ORGANIZ/fIION DE\\IELOPMENT 4t XieS&r& L:rlt ttttrc DONALD R.BRO\\MN p A ,,..fr,,l,' , Anticipating Change 1 Anticipating Change Chapter 1 Organization Development Part and Reinventing the Organization Chapter 2 Organization Benewal-The Challenge of Change Chapter 3 Changing the Culture part ? Understandinq the OD prcees Chept*r 4 Role arid Sxyte ol the SD practitioner 0hapter S The 0iagnostic Proess *hapt*r 6 Sveremning Fte$istance to Shange part 3 lmpfloving Excellence in Individuals 7 Om lntervention $trategies Sh*pter & Frocess Intervention Skills Shepter $ Ernplnyee Empowerrnsnt snd inierpersonal lnteruentions Shapten Beffi 4 mevslsping f{igh Perfornrance in Teams *hepter 10 Team Development Chapter 11 lnterventions lntersroL,p nevelopment inten entions Shspter 12 Goel Settins for Effeetive SrSffnieati0ns *hmpter 13 Work Ts&m Deveiopnnent psrt 5 Building Suecess in Organieations Shapter't4 High-psr{orming $yst*m* anr{ the Learning Srganixation Cl:apter'l 5 Snganization Transforrnation and $trategis Change ehapter 16 The Challange and the Future for 0rganizations 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 pliyers. To wait and let the marketplace change and then stabilize is not a strategy for managing change. Tne iirsidecade of this century painfully taught many companies-big and small-the lessons of not managing for the future. Once-powerfui Org anrzation DeveloPment and Reinventing the Org anrzation LEARNING OBJECTIVES Upon completing this chapter, you will be able to: ' 1. Defrne 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. PREM EETING PREPARATION 1. Read ChaPter 1 . 2. Read and prepare analysis for Case: TGIF. CHANGE IS THE CHALLENGE FOR ORGANIZATIONS to cope with it. Tomorrow's Change is coming down upon us like an avalanche, and most people are utterly unprepared approaches. Organizations will need to adapt to changworld will be different from today's, calling for new organizational Every day ing market conditions and at the same time cope with the need for a renewing rather than reactive workforce. writer comments, "Call it whatever you like-reengineering, managers confiont massive and accelerating change. As one real, it's radical restructuring, transformation, flattening, downsizing, rightsizing, a quest for global competitiveness-it's and it's arriving every day at a company near you."l the fact Global competition and economic downturns have exposed a glaring weakness in American organizations: inefficient. To increase productivity, enhance competithat many of them have become overstaffed, cumbersome, slow, and way they are organized and managed' tiveness, and contain costs, organizations have changed and continue to change the in isolation of other entities. They are in continuous inOrganizations are never completely static and they do not exist suppliers, society, and unions' teraction with extemal forces including competitors, customers, govemments, stockholders, The conditions facing today's organizations are different Their interactions with their environment are illustrated in Figure 1.1. consumer lifestyles and from those of past decades. Many companies face global as well as domestic competitors. Changing to change. Government regulation and deregulation are technological breakthroughs all act on the organizationto cause it new opportunities and obstacles' continually changing, while at the same time, intemational trade agreements present both both products and services to organizations, come Stockholders are demanding more accountability. Suppliers, providing influences the modes, values, and more and more from the world economy. The ,o"i"ty within which an organization operates have a direct and substantial influence on how norms that are developed within the organization. ihe employees and unions with operating in an enwell an organization functions. The cEo of Intel corporation, Paul otellini, expressed his frusffation is that there used to be one set of rules out therevironment of unknowns in aWall Street Journal interview. "The problem sets of rules