MGM628 — Final Term Summary (Lectures 23–45)

📘 Lecture 23 — Leading and Managing Change

📖 Overview: This lecture examines the critical activities involved in planning and implementing organizational change. It provides a comprehensive framework for understanding how leaders can motivate change, create vision, build political support, manage transitions, and sustain momentum to improve organizational effectiveness.

🗂️ Topics Covered

The lecture introduces five major activities for effective change management: motivating change (including creating readiness and overcoming resistance), creating a vision, developing political support, managing the transition, and sustaining momentum. It then explores in detail the processes of creating readiness for change through three methods, overcoming resistance through three major strategies, and understanding the five-phase life cycle of resistance to change with real-world examples.

📝 Lecture Summary

Overview of Change Activities

Organizational changes vary in complexity from simple process introductions to full organizational transformation. The OD literature has traditionally focused on identifying sources of resistance to change and offering ways to overcome them, while more recent contributions focus on creating vision, gaining political support, and managing the transition toward desired futures.

Five major activities contribute to effective change management, as shown in Figure 33:

1. Motivating change – creating readiness and addressing resistance
2. Creating a vision – providing purpose and describing the desired future state
3. Developing political support – engaging powerful individuals and groups
4. Managing the transition – creating plans and special management structures
5. Sustaining momentum – providing resources, building support systems, and reinforcing new behaviors

Unless individuals are motivated and committed to change, unfreezing the status quo will be difficult. In the absence of vision, change is disorganized. Without political support, change may be blocked or sabotaged. If the transition is not managed carefully, the organization will struggle to function. Without sustained momentum, changes may not be carried to completion.

💡 Why this matters: All five activities must be managed effectively to realize successful organizational change.

Motivating Change

Organizational change involves moving from the known to the unknown. Because the future is uncertain and may adversely affect people's competencies, worth, and coping abilities, organization members generally do not support change unless compelling reasons convince them to do so. A key issue is how to motivate commitment to organizational change, requiring attention to two related tasks: creating readiness for change and overcoming resistance to change.

Creating Readiness for Change

A fundamental axiom of OD is that people's readiness for change depends on creating a felt need for change — making people dissatisfied with the status quo so they are motivated to try new processes, technologies, or behaviors. Generally, people and organizations need to experience deep levels of hurt before they undertake meaningful change (e.g., IBM, GM, and Sears faced survival threats before engaging in significant change programs).

Three methods help generate sufficient dissatisfaction to produce change:

1. Sensitize organizations to pressures for change External pressures include heavy foreign competition, rapidly changing technology, and global markets. Internal pressures include new leadership, poor product quality, high production costs, and excessive absenteeism and turnover. Organizations must pass these pressures beyond their threshold of awareness. Organizations like Kodak, Apple, Polaroid, and Jenny Craig set their thresholds too high and neglected pressures until disaster struck. Organizations can increase sensitivity by: encouraging leaders to surround themselves with devil's advocates; cultivating external networks with different perspectives; visiting other organizations for new ideas; and using external standards of performance (e.g., competitors' progress or benchmarks) rather than past performance.

2. Reveal discrepancies between current and desired states Information about the organization's current functioning is gathered and compared with desired states of operation (goals, standards, or general vision of a more desirable future). Significant discrepancies can motivate corrective actions, especially when members are committed to achieving those ideals. A major goal of diagnosis is to provide feedback about current functioning so it can be compared with goals, energizing action for improvement.

3. Convey credible positive expectations for the change Organization members' expectations about change results can serve as a fulfilling prophecy, leading members to invest energy in change programs they expect will succeed. When members expect success, they develop greater commitment and direct more energy into constructive implementation behaviors. The key is to communicate realistic, positive expectations and teach members about the benefits of positive expectations.

Overcoming Resistance to Change

Change can generate deep resistance at both personal and organizational levels. At a personal level, change arouses anxiety about letting go of the known and moving to an uncertain future. At the organizational level, resistance comes from three sources:

• Technical resistance – from habits of following common procedures and consideration of sunk costs invested in the status quo
• Political resistance – when changes threaten powerful stakeholders or call into question past decisions of leaders; change often implies different allocation of scarce resources (capital, training budgets, good people)
• Cultural resistance – from systems and procedures that reinforce the status quo, promoting conformity to existing values, norms, and assumptions

Three major strategies for dealing with resistance:

1. Empathy and support Learn how people are experiencing change through active listening — suspending judgment and seeing the situation from another's perspective. When people feel that change managers are genuinely interested in their feelings and perceptions, they become less defensive and more willing to share concerns and fears. This provides useful information about resistance and establishes a basis for joint problem-solving.

2. Communication People resist change when uncertain about consequences. Lack of adequate information fuels rumors and gossip, adding to anxiety. Effective communication about changes and their likely results reduces speculation and allays unfounded fears. However, communication is one of the most frustrating aspects of managing change because organization members constantly receive data. One strategy is to make change information salient by communicating through a new, different channel (e.g., meetings and presentations instead of memos and emails). Another method during large-scale change is to deliberately substitute change information for normal operating information.

🔑 Definition — Active Listening: A process requiring willingness to suspend judgment and see the situation from another's perspective.

3. Participation and involvement Involving organization members directly in planning and implementing change is one of the oldest and most effective strategies. Participation can lead to designing high-quality changes and overcoming resistance. Members provide diverse information and ideas, identify pitfalls and barriers, and ensure their interests and needs are accounted for. Participants become committed to implementation because it suits their interests. For people with strong needs for involvement, the act of participation itself can be motivating.

The Life Cycle of Resistance to Change

Organization programs such as downsizing, reengineering, and total quality management will encounter some degree of resistance evident in controversy, hostility, and conflict. The response to change tends to move through five phases:

Phase 1 – Only a few people see the need for change and take reform seriously. As a fringe element, they may be openly criticized, ridiculed, and persecuted. Resistance looks massive. The change program may die or continue to grow. Large organizations seem to have more difficulty bringing about change (e.g., IBM described as "giant pools of peanut butter").

