What Is Organizational Development + Why Startups Should Care

Ask five different Human Resources professionals to define “change management” and you’ll get five different answers. Similarly, try doing a quick Google search for “what is workplace culture”, and you’ll get an avalanche of unique, and often conflicting, results.

Like many of the terms used in the field of HR — and in the broader world of organizational strategy — there is no clear and common definition for what “organizational development” is or how it actually works. Every consultant, author, and HR practitioner has their own interpretation of what those two simple words mean when joined together in holy matrimony.

If you’re a startup founder, a leader in an early-stage company, or the owner of a small business, making sense of it all can be a challenging, and at times frustrating, experience. On top of that, it’s not necessarily clear why you should even care about organizational development.

This article is intended to help distill and clarify the mountains of information that exist on organizational development, and will explain the:

• Basics and definition of organizational development
• Differences between OD and human resources
• OD roles and responsibilities
• Impact of HR on OD (and vice versa)
• Importance of effective organizational development

What is organizational development?

Organizational development, or organization development (“OD” for short), is the action-oriented practice of moving an organization toward achieving the organization’s purpose and/or objectives by enabling and motivating people to manage, drive, and embrace organizational change.

Organizational development theory has been percolating since the 1930s when research showed that organizational behavior influenced employee behavior, performance, and group dynamics. Research also demonstrated that the structure of the organization (e.g. hierarchical, flat, team-based) affected its success.

There are many alternative definitions of OD. For example, the book “Health Behavior and Health Education” defines organizational development as, “a field of research, theory, and practice dedicated to expanding the knowledge and effectiveness of people to accomplish more successful organizational change and performance.” Wikipedia, on the other hand, defines OD more simply as, “the study of successful organizational change and performance.”

While both are useful definitions, neither of them addresses some of the most important factors in successful organizational development. Let’s unpack the definition of organizational development from above and examine what these aspects are.

Action-oriented practice

The research, theory, and behavioral science behind OD is very important. For example, you might conduct action research to plan on how to make your company more diverse and inclusive. However, effective organizational development requires you to take action on those plans, such as making the necessary modifications to hiring and promotion practices and working to change the behavior of employees to align with the new practices.

OD activities are generally categorized as either assessments or interventions. OD assessments involve using research and data to determine organizational effectiveness in certain business processes such as onboarding or recruiting, which then informs potential OD interventions. Decision making around whether or not to undertake an intervention is based on the results of the OD assessment. OD interventions are the actual actions taken, and techniques used, to drive the organizational change. For example, an employee engagement or satisfaction survey might be used as an assessment tool to drive changes to the organizational structure or employee compensation programs (interventions).

It’s important that OD assessments and OD interventions are rooted in research, data, and analytics, rather than anecdotal evidence or case studies around interventions that worked for other companies. Each organizational structure and organizational culture is different and needs unique OD processes and outcomes.

The OD process can be applied to many business activities, including leadership development, performance management, change management, organizational performance, organizational culture, and training and development programs.

Moving an organization

Imagine organizational development as the process of running a marathon, or flying to the moon. Finishing the race or landing in the Mare Tranquillitatis might be the ultimate goal, but getting there involves a journey. For example, maybe your startup or small business is growing, and you’d like to move from a flat to a more hierarchical organizational structure. According to Brenda Rigney, a Vancouver-based organizational development strategist, and consultant, “OD activities can take months or even years; the timescales are much longer than other tactical HR activities.”

Achieving the organization’s purpose and / or objectives

According to Lorie Corcuera, co-founder of Vancouver-based SPARK Creations, workplace culture and leadership consulting business, “Organizational development starts with purpose, the vision for the organization, and the culture.” OD assessments and interventions should be driven by the organization’s vision and/or objectives. If you’re a startup founder or small business owner, make sure your organization’s vision, or purpose, answers the fundamental question, ”Why does your company exist?”

Enabling and motivating people

At its heart, OD is a people-driven activity grounded in the field of behavioral science. Unfortunately, the importance of people is not reflected in most conventional definitions of OD. The people responsible for OD need to be enabled — supported, trained, and empowered — to make the changes necessary for OD. For OD to be truly successful, people must also be motivated. In his book, “Primed to Perform”, author Neel Doshi talks extensively about the importance of motivation in building high-performing organizational cultures that can adapt to change.

Manage, drive, and embrace change

Change management is at the very heart of organizational development. Scott Span, CEO and People Strategist at Tolero Solutions, defines change management as, “a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state.” The people being affected by the change process must also buy-in and fully embrace them for OD to be truly successful. Growing startup and early-stage companies must constantly adapt to new circumstances and challenges, so it’s critical for these organizations to create a culture that thrives on change.

How is organizational development different from HR?

Organizational development is often confused with other business and organizational functions and activities, most notably with Human Resources (HR). Organizational development and human resources are often connected, but they are not the same.

The field of Human Resources is focused on the strategies, processes, and policies related to the placement, management, and development of employees within an organization. HR’s main goals are to manage and support employees and to help management by assisting staff to do its best within the organizational structure, without systemic blocks hindering them.

Examples of some typical HR activities include:

• Placement activities: recruitment, selection, and termination activities; diversity and inclusion (D&I) programs; succession planning.
• Management activities: performance management; compensation and benefits administration; legal employment standards compliance.
• Development activities: training and education programs; workplace culture initiatives; performance coaching.