for different U.S. antitrust laws were the de facto rules of the world. Now with globalization, we have different It would sure make things easier if we decided on a regions, such as the EU, written around entirely different philosophies. plan better for the future."2 single set of rules once again-whatever they are. Then we'd know how to behave and we could to another, but all organizations face the need The type and degree of external forces vary from one organization internally. to adapt to th"r" forces. Many of these changes are forced upon the organization, whereas others are generated it. General Mills is one of a number of Because change is occurring so rapidly, there is a need for new ways to manage Part 1 . AnitciPatingChange FIGURE 1.1 The Organization Environment during the confronting it' As the economy unraveled companies that has recognized the challenges come up with ways to cut costs' looked far afield to first few years of th" 2d00., General Mills Organizations ,.We can,t get by doing *t ui ,r" did yesterday;' *V, t"t,r"a CEO Stephen Sanger'3 arechangingandwillcontinuetodosoinordertosurrriveinthiscomplexenvironment. Thisbookhasbeenwrittentohelpmanagersarrdwould-bemanagersl3amaborl|orc*1,:]1".1 ls The purpose p,lay intiinging about change in organizations' f"*:l confronting the modem "trunglrienvironmentil change in organizations' urra ,titt,i""ded for dealing with manager and 121 to provia" it t""t",oiqu", " organizationsareusingoDtechniquestoincreasetheireffectivenessandtheiradaptabil- is, oD you will leam about this exciting field: What ity to changing conditions. In this chapter, development (oD) and tt prrt it can " twofold: (1) to create * u*ur"rr"r, o1 tn" whyithasemerged,andsomebasicconceptspertainingtotheprocessoforganizationchange. of the organorganizational change describing the stages The chapter concludes with a model for izattort develoPment Proces s' WHAT IS ORGANIZATION DEVELOPMENT? use of the same opportua winner, whereas another fails to make tu]r1l11n lies not in rational, quantitative approaches' nities? The key to survival and success quality' customer servrce' what makes one organization things like people' a commitment to irrational, difficult-to-measure involveto meei changing conditions' Employee and, most important, developing the flexibility mentandcommitmentarethetruekeystosuccessfulchange. aimed at the lon!-range efforts and programs organization development (oD) comprises by changi-ng iti problem-solving and renewal improving an oryanizationls aui,ty to ,urrir" processes. op and achieving corporate excelirrrorre. *oving toward an adaptive -gurilruiio., organizational lence by integrating tn" with J"rir"I of individualr'ro. groirtt and development development is Beckhard, "organization (4) to increase orga1]'7,athe top, o;gantzation-wide, (3) mana,sed from 01 goals. According to u i"ualng aurhority an effort: (1) planned, ( 2) oD, nl.i*a processes planned inten'entions in the organization's tion effectiveness and nlarrr" through.(5) urlrg u"ttuuioral science knowledge"'a I They inpianned' s)'stematlc appr(rachedh change. Organization development efforts are oflt-{hhe pumose of oD or to relativell: large segment* volve changes to the total organization of att ttre individof the ,1:rr.. *i to d.r.lop the potffi efforts is to increase the effectiveness activities carried out planne,J beha\\ioral science intervention ual members. It incluies a series of toio help t-rnd improved ways of working together in collaboration with organization members ward individual and organizational goals' to erplain what it is not: Another way of rlnderstanding OD i: example' is aimed . oD is not a micro approach to change.