Phase 2 – As the movement for change begins to grow, forces for and against it become identifiable. Change is discussed and more thoroughly understood by more members. Greater understanding may lessen the perceived threat. The novelty and strangeness of change tends to disappear.

Phase 3 – Direct conflict and showdown between forces for and against change. This phase means life or death for the change effort. Exponents of change often underestimate the strength of their opponents. Those who see change as good often find it difficult to believe how far the opposition will go to stop the change.

Phase 4 – If supporters of change are in power after decisive battles, remaining resistance is seen as stubborn and a nuisance. Resisters may still mobilize enough support to shift the balance of power. Wisdom is needed in dealing with overt opposition and the sizable element not openly opposed but not convinced of benefits.

Phase 5 – Resisters to change are as few and alienated as advocates were in Phase 1. The actual conflict is usually more subtle than a battle, surfacing in small verbal disagreements, questions, and reluctance. Change will evolve through these five phases to some extent, though some phases may be brief, omitted, or repeated. If the last phase is not solidified, the change process moves back into Phase 1.

John F. Welch (retired CEO of General Electric): "People always ask, 'Is the change over? Can we stop now?' You've got to tell them, 'No, it's just begun.' They must come to understand that it is never ending. Leaders must create an atmosphere where people understand that change is a continuing process, not an event."

Example — The Five Phases of Resistance to Change in Action (Environmental Movement)

• Phase 1 (1970s): Environmental movement began with First Earth Day in 1970. Interest subsided in the 1980s; environmentalists were portrayed as extremists and radicals. Forces for change were small but persisted through court actions, elected officials, and group actions.
• Phase 2 (1980s): Supporters and opponents became more identifiable. Secretary of Interior James Watt served as a "lightning rod" for pro-environmental forces. Educational efforts by groups like the Sierra Club and Wilderness Society delivered their message. The public gained information and scientific data.
• Phase 3 (1990): The Clean Air Act passed by Congress represented the culmination of years of confrontation. The bill passed months after national and worldwide Earth Day events. Corporations criticized for environmental problems took out large ads explaining their pollution reduction efforts. The "greening" of corporations became popular.
• Phase 4: Confrontation between Greenpeace and Shell Oil over disposing of the Brent Spar oil-storage rig. Shell blasted high-powered water cannons as a small helicopter sought to land Greenpeace protesters. Four days later, Shell executives agreed to comply with Greenpeace requests and dispose of the rig on land.
• Phase 5: Environmentally responsible behavior is now seen as a necessity. Near-zero automobile emissions are moving toward reality. Recycling has become natural for many people.

⭐ Key Takeaways

The five activities for effective change management — motivating change, creating vision, developing political support, managing the transition, and sustaining momentum — are all essential and must be managed together for success. Motivating change requires both creating readiness through sensitizing organizations to pressures, revealing discrepancies, and conveying positive expectations, and overcoming resistance through empathy and support, communication, and participation and involvement. Resistance to change follows a predictable life cycle of five phases, from a fringe element advocating change through direct confrontation to eventual acceptance, and leaders must understand that change is a continuous process, not a single event.

🧠 Quick Revision Questions

1. What are the five major activities that contribute to effective change management, and why must all five be managed effectively?
2. What three methods can help generate sufficient dissatisfaction to create readiness for change?
3. What are the three sources of organizational resistance to change (technical, political, cultural), and what three strategies can overcome resistance?
4. Describe the five phases of the life cycle of resistance to change, including what happens if the last phase is not solidified.
5. According to John F. Welch, why must leaders communicate that change is "never ending" rather than a single event?

📘 Lecture 24 — Leading and Managing Change

📖 Overview: This lecture focuses on the second critical activity in leading and managing change: creating a vision. It details how a vision provides direction and energizes commitment, and contrasts it with ineffective visions. The lecture also covers the political dynamics of change, including developing support and managing transitions, and concludes with strategies for sustaining momentum.

🗂️ Topics Covered

This lecture explores creating a vision for change, describing its core components: Core Ideology (values and purpose) and the Envisioned Future (bold outcomes and desired state). It then addresses the political realities of change, including assessing change agent power, identifying key stakeholders, and managing the transition through activity planning, commitment planning, and special management structures. Finally, the lecture details five key activities for sustaining momentum: providing resources, building support systems, developing new competencies, reinforcing new behaviors, and staying the course, illustrated by the case of Levi Strauss & Co.

📝 Lecture Summary

Creating a Vision:

This is the second activity in leading and managing change. It involves creating a vision of what members want the organization to look like or become. A vision describes the core values and purpose that guide the organization, as well as an envisioned future toward which change is directed. It provides a valued direction for designing, implementing, and assessing organizational changes and can energize commitment by providing a common goal. However, if the vision is seen as impossible, it can depress motivation. For example, George Bush’s “thousand points of light” was too vague, while John F. Kennedy’s “putting a man on the moon” was bold, vivid, and just beyond feasibility. Developing a vision is driven by people’s values and requires creative, intuitive thought, which often conflicts with rational, analytical methods. Research by Collins and Porras suggests compelling visions have two parts: a stable core ideology and an envisioned future.

🔑 Definition — Core Values: Typically three to five basic principles or beliefs that have stood the test of time and represent what the organization stands for. They are not "espoused values" but "values in use" that must be discovered, not designed.

🔑 Definition — Core Purpose: The organization’s reason for being; the idealistic motivation that brings people to work each day. It is not a strategy, but describes why the organization exists.

