Why is organizational development necessary

Organizational development: How to make your company fit for change

Standing still is going backwards - this is especially true for companies that have to assert themselves in the face of tough competition. The concept of organizational development is intended to help companies remain agile and adapt to constantly changing market conditions. What exactly is organizational development and how can you promote it in your company?

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What does organizational development mean?

Organizational development is a planned, systematic and long-term process of changing and developing a company (organization) with the greatest possible participation of all those concerned. It is holistic and includes changes in the organizational structure, corporate culture and the individual behavior of managers and employees.

Organizational development should make the company more efficient and successful overall. At the same time, the working conditions and opportunities for individual employees are to be improved. These two goals interact.

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Why is organizational development important?

Due to ever faster innovation cycles and global competition, companies are forced to change permanently - keyword agility. Rigid structures and well-established processes slow down companies. In order for employees to be innovative, they need freedom and scope for decision-making. Through the concepts of organizational development, companies can renew themselves from within, initiate learning processes and thus remain competitive.

Features of organizational development

Organizational development is a rather abstract term. The following criteria help to distinguish it from other change processes:

  • It is medium to long-term and integrates the company holistically.
  • It is based on the findings of the behavioral sciences and takes into account how and why organizations change.
  • It is process-oriented. It's about the change itself, not about reaching a final state.
  • It is participatory; all those affected should and must actively participate.
  • She needs moderation.

Organizational development can be distinguished from the concept of change management through the features mentioned. Change management describes a change decided (from above) with a project character, for example the restructuring of a company after a merger. It relates to a specific scenario and has a clearly defined goal. Organizational development, on the other hand, is designed to be permanent. In real life, however, the two terms are often mixed up with one another.

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Process models in organizational development

In reality, there are long learning and adaptation processes behind the measures mentioned. Organizations cannot be changed overnight. There are various theoretical models for the process of organizational development:

The top-down and bottom-up model

Top down means that the change is initiated and specified by the company management (“from above”) and must be implemented by the employees. The problem with this approach is that the change is imposed from outside. Employees are not involved in the decisions and are therefore likely to be less motivated or even resist.

Bottom up describes the change “from below”, i.e. by the employees. You recognize weak points yourself, develop suggestions for improvement and pass them on to the management. Changes initiated in this way have a high level of acceptance, but this approach only leads to small, point-by-point improvements, but not to holistic change.

A combination of the two models, the “countercurrent process”, promises the greatest success. For example, the management recognizes the need for change and then creates processes to collect suggestions for improvement from employees. Or employees complain to the management about certain conditions, which then decide on measures for improvement.

3-phase model by Kurt Lewin

While the above models deal with who is responsible for the change, the following models describe successive, characteristic phases of organizational development.

The psychologist Kurt Levin published his 3-phase model as early as 1947. It divides the process of change in groups or organizations into the following phases:

1. Thawing ("Unfreezing")

In this phase, a planned change is prepared. The status quo is analyzed and goals are defined. Those affected are informed and included in the discussion. You have time to prepare for the changes ahead.

2. Changing ("Moving")

In this phase the actual change takes place. The planned measures are implemented, the process is controlled and monitored by those responsible.

3. Stabilize ("Freezing")

In the last phase, the still unfamiliar processes should be practiced and consolidated. It is monitored whether the changes are maintained and, if necessary, additional measures are taken.

Kotter's 8-step model

The model by John P. Kotter is a further development of the 3-phase model by Levin. It follows the approach of change management, ie describes a change initiated by the management and accompanied and controlled by managers (“top-down”). This model helps to better understand organizational development and makes it clear how much work is behind a change and how important it is to be accompanied by management over the long term. The change can only be successful when all eight stages have been passed through intensively.

1. Create urgency

Managers and employees need to understand the importance of changing. Arguments are the negative consequences if the company does not change, or the positive consequences of the planned change.

2. Build leadership team

Every change needs a good leadership team to drive it forward. In terms of organizational development, it should be composed of managers and employees from all departments.

3. Develop vision and strategy

Employees need to recognize where change is going and how exactly it should be achieved. A shared vision and concrete strategies are essential.

4. Communicate your vision

The common goal has to be communicated again and again so that it is solidified among all those involved and motivation remains high.