\\[anagement development' for goal of developing on the macro ,* herses oD is focused at changing rndn iouat behavior. improrement in rnanagerial style' an orsarrizati6n-s ide Chapter 1 ' Reinventing the Organization Organization Development and .oDisnotanysingletechnique.oDusesmanydifferenttechniques,suchaStotalquality mallagementorjobenrichment,andlo,,"orth"muyitselfrepresentstheoDdiscipline. op i' uu'"a on a systematic appraisal . . or ad hoc oD iloes rtot include random t;;;;;;' of change efforts' to pturrn"J"und specific types diagnosis .f p;1"*;, leading and is aimed at overall organiraising *r."tt-r, intuiles' oo is not exctusiveiy aimed at oD aspect of the change i;*ri",p#-ruiirruoion may be one zadonal t"urrr, well' "r,a'3n1"rir"#* effectiveness parameters as effort, but it includes other chester organizationdevelopmentisanemergingdisciplineaimed.atimprovingtheeffectiveu ,yrt"*utit change program' organizati";-;; its members by -"";;i theorists, hav.e noted that a truly effecamong other manag-Jment deBarnard and chris Argyris, the individual can grow and is one in which. both th:,-o^lc-5a;"iit' "'a The goal of dve organization is a "healthy" organization' convelop. An organization with such,'" "*ll",l1; and more effective' These to make orgu.riruiions healthier organization development is military forces' governschools' churches' ness of the uu cepts apply to o'gu""J;";;i 'yp"',in"1uding . -L:^- t,+ n *qnizqtions are also faced with ments. andbusinesses' i n .: Chan ge i s a w ay or rire t""Ii::{ "X3111, ::, J:Hli,lXi maintaining a stable identity Td. ,,"'*uy ti,', handle it is iilHtfl:.} :::::ffi1 op"tu]l1l:-'1 ;;;,hG""izations i. inloived in managl11-"1ff:#;:i:iJiJll#'" discriminate between or u," no, Erratic, ,io*-'"'*, unpranned' ililll;Ti'l,i#i,r1:::iHJ"T'["!1lJ*l,m exist before or result in side effects that Jia.,ot n *# ffi;;';;;;il;,* M*;gers *J#ffi;.;;i;. .?i"rrrty srate. d?;; librium can conrribu," is steady state. change :I]rt I dysfunctional. s. Development The Characteristics of Organization s [ls' p. n- haphazard changes may be worse than rr. the sake or "nu#?r- or equlsrrouta also be aware that stabilitv of that i""ri,uurv involves the disruption in fact' it may be effective; noi """"tt-ily ToenlargeuponthedefinitionofoD,letusexaminesomeofthebasiccharacteristicsofoDprograms (see Table 1'1)' .Change.oDisaplanned,.,ul"c{tobringaboutorganizationalchange'Thechangeeffort ''-'-uu'"a of problem areas' . aims at ,pt"intli:"tii'"' oi'a diagnosis unA typically Collaborative approarh.OD i;;"kt; that incolaborative approach to change cludestheinvolvementandpafiicipatio,,ortn"organization*"*b".'mostaffectedbythe ru- changes. on ways to improve and progra ^-:^-tnl;^n nf) nrosrams include an emphasis Perfonnance orientatior' OD 'in ' ce, ve- ."m:;,i;f',H"T;Z:::stri:J,Y;' "* a set orhumanistic "'':.:lo:1,'J;:*'ffiS#f,*' lat wal zationsthataimsatmakingorganizationsmoreeffectivebyopeningupnewopportunities interrerationship approach concerned with the .'!;,?;;:T;i#;;:3yffi'::::t*vstems l.aitio.as groups, of divisions, departments, cel- lnal rt is tal *o organization. as interdependent subsystems ^:^-+irin of the to- tion o--ronchr .Scientific*",noa.oDisbaseduporlscientificapproachestoincreaseorgafl|Za 'ua' effectiveness' SSES i inOD ivid- Characteristics I out 1. ir to- 2. Collaborative APProach 3. Performance Orientation 4. Humanistic Orientation 5. SYstems APProach 6. Scientific Method imed )Phg Change Focal Areas -nrng" is planned by managers to achieve goals' and involvement' lnvolves collaborative approach and enhance performance' Emphasis on ways to improve and use Emphasis upon increased opportunity and excellence' Relationship among elements Scientif ic approaches supplement of human potential p"tt't'l t'*p*'tnc1 Part 1 . AnitcipatingChange 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 tealize 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 otganizational performance. New techniques have been developed to provide organization members with the competence and motivation to alter ineffective pattems of behavior. There are many OD techniques, and any individual using OD may rely on one or a combination ofapproaches. Regardless ofthe 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 accom- plish 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. ,iiffi.-u i!Silu-t ing. ani -le:e c. not-for r ious .