Describing the Core Ideology:

The fundamental basis of a vision is the organization’s core ideology, which is relatively stable over time. Core values typically include three to five basic principles that have stood the test of time and represent what the organization stands for. They are not “espoused values” but “values in use” that must be discovered through inquiry into history, key events, and the founder’s beliefs. For example, Nordstrom values customer service, Lego values families, and Disney values wholesomeness. The core purpose is the idealistic motivation that brings people to work, such as Apple’s original vision of “changing the way people do their work.” The real power of the core ideology is its stability and its ability to guide strategic choices.

💡 Why this matters: The core ideology ensures that the envisioned future aligns with the organization's true identity, preventing change efforts that contradict the organization's nature.

Constructing the Envisioned Future:

Unlike the discovered core ideology, the envisioned future is specific to the change project and must be created. It varies in complexity and scope depending on the change. It includes:

1. Bold and valued outcomes: These are specific performance and human outcomes, such as BHAGs (Big, Hairy, and Audacious Goals), which are clear, tangible, energizing targets. Example: Wal-Mart’s goal to become a $125 billion company by the year 2000.
2. Desired future state: A vivid, passionate, and engaging word picture of what the organization should look like to achieve those outcomes. It should be emotionally powerful and motivate members to change.

🔑 Definition — BHAGs (Big, Hairy, and Audacious Goals): Clear, tangible, and energizing targets that serve as rallying points for organization action, such as achieving role-model status or transforming the organization.

📌 Example: Rockwell’s BHAG following downsizing was to transform from a defense contractor into the best diversified high-technology company in the world.

Developing Political Support:

From a political perspective, organizations are seen as coalitions of individuals and groups with different preferences and interests. Change attempts threaten the existing balance of power, leading to political conflicts. Groups whose power is threatened will act defensively, while those who will gain power will push for change. Traditional OD has neglected these political issues, but today, change agents pay more attention to power. OD practitioners can use power positively by building their own power base, using open strategies, and helping power holders devise creative strategies.

🔑 Definition — Political Perspective: The view of organizations as loosely structured coalitions of individuals and groups with different preferences and interests who compete for scarce resources and influence.

Assessing Change Agent Power:

The first task is for the change agent to evaluate their own sources of power. Greiner and Schein identified three key sources of personal power (in addition to formal position):

• Knowledge: Having valued expertise and controlling important information.
• Personality: Deriving from charisma, reputation, and professional credibility.
• Others’ support: Having other powerful people use their power on the change agent’s behalf.

By assessing their own power base, change agents can determine how to use it and identify areas where they need to enhance their power.

Identifying Key Stakeholders:

Change agents must identify powerful individuals and groups with an interest in the changes, such as staff groups, unions, managers, and top executives. These key stakeholders can either thwart or support change. The process can start with the question: “Who stands to gain or to lose from the changes?” Creating a map of influence can show relationships among stakeholders, who influences whom, and what the stakes are for each party.

Managing the Transition:

Organizational change involves moving from the existing state to the desired future state through a transition state. Beckhard and Harris identified three major activities and structures to facilitate this transition:

• Activity Planning: Making a road map for change specifying activities and events. It should link tasks to change goals, gain top-management approval, be cost-effective, and remain adaptable. Midpoint goals can supplement the vision, providing more concrete and manageable steps.

• Commitment Planning: Identifying key people and groups whose commitment is needed and formulating a strategy for gaining their support.

• Change-Management Structures: Special structures for managing the ambiguous transition process. They should include people with power, respect, and existing skills. Alternatives include a project manager, formal organization, a cross-section of people, or a “kitchen cabinet.”

Sustaining Momentum:

Once changes are underway, explicit attention must be directed to sustaining energy and commitment. Five activities help sustain momentum:

• Providing resources for change: Additional financial and human resources are needed for training, consultation, and buffering performance drops. A separate “change budget” can help.
• Building a support system for change agents: Change agents need a network of people for emotional support, sounding board, and challenging assumptions. This can include “shadow consultants” or internal networks.
• Developing new competencies and skills: Members need new knowledge, skills, and behaviors. Training, on-the-job counseling, and experiential simulations are needed. Social skills are often overlooked.
• Reinforcing new behaviors: Linking formal rewards to desired behaviors is effective. Informal recognition and intrinsic rewards from early success are also important.
• Staying the course: Change takes time, and performance often declines before it improves. Managers must not abandon change due to short-term declines or the allure of the next management fad.

OD in Practice: Values drive Culture and Operations at Levi Strauss

Levi Strauss & Co., a major blue jean maker, began a culture change in 1985. CEO Robert Haas organized an off-site retreat after minority and women managers identified invisible barriers. The company is now focused on balancing concerns with values of diversity, empowerment, and openness. The Aspiration Statement guides all major decisions, outlining desired behaviors, diversity, recognition, ethical management, communications, and empowerment. Haas believes values provide a common language for alignment. Training courses like “leadership week” and “managing diversity” are highly experiential. The aspiration management was integrated into the performance management system, with one-third of an employee's evaluation based on aspirational behaviors. The company pulled out of China in protest of human rights violations, costing $40 million in revenues.

⭐ Key Takeaways

The lecture emphasizes that a compelling vision must have two parts: a stable core ideology (discovered, not designed) and a specific, bold envisioned future. Successfully leading change requires managing the political dynamics by assessing the change agent’s own power, identifying key stakeholders, and building support. The transition from the current to the future state requires careful management through activity planning, commitment planning, and special management structures. Finally, sustaining momentum requires providing resources, building support for change agents, developing new competencies, reinforcing new behaviors with rewards, and having the patience to stay the course, even when performance dips.

🧠 Quick Revision Questions

1. What are the two components of a compelling vision according to Collins and Porras, and why is the first one "discovered" rather than "designed"?
2. What are the three key sources of personal power for a change agent identified by Greiner and Schein?
3. What is the difference between "core purpose" and "strategy" as defined in the lecture?
4. Why is the transition state in organizational change different from the current and desired future states, and what three structures help manage it?
5. List four of the five activities that help sustain momentum for change once it is underway.