5. Remove obstacles from the way

Old rigid structures, processes or habits often hinder change. The management must recognize and remove such obstacles and give the employees the necessary freedom to implement the changes.

6. Make short-term successes visible

Gradual, measurable successes motivate and show everyone involved that the effort is worthwhile. It is therefore essential to define interim goals that can be achieved quickly.

7. Initiate further changes

The results of the changes must be continuously analyzed, optimizations and other changes initiated in order to achieve the goals.

8. Anchoring changes in the corporate culture

The changes must become normal, and become part of the flesh and blood of everyone involved, so to speak. Then, according to Kotter, the change management process is successful.

Take direct influence on work processes

When companies grow, speed and agility count. When HR processes run smoothly, all departments can concentrate on their actual work.

Fields of action of organizational development

As mentioned, organizational development encompasses all areas and levels of a company. The following areas are to be influenced with various measures:

  • Visions, strategies and goals
  • Corporate and team culture, self-image, philosophy
  • Organizational structures
  • Management structures and methods
  • Work processes
  • Resources and work equipment (personnel, machines, budgets, etc.)
  • Work results (products, services, etc.)

Concrete examples of change

How do changes in the areas mentioned look like in practice? Concrete examples are:

  • The motivation of employees is to be increased through new systems for target agreements.
  • Decisions and projects are to be accelerated through flat hierarchies and more personal responsibility for employees.
  • The company would like to become a more attractive employer and attract young talent through flexible working time models.
  • The company aims to protect the environment and comply with high ethical standards, and adjusts its purchasing and production processes accordingly in order to win new customer groups.
  • Work processes are optimized and new machines are purchased in order to increase employee productivity.
  • Agile development methods are introduced in production in order to bring innovations to market more quickly.

This selection of examples shows that everyone involved, both the company and the employees, always benefits from good organizational development.

Organizational development instruments

The instruments used in organizational development are impossible to list in full - the range is too wide. As already discussed under the heading “Fields of Action”, organizational development can include measures as diverse as a new corporate philosophy, process optimization or the purchase of new machines.

Organizational development pays special attention to ensuring that everyone involved is included in the process. The changes must be developed and discussed on a broad basis so that they are accepted and implemented by everyone as far as possible. For example, companies use the following instruments:

  • Self-assessment methods, such as a balanced scorecard
  • Surveys among and interviews with employees and other stakeholders (suppliers, business partners, customers, investors)
  • Moderated workshops for conflict resolution, for the development of strategies and concepts, for team building
  • Conferences and moderated large group discussions such as World Cafe, Fishbowl, Open Space or BarCamp

These instruments only work with an independent moderation who takes the interests of all those involved into account and ensures a constructive process. The moderation can be done by trained employees as well as by external consultants.

A practical example

As an example, the process of organizational development in a company could look like this:

A software company gradually loses market share. Customers are switching to competitors because they can offer new products and functions more quickly. The development of the company's own products is only progressing slowly and there are few ideas for new, innovative offers.

The management then searches for the causes, conducts a survey among the employees and speaks to the executives. It turns out that important positions have been vacant for a long time and therefore the workload for the employees is very high. The planning processes are lengthy and rigid, so that it is not possible to react to new requirements. In addition, the current management style leaves little room for personal initiative and ideas on the part of employees.

A team of managers and employees works together to develop measures for improvement and presents them to the management. This includes the quick filling of vacancies, further training for employees, the introduction of agile planning processes and management coaching. The measures are implemented in the departments concerned.

At the end of the day, the management evaluates the success of the measures using a before-and-after comparison. By means of a quarterly survey of employees, she continuously checks how the changes will affect them in the long term. The feedback from employees is regularly analyzed and further, necessary changes are initiated.

The ideal: the learning organization

Although the models and examples of organizational development always assume a before and an after state (target / actual state), the process is never completed. Technologies and markets are constantly changing and companies have to constantly adapt. Change processes always take place simultaneously in different phases and the conclusion of one is the prelude to the next.

A successful company is in a permanent state of change; permanent organizational development is firmly anchored in its own identity. In such a learning organization, the employees check the processes and their ways of thinking and acting themselves again and again. They recognize when the framework conditions have changed and they have to adapt. You initiate change processes and acquire the skills that are necessary for this.