- rhat g'i. ( menl t( todar''s changu velopei allog's related. anothel uses to Center. o$, Why Organization Development? Why has such a fast-growing field emerge d? Organizations are designed to accomplish some purpose or function and to continue doing so for as long as possible. Because ofthis, they are not necessarily intended to change. But chaage 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 oflhe great- (lerer - t ligh: wind impor ihe w est 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 it organization change and renewal techniques. Typical factors for an organization to initiate a large-scale change program include a very high level of competition, concem for survivability, and declining performance. Goals for change inclfie changing the corporate culture, becoming more adaptive, and increasing competitiveness. today,s business environment, managers must continuously monitor change and adaft their systems to survive by staying competitive in a turbulent arena. Kodak, for example, is nying to change by focusing on consumers who use digital cameras instead of fiIm cameras. "ffthey don't invest in digital, thatb the end of Kodak," according to Frank Romano, professor of digital printing at the Rochester si,'ip i*itial eEt-r rnore l no$, I Web s L Institute { turns applk mer:t JefJ lra ' lorn tY of Technology's In the coming decades, changes in the extemal environment will occur so rapidly that organizations will need OD techniques just to keep pace with the accelerating rate of innovation. .ing an The Emergence of OD lieved 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. gran* l. The need .. the re CE0lr ple.'r ship a hi: 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 ofbeliefs 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 tis ,GE Eea for THE ONIY 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 changilg social and cultural conditions. In a dynamic environment, change is unavoidable. The pace of change has become so rapid that it is ,arour} . [evel I ,defiail 'iiveek .: . .:.: ' :,':' ' t .:. a l ' chapter nLzation adapt to in_e #l'::[:TTi; pat- these changing demands' The first "n""tru"tytlffir: a""uo" oittr" twenty-first century hus s"en change in poriticar, not-for-profit' and business institutions tt ut *"." hardiy imaginrur" mlrr" evelop- ient for ngtoa : or the ,roduce organior. ' ination rr-gani- ment. dividlcomrh the lously 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, sociai una ing, and an organizatiJn will be uut" to".r.riu" only if it ".ono_i.-"rrui, can last decade of the pre- vious century' As we move into the second a"cra., theie that will provide both chalreng"r ura wiliunarrii.ory, be additional changes oppori*iti", fo. .orp".uiirn, a -.o-r"r. elfectively. Given this increasingly compler environment, it becomes even more critical for management to identify and respond ro forces of social and t""t rri"oi ;, atrempring ro manage today's organizations many executives "r,u;;;. find that their past failures ' [o give enough attention to the changing environment are now creating probrems veloped an outstanding reputation I::1h"- In contrast, 3M corporation has de_ for innovation. 3M is big but u"t, ,-u[. 3M,s 15 percent rule allows its peopre to spend up ro r5 percent oiir,"^*o.t ,""k o, related' The most famous example -ytrrirg as long as it is product to come out of this is the post-#ror". c"r"rul Electric (GE), another company that cultivates a crimate ro. .rru.rg", has a Leadership center, a tool that GE uses to spread change throughout rhe company. Foi more irfu;;;#rbout GE,s Leadership Center, see oD Applicationicr., npi."ni'". L cnuru". irena. OD Application: GEt Epi(enter of Change? !Ome General Electrrc Company_is well known the world over fo.r its e not like ; reat- trket onal can iza,igh ude 1)"s iur- ing It's ute llv )n. ?llHf' l,?il, :::':-'::.'6uis.'toi''"r;'",.n1t,""'unsin"s, NBC, wind rurbines. and roasrer,s. But one m *rri iy,ortant accornplishments is their iuniuurrit"; *i?.iri;ilr1,.; "r ,nr, it oper.ates the world over. rt is headquartered at the iohn r, welch reader_ rh!p- Ccnter at Crotonvrlle; to.rt*Jio o.iininq, N.v. Here, GE turns out the internal leaders it needs. *friif.l *u, the centert initial mission when n was foundeJ;;;;;;;rr rg" _-^ .Tl.rsh the years and particutariy airiiig rhe tenure of CEo iack Welch, now retired, the.