📘 Lecture 25 — Evaluating and Institutionalizing Organization Development Interventions

📖 Overview: This lecture examines the final stage of the organization development cycle—evaluation and institutionalization. Evaluation provides feedback about intervention progress and impact, while institutionalization ensures successful changes become permanent parts of organizational functioning. The lecture emphasizes that evaluation must include both implementation feedback (during the intervention) and evaluation feedback (after implementation) to guide change effectively.

🗂️ Topics Covered

The lecture covers two distinct types of OD evaluation—implementation feedback and evaluation feedback—and how they integrate with diagnostic and intervention stages. It explains measurement issues including selecting appropriate intervention and outcome variables based on theory, and discusses research design. The institutionalization framework examines organization characteristics, intervention dimensions, and processes that contribute to making changes permanent. A detailed job enrichment example illustrates the entire evaluation cycle.

📝 Lecture Summary

Evaluating OD Interventions

Assessing OD interventions involves judgments about whether an intervention has been implemented as intended and whether it is producing desired results. Managers investing resources in OD are increasingly held accountable for results and asked to justify expenditures in terms of hard, bottom-line outcomes. They use evaluation results to decide whether to continue, modify, or terminate change programs.

Traditionally, OD evaluation was discussed as something occurring after the intervention, but this view is misleading. Decisions about measurement and research design should be made early in the OD cycle. There are two distinct types of evaluation: one guiding implementation and another assessing overall impact.

💡 Why this matters: Early planning of evaluation ensures that measurement choices align with intervention goals and that data collection begins from the start of the change process, not as an afterthought.

🔑 Definition — OD Evaluation: The process of providing feedback to practitioners and organization members about the progress and impact of interventions, used to guide implementation or assess outcomes.

Implementation and Evaluation Feedback

Most discussions imply evaluation happens after intervention—for example, expecting job enrichment to lead to higher satisfaction and then assessing if those results occurred. However, this view is only partially correct. It assumes interventions are implemented as intended, but most OD interventions require significant behavioral and cognitive changes that cannot be taken for granted.

Implementation feedback assesses whether interventions are being implemented as intended during the change process. It guides the learning and experimentation needed to translate general prescriptions into specific behaviors and procedures. Evaluation feedback assesses whether interventions have produced expected results after implementation is sufficiently in place.

Figure 36 shows how these two feedback types fit with diagnostic and intervention stages. The OD cycle starts with diagnosis, then intervention selection, followed by implementation feedback cycles (each providing snapshots of progress), and finally evaluation feedback once implementation is confirmed.

🔑 Definition — Implementation Feedback: During-implementation assessment providing data about whether intervention features are being changed as intended, used to guide subsequent implementation steps. 🔑 Definition — Evaluation Feedback: After-implementation assessment of overall intervention impact on outcome measures, used to decide whether to continue, modify, or institutionalize changes.

📌 Example — Job Enrichment Program:

• Initial diagnosis: Low employee performance and satisfaction caused by overly structured, routinized jobs. Most employees have high growth needs.
• Intervention chosen: Job enrichment (increasing discretion, variety, and feedback). General prescriptions are translated into specific changes: participatory supervision, employee inspection of outputs, quicker performance feedback.
• Round 1 (after 3 months): Questionnaires, interviews, and company records show little change in satisfaction and performance; discretion and feedback unchanged; variety improved. Supervisors receive leadership training; statistical reports replaced with simple bar graphs.
• Round 2 (after 3 more months): Satisfaction and performance moderately higher; variety and feedback high; discretion still low. More supervisory training plus online counseling/coaching added.
• Round 3 (after 4 more months): Satisfaction and performance significantly higher; discretion, variety, and feedback all high. Intervention successfully implemented.
• Evaluation feedback begins: Includes performance and satisfaction data plus absenteeism, maintenance costs, reactions from other units. After one year, program deemed effective and made permanent.

📐 Formula — Evaluation Feedback Sequence: Implementation confirmed → Broader outcome measures → Decision to continue/modify/terminate → Possible institutionalization

Measurement

Providing useful feedback involves two activities: selecting appropriate variables and designing good measures.

Selecting Variables: Variables should derive from the theory underlying the intervention. The diagnostic model should incorporate both key features of the intervention and expected results. For job enrichment, the job-level diagnostic model specifies task variety, feedback, and autonomy as key features, with work quality and satisfaction as expected outcomes, moderated by employee growth need strength.

Intervention variables assess whether the change is being implemented (e.g., number of rewritten job descriptions, employees receiving cross-training). Outcome variables assess impact (e.g., performance, satisfaction, absenteeism, turnover).

A common problem in OD evaluation is measuring only outcome variables while neglecting intervention variables. Implementation feedback serves to empirically determine that the intervention has been implemented—this cannot be assumed. Outcome measures are ambiguous without knowledge of implementation quality. For example, negligible change in performance could mean wrong intervention, ineffective implementation, or wrong variables measured.

The choice of outcome variables should be dictated by intervention theory. Historically, OD focused on attitudinal outcomes (job satisfaction), but managers increasingly call for behavioral measures of bottom-line results (joining, remaining, producing). Macy and Mirvis developed standardized behavioral outcomes for comparing intervention results.

🔑 Definition — Intervention Variables: Measures of whether specific organizational changes required by the intervention have been implemented (e.g., job discretion, task variety, feedback). 🔑 Definition — Outcome Variables: Measures of results produced by the intervention (e.g., performance, job satisfaction, absenteeism, turnover, organizational commitment).

