discourages innovation. Removing the real or imagined silos that block communication and cooperation can also make an environment that spurs innovation and collaboration.
Human Resources plays a role in innovation and change, too. Companies that value moving forward and finding new solutions hire people who feel the same and possess a range of experiences and skills that complement that mission.
The role of Organizational Developers is to place those assets in the best positions to be successful. That includes recognizing when and where different skill sets would be most effective within the context of the company’s goals.
For a more in-depth exploration of this topic, you can refer to our book “How to Create Innovation,” where we delve into the strategies and tactics that drive innovation through effective organizational development.
(3) Increase Profit Margins
Between Human Resources and Organizational Development, decision-makers must recognize the needs of the company and opportunities to increase efficiencies that boost the overall profit margin. It’s true that oftentimes this means eliminating redundant positions and trimming staff numbers where it looks like resources are being used wastefully. It’s an unfortunate fact of business that good people doing good work are sometimes let go because they no longer fit into a company’s overall strategy.
At Digital Leadership, we don’t take letting people go lightly. That’s why we encourage innovative thinking when it comes to using the people you have, even if that means changing their roles to better meet the company’s needs and increase profit margins. After all, each person represents an investment of time and training, familiarity, and connection to the business model that can’t necessarily be replaced cheaply, or ever.
In this way, Organizational Development and Human Resources work hand-in-hand to truly identify how existing workers can be better used in order to boost profits. Consider their hidden skills or abilities that may be ready to tap. Perhaps, too, a small investment in cross-training or additional education would create a worker who’s able to do more things, better, and more efficiently.
In that case, you’ve boosted the bottom line while retaining an asset whose loyalty may have benefits for you and your customers.
Organizational Development Process
Organizational Development doesn’t just happen through a will or by accident. It requires forethought, planning, and a shared vision.
As part of our UNITE movement and the models and strategies behind it, we’ve outlined an 8-step change process that businesses can use to drive their innovation and transformation efforts. Our Change Management Plan helps ensure you move your organization forward at a steady pace—not too quickly and not too slowly—building momentum as you string together successes. As you may notice, we’ve borrowed heavily from John P. Kotter, a leading expert in driving organizational change. A change in organization isn’t easy, and we recommend due diligence and extensive research before you go too far into the process.
Step (1): Identify the reasons for change & create urgency
Change simply for change’s sake only creates drama and confusion. Understand and communicate the purpose behind the changes your organization must make, and clearly communicate them to all the members of your team. You’ll need everyone on board if you hope to be successful.
Create urgency by establishing measurable, achievable goals, with benchmarks tied to reasonable deadlines. Use transparent processes to monitor progress and issue rewards where appropriate for early successes.
Step (2): Form a powerful coalition & build the guiding team
Organizational Change should be directed by a team drawn from across multiple levels of your company, from an assortment of concerns and offices. They should be selected for their leadership abilities, their experience, and their ability to see the entirety of a situation—broadly and in detail.
We think it’s important that this team be given a wide range of authority and the freedom to make controversial suggestions without the fear of reprisal.
We don’t propose that this team has the ultimate authority over the direction of the company; executives and CEOs are still in charge. But if those leaders are truly interested in meaningful Organizational Change, they’ll build, empower, and listen carefully to their team.
Step (3): Develop a vision & strategy for change
How does the company of tomorrow differ from the company of today?
How will you get to that shiny new place?
As we stated earlier, Organizational Change should be motivated by need and reason. In Step Three, you should reflect on how your organization looks now, and how you expect it will be different by the time your change efforts are completed.
Think critically about how your initiatives will or won’t bring about the desired changes. That includes mentally working forward from where you are now, as well as backward from where you want to be. Consider the steps and milestones you’ll need to take and reach, respectively.
Because big changes don’t happen overnight, describe the incremental shifts you want to see in your company and how you’ll best make those shifts happen.
Step (4): Communicate the Vision and Strategy
Workers do better when they’re informed, and since these strategic changes involve them, you must communicate the team’s Vision and Strategy.
Imagine the uncertainty your workforce will feel when they learn a team has been formed to identify inefficiencies and identify potential changes. These are often corporate buzzwords for downsizing.
If you are reducing staff, let employees know they may be facing layoffs. If you aren’t, tell them that, too, so you don’t risk chasing away valuable human resources.
Step (5): Empower actions & remove barriers
Give your Organizational Development team real power to make the changes they believe will get the results you’re all wanting. Inspire them, too, to iterate often and fail quickly without fear of reprisal—you don’t want a wrong turn prolonged because the team is afraid to acknowledge a strategy isn’t working.