*i_;;"fu_dlto [8. rn* .omprnys "trasl"*n iiit,a f*r.-f*", of real.worid applicaiion for cutting-edge thinking in irJrnl.rtionul developWsb. site say-s the center ment, leadership, innovarion and chaige.,, ,iriif.,lf.,* .urr"nt CEO, ieff 'tmmeli. the eenter is branching UV its customers to joln wrth GE employee* to "r, discuss-and l*i*g [ru", G[ invests about . and education $ 1 biilion world_wiOu Ju"iy y..rofi train_ ing for its people. rhf has beeni,r. .rr* even in the recessionary years ot iOO'e ur; ,0C6. ;il; ;il;l;;;;';;- lieved that buildinE strong l.aO"r, L I .irat*gic:imp*railu*. ,, says lmmelt. ,lWhen times are easy. leadership can b taken for granted. When rhe wortd is turbutent, y;; great people."..An indieation of lmmeltb peoo,.,it .orii-,i *"nt to teadership.and learnjng is that he ,punoiupprJ*.i"fv ".''r ro percent of his time on leadership CEO IS. :o ;- s ;;;;irte development. Th.*,1*adership Center at Crotonville is the epicenter for ^_. Gf learning, bur {he studenrs are not t; ;;p;;;curives, tt hosts around 10,000 "rptou.::.lfO .rrtor.riLrni.S from entry_ level to the highest_performing executives. F"or many, defining career event. The courses, typically r.rnninq wgeks, cover a broad range or topicslnJuiifr,"'l' it rs a o;'Jiril;; : . r Essential skills courses such as hiring, team building, and presentattons. Leadership gourses for new managers. Executive eourses in leadership, irinovation, strategy, and manager development. . . . Customer progfams including change integration. management and ffi ';il;;l tn"#;;; il i..il,f;,; pui#,p,il sh i p, A recent proqram at th6 Leadership Center was Leadern n ovation, d c rowth-(r_-C ffi ;;;;; ;,*;;ii.J_ ; gether all the senior manager5 of a Ousinesi injt for fou1.dsy5 with rhe expr*sed purposi or e*prnJing.Igl nuu;nurres and creating new opportuniries. ee catts;h; lll.*r; ", AttendinE each session were several teams from afound the wor,ld, This was a new appraach at the Leadership as ir brought in exkting teami it one ti*u ,o work on a -tul:l specific,issue. lrr addition to iniensive **rt ,Lrrionr, there were external speakers who frequently came fioml univer:sity and internal speakers who were GE managers i;U fr.* applied the con(epts that ths teams were learnin{. Onltire tast duf ,f f in" teams at the session delivered u zol*inri. presentation to CEO tmmelt that covered what the teum merO!r, f,.J O".iO.i they shoutd do to optimiz" gro*tn.-on.;;;;k at rheir home offrce, they had to refine ttreir presentat*"jri; a rerter to rmmett that was no lonqer than t*o pug"l. ,ob?'i" l"oijlj, 2,500 people and their 260 t"ams'*Jnt ' tfrrorgf, the program -"Y with a follow-up in I an ,Hil";; .h;;i; becomu much, morethgn a training center for future crrrn"g*ru. The center is now the tool to spread change *rroulrroui rofr""n* The classes have a broad functional and global mix with .orrro so n9r5e1y non-u.s ll|,::.ry,- a targe rng such lrTi:! worldwide. pr*run..', courses that are tauoht in places tf,at lnctuAe Sfrunghrl, Munrch, lndia, Africa, and. Oirbai , ir", - 2009. !! Vears ago when the CEO at that time, Ralph cordiner. estabtiihed GE discovered over tr,a1*rU.r.iiip center that their success depended upcn having w.fiiianeOtrnd developedl leqders. Though GE has experienied sorna,ciitlcat challenges during recent recessionary li*"u, tir*ii uuc.urs the future wifi in part dqpend upon how weJf tfr*t, **pfivJ, iearneu,their les59ns ar the Leadership Center. # Questions 1, How does thetLeadership Center serve as a center for change at Gt? 2. Visit GEt Web $te to lea{n about the Leadership Cen,ter's curient proqrfims at www.ge.cornr-ind wwwge, ,, comtornpany/cutture/eadership*liairt-Ag. hi*f , Part 1' tn AnitciPatingChange IDfr gou i-nd 'uur I! end bebr u-