📐 Formula — Measurement Requirements: Intervention variables + Outcome variables = Complete evaluation

📌 Example — Variable Selection for Job Enrichment:

• Intervention variables: Rewritten job descriptions, cross-training completion, employee perceptions of discretion/variety/feedback
• Outcome variables: Productivity, satisfaction, absenteeism, maintenance costs, reactions from other units

Research Design

Research design involves how data are collected and compared to assess intervention effects. The basic question is whether observed outcomes can be attributed to the intervention rather than to other factors (history, maturation, testing effects, etc.).

The strongest designs include: (1) Time-series designs with multiple measurements before and after intervention to detect change patterns; (2) Comparison group designs where similar units not receiving the intervention serve as controls; (3) Combined designs using both time series and comparison groups for maximum validity.

Practical constraints often limit design choices in organizations. The minimum acceptable design includes measurement before and after intervention, but this cannot rule out alternative explanations. Adding multiple pre-measurements (time series) strengthens causal inference. The strongest design adds a comparison group that is measured simultaneously.

🔑 Definition — Research Design: The plan for collecting and comparing data to determine whether observed outcomes are caused by the intervention rather than other factors.

📐 Formulas:

1. Pre-Post Design: Pre-measure → Intervention → Post-measure (weakest)
2. Time-Series Design: Pre₁, Pre₂, Pre₃ → Intervention → Post₁, Post₂, Post₃ (stronger)
3. Comparison Group Design: Experimental group (Pre → Intervention → Post) + Control group (Pre → No intervention → Post) (strongest)

📌 Example — Design for Job Enrichment:

• Implementation feedback rounds at 3, 6, and 10 months (time series)
• Evaluation feedback at 12 months with comparison to similar work units not receiving enrichment
• Multiple pre-measures from initial diagnosis establish baseline
• This combined design allows causal attribution of changes to the intervention

Institutionalizing OD Interventions

Institutionalization involves making a particular change a permanent part of the organization's normal functioning. It ensures that results of successful change programs persist over time.

The institutionalization process is influenced by three categories of factors:

1. Organization characteristics: Culture, structure, management support, resource availability
2. Intervention dimensions: Goal clarity, complexity, compatibility with existing systems, level of change (individual, group, organization)
3. Institutionalization processes: Training, rewards, monitoring systems, ongoing communication, integration with standard operating procedures

For an intervention to become institutionalized, it must be embedded in the organization's systems—policies, procedures, reward structures, performance appraisal, training programs, and cultural norms. This requires deliberate action beyond the initial implementation phase.

🔑 Definition — Institutionalization: The process of making a change a permanent part of the organization's normal functioning, ensuring persistence of intervention effects over time.

📐 Framework — Institutionalization Factors:

• Organization characteristics (culture, structure, support)
• Intervention dimensions (goal clarity, compatibility, level)
• Institutionalization processes (training, rewards, monitoring, integration)

📌 Example — Institutionalizing Job Enrichment:

• Rewrite job descriptions to permanently include enriched features
• Incorporate participatory supervision into performance appraisal criteria
• Make cross-training a standard part of employee development
• Continue leadership training for new supervisors
• Monitor discretion, variety, and feedback levels as ongoing metrics

Assessment of Institutionalization

Institutionalization can be measured by the extent to which intervention-related behaviors, procedures, and outcomes persist over time without external intervention support. Key indicators include: (1) continued use of new practices, (2) maintenance of outcome levels, (3) integration into standard operating procedures, (4) acceptance as normal organizational functioning.

Long-term persistence requires institutionalization of both the intervention itself and the ongoing learning and adaptation processes that the change introduced. The goal is for the organization to sustain improvements through its own systems rather than relying on external change agents.

🔑 Definition — Assessment of Institutionalization: Measuring the extent to which change has become permanent through indicators such as continued practice use, outcome maintenance, and system integration.

📐 Formula — Institutionalization Indicators: Continued practice use + Outcome maintenance + System integration + Normal acceptance = Successful institutionalization

📌 Example — Job Enrichment Assessment:

• After 2 years, employees still report high discretion, variety, feedback
• Performance and satisfaction remain at improved levels
• Participatory supervision is standard practice across the unit
• New hires are trained in enriched job design from orientation
• The unit no longer requires OD practitioner support for the intervention

⭐ Key Takeaways

The critical distinction between implementation feedback and evaluation feedback is the most important concept—implementation feedback guides the translation of general prescriptions into specific behaviors during the change process, while evaluation feedback assesses overall outcomes after implementation is confirmed. Measurement must include both intervention variables (to verify the change occurred) and outcome variables (to assess impact), and these should derive directly from the theory underlying the intervention. Research design choices—from simple pre-post designs to stronger time-series and comparison group designs—determine the validity of causal claims about intervention effects. Institutionalization requires deliberate effort to embed changes into organizational systems, including policies, rewards, training, and culture. Finally, evaluation decisions must be made early in the OD cycle, not as an afterthought, to ensure proper measurement and design integration with intervention activities.

🧠 Quick Revision Questions

1. What are the two types of feedback in OD evaluation, and how do they differ in purpose and timing?
2. Why is it problematic to measure only outcome variables without also measuring intervention variables?
3. What three elements does the job enrichment example demonstrate about the implementation feedback cycle?
4. What are the three categories of factors that influence institutionalization of OD interventions?
5. How does research design strength affect the ability to attribute observed outcomes to the intervention rather than other causes?

📘 Lecture 26 — Evaluating and Institutionalizing Organization Development Interventions

📖 Overview: This lecture focuses on how to properly evaluate OD interventions through careful measurement and research design. It covers the selection of appropriate variables, design of good measures, and the use of quasi-experimental designs to determine whether interventions actually produced observed results. Understanding these evaluation methods is critical for OD practitioners to demonstrate accountability and justify resource allocation.