To illustrate how organizational development is different from human resources, let’s look at a specific example. An HR manager might work with senior management to lead the creation of a performance management system that will be used by managers to review and develop their people. An OD practitioner or specialist, however, might look at how that same performance management system could be used to make the entire organization more effective, not just individual employees. Many OD interventions will leverage typical HR activities to drive the necessary organizational changes.

Examples of some typical OD interventions include:

• Interpersonal interventions: vision and values creation; team-building and cohesion; cross-functional team dynamics; cross-cultural and international dynamics.
• Structural interventions: organization structures (e.g. flat, matrix, team-based); lean and Six Sigma total quality management techniques.
• Human resource interventions: performance management systems; compensation and rewards programs; leadership training; D&I initiatives; health and wellness programs.

Organizational development is also sometimes confused with human resource development (HRD). Unlike OD, which focuses on moving the organization toward achieving its purpose and goals, HRD focuses on developing the skills, abilities, and knowledge of the individual employees within the organization. HRD activities are often required to enable OD activities. For example, perhaps your startup is in the process of moving from a flat to a more hierarchical structure (a typical OD activity). If that’s so, training and education (a typical HRD activity) may be required for new managers to be effective.

Who is responsible for organizational development?

Here’s what HR consultant Benda Rigney had to say about who is responsible for organizational development:

“ Many larger organizations will have dedicated specialists, senior executives or even entire teams focused on organizational development. However, most businesses rely on OD expertise from experienced senior leaders, HR team members with education in OD, or external consultants. For smaller organizations, startups, and early-stage companies, OD activities are often the responsibility of the company founder, CEO, or owner. Unfortunately, these individuals are often too busy to effectively lead OD and must turn to outside experts and facilitators. ”

Brenda Rigney, Consultant

It’s often believed that HR is responsible for OD because of the confusion between the two, and because in many cases the OD activities rely on HR interventions. In fact, the nature of the intervention will typically determine who is responsible for driving it forward.

For example, the HR team may be responsible for an OD intervention involving a change to the company bonus program. On the other hand, the Quality Assurance team may be responsible for implementing Six Sigma techniques to assess manufacturing efficiency and improve quality control.

It’s truly a coordinated effort. According to Lorie Corcuera, who has over 25 years of professional and executive HR experience and has worked with dozens of startups and early-stage companies in Vancouver:

“ Broad organizational change requires the support and buy-in from everyone affected by that change to be successful. Everyone is responsible for OD, but someone needs to lead it. ”

Lorie Corcuera, Consultant

How do HR and OD impact each other?

HR professionals and those with organizational development jobs know that organizations are becoming more complex and diverse, which makes employee management more complicated. The move to outsourcing, increasing globalization, cross-generational issues, and a greater focus on diversity and inclusion means that the old corporate structures may no longer be fully effective. Traditional bureaucratic structures (e.g. hierarchical) are shifting to new team-based or matrix-style structures to meet the demands of a changing workplace.

HR (or whoever is responsible for HR in an organization) will often have a direct impact on OD as a result of the numerous HR interventions that can be used for organizational development. HR team members may also have OD expertise that allows them to make sure that OD best practices are incorporated when an organization decides to move forward with a change. Organizational development, on the other hand, will almost always have a direct impact on HR because every OD intervention requires change. Change can increase employee stress and anxiety, and cause confusion and uncertainty. Part of HR’s responsibility is to work with managers and leaders to ensure the health, well-being, motivation, and engagement of the company’s people.

HR needs to act as the department with a human face and understanding and work to alleviate people’s concerns around change. Fears should be addressed by communicating properly with staff. HR can help redirect and clarify information that is causing angst, becoming the bridge between the staff and the team that is trying to implement OD. The effectiveness of clear communication that creates understanding is critical.

Why should you care about organizational development?

By now you should have a better understanding of what organizational development is, how it’s defined, and how it relates to the typical HR activities in an organization. If so, then you’ve probably realized that in some way, shape, or form, you’ve already been practicing organizational development. For example, you’ve engaged in OD if you’ve ever:

• Created vision and values statements for your organization;
• Created a compensation or bonus program;
• Introduced a new performance management process;
• Rolled out a new project management software system; or
• Implemented lean or Six Sigma methodologies.

Depending on the size of your organization, you may not have an employee or team dedicated to Human Resources. Instead, many of the typical HR activities will be performed by you, whether you’re the founder or owner of the business; the CEO; or a senior leader. If that’s the case, you’re also probably busy with a myriad of other critical and important activities like raising money, hiring people, and creating your products and services. However, OD is at the heart of all of these things.

Every startup founder wants their organization to grow, and growth means change. By practicing organizational development with purpose and intention, starting from Day 1, you can ensure that the changes you make will be successful in the long run.

What do you think?

What’s a recent organizational development activity (assessment or intervention) you have recently engaged in? How did it go? Does your organization have a vision (purpose) and set of objectives that guide your organizational development? Do you do it all yourself, or do you have someone or a team that helps you with your organizational development?

Weigh in on these questions in the comments below and subscribe to the People Managing People newsletter to stay up to date with the latest thinking in HR from leadership and management experts from around the world.

Originally published at https://peoplemanagingpeople.com on February 08, 2020