Remove barriers to communication. Demand transparency and collaboration as a way to create efficiencies using the staff you currently have. Expect data-driven decision-making and give your team the tools necessary to carry it out. Be clear about the metrics that define success and how they’ll be measured and reported.
Focus on leadership as a service. Encourage and provide meaningful, timely feedback.
Step (6): Create quick wins & celebrate achievements
If you’ve successfully completed the previous steps, then you should have already identified some benchmarks and other measurements that indicate growth and progress before your overall goals are reached.
Celebrate reaching these smaller goals in a meaningful way that doesn’t add to the workload or make achieving the big picture harder.
We suggest providing lunch to celebrate team wins, or using small bonuses to mark the occasion. Added vacation time would be a nice reward, too.
Use frequent, small rewards to remind everyone that the team is making progress, that their efforts are appreciated, and that results are getting noticed and measured.
Step (7): Secure successes, accelerate & build on the change
With success building, make sure you take steps to maintain momentum and avoid backsliding.
Continue to follow your plan—don’t get distracted by success and assume you’re done. But be flexible enough that you can re-evaluate your plan in the face of success. We are often prepared to make changes in the face of failure, but we also need to recognize success as an opportunity for change and continued growth. If you quickly reach your goals, maybe your goals are too modest.
Step (8): Make change stick & anchor change in the Organizational Culture
It takes time for new actions to become old habits. Continued evaluation and articulation of recent goals will help ensure that your new methods are fully adopted and ingrained into your business’s operations and your business goals. We’ve seen many businesses succeed in creating short-term gains as a result of renewed innovative vigor, but that energy is difficult to sustain without explicit decisions to continue on new paths. Truly successful enterprises build an innovation culture that values collaboration, growth, failing fast, and creative thinking.
Adherence to new initiatives must become part of yearly evaluations, and Human Resources should emphasize them during the onboarding of incoming employees. In this way, the “new” culture becomes “the way we do things” more quickly.
When we build success into our hiring, training, and structural decision-making, it’s much more likely to remain sustainable and continue to be something an organization can build upon.
Organizational Change & Development Challenges “Fears”
What would you do if you weren’t afraid?
Like all change, Organizational Change is deeply influenced by our fear of the unknown and our unwillingness to leave behind things that are familiar. But we can face those fears using some well-known tactics.
- Be vocal as a manager about the fears: acknowledging that everyone in the organization is feeling similarly lets everyone know that their concerns are seen, valid, and recognized.
- Communicate the vision of what the future will be and how Organizational Development will help make it a reality.
- Make expectations reasonable. Fight for reachable goals. Push your people to reach them, but don’t let others railroad you into accepting goals that can never be reached and are therefore self-defeating.
- Don’t threaten or abuse fear. When others are losing their jobs, it can be easy to exploit the people who remain. That ultimately makes lasting change difficult, in addition to being a pretty terrible thing to do to another person.
- Remain upbeat and positive. Lead through motivation, not fear or threats.
One last thing here when it comes to managing the fear that accompanies Organizational Change and Organizational Development: don’t ignore your own mental health needs. We’ve heard plenty of stories about managers who are worried they’ll be the last ones left to turn off the lights. Take care of yourself and the guilt you may be feeling. Don’t let yourself slip into poor coping habits.
Innovation and transformation are often sparked by Organizational Development. The Organizational Change that begins as a result of this development has a ripple effect that promotes innovation across a company.
Though it’s not to be undertaken lightly, Organizational Development can play a key role in building your business and properly addressing changing climates and customer expectations.
As always, Digital Leadership is here to help your business succeed. If you have any questions about the processes behind Organizational Development, don’t hesitate to reach out to schedule a free consultation with one of our global experts. When one of us succeeds, we all succeed.
Frequently Asked Questions
What is the role of organizational development?
The role of Organizational Development is to develop new processes and improve existing processes to increase the organization’s capabilities and efficiency. As part of an overall Business Strategy, Organizational Development can be used to ignite innovation and growth.
What are examples of Organizational Development?
Examples of activities often a part of Organizational Development include employee training, strategic realignment, product research, management restructuring, and service development.
What are the benefits of Organizational Development?
There are many benefits to Organizational Development that make it worth the effort. These include improved profit margin, broader customer base, employee growth, improved products and services, increased communication, and corporate flexibility.