🗂️ Topics Covered

The lecture covers selecting variables for OD evaluation that derive from underlying theory, measuring both intervention and outcome variables rather than outcomes alone, designing good measures with operational definitions, reliability, and validity. It then discusses research design focusing on internal and external validity, quasi-experimental designs with longitudinal measurement and comparison groups, the three types of perceptual change (alpha, beta, gamma), and concludes with the Farm Bank case study examining MIS implementation challenges.

📝 Lecture Summary

Selecting Variables

Ideally, the variables measured in OD evaluation should derive from the theory or conceptual model underlying the intervention. The model should incorporate the key features of the intervention as well as its expected results. For example, the job-level diagnostic model proposes several major features of work: task variety, feedback, and autonomy. The theory argues that high levels of these elements can be expected to result in high levels of work quality and satisfaction. The strength of this relationship varies with the degree of employee growth need: the higher the need, the more that job enrichment produces positive results.

Measuring both intervention and outcome variables is necessary for implementation and evaluation feedback. Unfortunately, there has been a tendency in OD to measure only outcome variables while neglecting intervention variables altogether. It generally is assumed that the intervention has been implemented and attention is directed to its impact on organizational outcomes. As argued earlier, implementing OD interventions generally takes considerable time and learning. It must be empirically determined that the intervention has been implemented; it cannot simply be assumed. Implementation feedback serves this purpose by guiding the implementation process and helping to interpret outcome data.

🔑 Definition — Intervention variables: The specific organizational changes needed to implement particular interventions, derived from the conceptual framework underlying the OD intervention.

🔑 Definition — Outcome variables: The expected results from particular change programs, such as job satisfaction, intrinsic motivation, organizational commitment, absenteeism, turnover, and productivity.

📌 Example: A negligible change in measures of performance and satisfaction could mean that the wrong intervention has been chosen, that the correct intervention has not been implemented effectively, or that the wrong variables have been measured. Measurement of the intervention variables helps determine the correct interpretation of outcome measures.

Designing Good Measures

Each measurement method has advantages and disadvantages linked to how operationally defined, reliable, and valid a measurement is.

1. Operational definition: A good measure is operationally defined; it specifies the empirical data needed, how they will be collected, and most importantly, how they will be converted from data to information. Macy and Mirvis developed operational definitions for behavioral outcomes consisting of specific computational rules to construct measures for each behavior. Most behaviors are reported as rates adjusted for the number of employees and for possible incidents of behavior, making comparison across different situations and time periods possible.

🔑 Definition — Operational definition: Precise guidelines about what characteristics of the situation are to be observed and how they are to be used, telling OD practitioners and the client system exactly how diagnostic, intervention, and outcome variables will be measured.

2. Reliability: Reliability concerns the extent to which a measure represents the "true" value of a variable; that is, how accurately the operational definition translates data into information. For example, the number of cars leaving an assembly line is highly reliable as a measure of plant productivity. However, when people rate their job satisfaction on a scale of 1 to 5, events like arguments with supervisors or accidents can sway responses, making the "true" satisfaction score difficult to discern.

OD practitioners can improve reliability in four ways:

• Rigorously and operationally define chosen variables
• Use multiple methods (questionnaires, interviews, observation, unobtrusive measures) to triangulate on dimensions
• Use multiple items on a questionnaire to measure the same variable
• Use standardized instruments that are already available

📌 Example: In the Job Diagnostic Survey, the intervention variable "autonomy" has the following operational definition: the average of respondents' answers to three questions measured on a seven-point scale:

1. The job permits me to decide on my own how to go about doing the work.
2. The job denies me any chance to use my personal initiative or judgment in carrying out the work. (Reverse scored)
3. The job gives me considerable opportunity for independence and freedom in how I do the work.

3. Validity: Validity concerns the extent to which a measure actually reflects the variable it is intended to reflect. For example, the number of cars leaving an assembly line might be a reliable measure of plant productivity but may not be valid because it doesn't account for production costs.

OD practitioners can increase validity by:

• Using face validity or content validity by asking colleagues and clients if a proposed measure represents a particular variable
• Using multiple measures of the same variable to assess criterion or convergent validity
• Demonstrating discriminated validity when the proposed measure does not correlate with measures it should not correlate with
• Establishing predictive validity when the variable accurately forecasts another variable over time

🔑 Definition — Face validity/Content validity: When experts and clients agree that the measure reflects the variable of interest, increasing confidence in the measure's validity.

🔑 Definition — Criterion validity/Convergent validity: When several different measures of the same variable correlate highly with each other, especially if one or more have been validated in prior research.

🔑 Definition — Predictive validity: Demonstrated when the variable of interest accurately forecasts another variable over time.

📌 Example: A measure of team cohesion can be said to be valid if it accurately predicts improvements in team performance in the future.

💡 Why this matters: Presenting proposed measures to colleagues and clients for evaluation prior to measurement builds ownership and commitment to the data-collection process and improves the likelihood that the client system will find the data meaningful.

Research Design

The key issue in research design is internal validity — whether the intervention did in fact produce the observed results. External validity is the secondary question of whether the intervention would work similarly in other situations. Internal validity is the essential minimum requirement for assessing OD interventions because unless managers can have confidence that the outcomes are the result of the intervention, they have no rational basis for making decisions about accountability and resource allocation.

Assessing internal validity involves testing a hypothesis that specific organizational changes lead to certain outcomes, and rejecting alternative hypotheses or rival explanations. For example, if a job enrichment program appears to increase employee performance, other possible explanations like new technology, improved raw materials, or new employees must be eliminated.

OD interventions present unique challenges for evaluation: they are complex with interrelated changes, they are long-term projects where other factors may emerge, and they are applied to existing work units rather than randomized groups.

Quasi-experimental research designs are used because they allow evaluators to rule out many rival explanations while being less rigorous than randomized experimental designs. The three most powerful features are:

1. Longitudinal measurement — measuring results repeatedly over relatively long time periods, ideally starting before the change program is implemented
2. Comparison unit — comparing results in the intervention situation with another similar situation where no change has taken place
3. Statistical analysis — using statistical methods to rule out the possibility that results are caused by random error or chance

📌 Example: Table 10 shows monthly absenteeism rates for an intervention group and comparison group. The intervention group showed 5.1% absenteeism in December, but after the intervention started in January, absenteeism dropped to 4.6%, then 4.0%, 3.9%, and 3.5% over the next four months. The comparison group remained stable around 2.5% throughout. Statistical analysis suggested the downward shift was not attributable to chance variation.

Unobtrusive measures collected from company records are especially useful because they do not interact with the intervention and affect the results. Obtrusive measures like questionnaires and interviews are reactive and can sensitize people to the intervention. Multiple measures should be applied to minimize measurement and intervention interactions.

The Three Types of Perceptual Change

Alpha Change concerns a difference that occurs along some relatively stable dimension of reality. This is typically a comparative measure before and after an intervention. If comparative measures of perceived employee discretion show an increase after a job enrichment program, and this represents alpha change, it can be assumed that the program actually increased employee perceptions of discretion.

🔑 Definition — Alpha change: A change along some relatively stable dimension of reality, measured before and after an intervention.

Beta Change occurs when the basis for judging the nature of a variable changes. Team members may view trust very differently after a team-building intervention. Their basis for judging the nature of trust changed, rather than their perception of a simple increase or decrease along a stable continuum.

🔑 Definition — Beta change: A change in the basis for judging a variable, rather than a simple increase or decrease along a stable continuum.

📌 Example: Before-and-after measures of perceived employee discretion can decrease after a job enrichment program. The first measure reflects the individual's belief about ability to move around in the immediate work area. During implementation, the employee learns that discretion is not limited to the immediate work area. At the second measurement, the employee uses this new recalibrated understanding and rates discretion as lower than before.

Gamma Change involves fundamentally redefining the measure as a result of an OD intervention. The framework within which a phenomenon is viewed changes. A major change in perspective or frame of reference occurs.

🔑 Definition — Gamma change: A fundamental redefinition of a measure where the framework within which a phenomenon is viewed changes completely.

📌 Example: After a team-building intervention, team members might conclude that trust was not a relevant variable. They might believe that clarity and responsibility were the relevant factors and their improvement as a team had nothing to do with trust. The term "discretion" may originally refer to ability to move about the department, but after the intervention, discretion might be defined as the ability to make decisions about work rules and schedules.

💡 Why this matters: Potent OD interventions may produce both beta and gamma changes, severely complicating interpretations of findings reporting change or no change. Heavy reliance on questionnaires should be balanced by using other measures like interviews and unobtrusive records.

⭐ Key Takeaways

The most critical concept from this lecture is that effective OD evaluation requires measuring both intervention and outcome variables — never assume an intervention has been implemented, it must be empirically verified. Good measures must be operationally defined, reliable (accurate representation of true values), and valid (actually measuring what they intend to measure). Quasi-experimental designs with longitudinal measurement, comparison groups, and statistical analysis provide the most practical way to establish internal validity in field settings. A crucial insight is that perceptual measures can show three different types of change — alpha (actual change along a stable dimension), beta (recalibration of the measurement scale), and gamma (fundamental redefinition of the concept) — and failing to distinguish these can lead to completely wrong conclusions about intervention effectiveness.

🧠 Quick Revision Questions

1. Why is it problematic to measure only outcome variables while neglecting intervention variables in OD evaluation?
2. What are the four ways OD practitioners can improve the reliability of their measures?
3. What is the difference between internal validity and external validity in OD research design?
4. How does beta change differ from alpha change when using perceptual measures?
5. What three features make quasi-experimental designs particularly powerful for assessing OD changes?

📘 Lecture 27 — Evaluating and Institutionalizing Organization Development Interventions

📖 Overview: This lecture examines how organizational changes from OD interventions become permanent parts of an organization's normal functioning. It presents a comprehensive framework identifying the factors, processes, and indicators that determine whether change programs are successfully institutionalized, which is critical for ensuring that OD efforts have lasting impact.

🗂️ Topics Covered

The lecture covers the concept of institutionalizing OD interventions, including Lewin's three-stage change model of unfreezing, moving, and refreezing. It presents a detailed institutionalization framework examining organization characteristics (congruence, stability of environment and technology, unionization) and intervention characteristics (goal specificity, programmability, level of change target, internal support, sponsorship). The lecture also explores five institutionalization processes (socialization, commitment, reward allocation, diffusion, sensing and calibration) and five indicators of institutionalization (knowledge, performance, preferences, normative consensus, value consensus).

📝 Lecture Summary

Institutionalizing Interventions

Once a change has been implemented and proven effective, attention shifts to institutionalizing the changes—making them a permanent part of the organization's normal functioning. Lewin described change as occurring in three stages: unfreezing, moving, and refreezing. Institutionalizing an OD intervention concerns the refreezing stage. It involves the long-term persistence of organizational changes; to the extent that changes persist, they can be said to be institutionalized. Such changes are not dependent on any one person but exist as part of the organization's culture, meaning numerous others share norms about the appropriateness of the changes.

How planned changes become institutionalized has not received much attention in OD literature. Rapidly changing environments have led to admonitions to "change constantly," "change before you have to," and "if it's not broke, fix it anyway." This context has challenged the utility of institutionalization—why make any change permanent if it may require changing again soon? However, these admonitions have also resulted in institutionalization concepts being applied in new ways, where change itself has become the focus of institutionalization. Total quality management, organizational learning, integrated strategic change, and self-design interventions all aim at enhancing the organization's capability for change.

💡 Why this matters: In modern dynamic environments, institutionalizing the capacity for ongoing change is more valuable than institutionalizing any single change.

Institutionalization Framework

Figure 37 presents a framework identifying organization and intervention characteristics and institutionalization processes affecting the degree to which change programs are institutionalized. The model shows that two key antecedents—organization characteristics and intervention characteristics—affect different institutionalization processes operating in organizations. These processes, in turn, affect various indicators of institutionalization. The model also shows that organization characteristics can influence intervention characteristics.

Organization Characteristics

Three key dimensions of an organization can affect intervention characteristics and institutionalization processes:

1. Congruence: This is the degree to which an intervention is perceived as being in harmony with the organization's managerial philosophy, strategy, and structure; its current environment; and other changes taking place. When an intervention is congruent with these dimensions, the probability of institutionalization improves. Congruence facilitates persistence by making it easier to gain member commitment and diffuse the intervention to wider segments. Conversely, participative interventions applied in highly bureaucratic organizations with formalized structures and autocratic managerial styles are not perceived as congruent.

2. Stability of environment and technology: This involves the degree to which the organization's environment and technology are changing. Unless the change target is buffered from these changes or the changes are dealt with directly by the change program, achieving long-term intervention stability may be difficult. For example, decreased demand for products can lead to personnel reductions that change group composition. Conversely, increased demand can bring new members on board faster than they can be socialized effectively.

3. Unionization: Diffusion of interventions may be more difficult in unionized settings, especially if changes affect union contract issues such as salary, fringe benefits, job design, and employee flexibility. A rigid union contract can make it difficult to merge job classifications. However, unions can be a powerful force for promoting change when a good relationship exists between union and management.

Intervention Characteristics

Five major features of OD interventions can affect institutionalization processes:

1. Goal specificity: This involves the extent to which intervention goals are specific rather than broad. Specificity of goals helps direct socializing activities (training, orienting new members) to particular behaviors and helps operationalize new behaviors so rewards can be clearly linked. An intervention aimed only at increasing product quality is more focused and readily operationalized than one intended to improve quality, quantity, safety, absenteeism, and employee development simultaneously.

2. Programmability: This involves the degree to which changes can be programmed or specified clearly in advance to enable socialization, commitment, and reward allocation. Job enrichment specifies three targets of change: employee discretion, task variety, and feedback, allowing the change program to be planned and designed to promote those specific features.

3. Level of change target: This concerns whether the change target is the total organization, a department, or a small work group. Departmental and group changes are susceptible to countervailing forces from others in the organization, but can be institutionalized within a department that successfully insulates itself as a subculture. Targeting wider segments can create shared beliefs about the intervention's value, promoting consensus, but can also become mired in political resistance from the "not invented here" syndrome or powerful opposing constituencies.

4. Internal support: This refers to the degree to which there is an internal support system to guide the change process, typically provided by an internal consultant who can gain commitment and help members implement changes. External consultants also provide support, especially temporarily during early implementation. In high-involvement organization interventions, external consultants bring expertise on organizational design and train members, while internal consultants help members relate to other units, resolve conflicts, and legitimize change activities.

5. Sponsorship: This concerns the presence of a powerful sponsor who can initiate, allocate, and legitimize resources for the intervention. Sponsors must come from high enough levels to control resources and must have visibility and power to nurture the intervention. Many OD interventions persisted for years then collapsed abruptly when the sponsor left. Middle managers have withdrawn support when top management excluded them from the change program.

Institutionalization Processes

Five institutionalization processes can directly affect the degree to which OD interventions are institutionalized:

1. Socialization: This concerns the transmission of information about beliefs, preferences, norms, and values regarding the intervention. A continual process of socialization is necessary to promote persistence, as organization members must focus attention on the evolving nature of the intervention and communicate this information to other employees, especially new members. Employee involvement programs often include initial transmission of information, retraining of existing participants, and training of new members.

2. Commitment: This binds people to behaviors associated with the intervention, including initial commitment and recommitment over time. Opportunities for commitment should allow people to select necessary behaviors freely, explicitly, and publicly. Commitment should derive from several organizational levels including directly involved employees and middle and upper managers. In early employee involvement programs, attention was directed at gaining workers' commitment but middle managers were often ignored, resulting in considerable management resistance.

3. Reward allocation: This involves linking rewards to the new behaviors required by an intervention. Organizational rewards enhance persistence in two ways. First, a combination of intrinsic rewards (internal rewards from challenge, development, and accomplishment) and extrinsic rewards (money, for increased contributions) can reinforce new behaviors. Intrinsic rewards provide opportunities that sustain motivation, while extrinsic rewards further reinforce behavior. Second, new behaviors persist to the extent that rewards are perceived as equitable by employees. Many employee involvement programs fail because employees feel their increased contributions are unfairly rewarded, especially when interventions rely exclusively on intrinsic rewards.

4. Diffusion: This refers to transferring interventions from one system to another. Diffusion facilitates institutionalization by providing a wider organizational base to support new behaviors. Many interventions fail because they run counter to the values and norms of the larger organization, which rejects the changes and pressures the change target to revert. Diffusion to other organizational units reduces this counter-implementation force and tends to lock in behaviors by providing normative consensus from other parts of the organization. The act of transmitting institutionalized behaviors to other systems reinforces commitment.

5. Sensing and calibration: This involves detecting deviations from desired intervention behaviors and taking corrective action. Institutionalized behaviors invariably encounter destabilizing forces such as environmental changes, new technologies, and departmental pressures. Sensing mechanisms, such as implementation feedback, provide information about deviations and initiate corrective actions. For example, if high job discretion from a job enrichment intervention does not persist, information about this problem might initiate renewed socialization or commitment efforts.

Indicators of Institutionalization

Institutionalization is not all-or-nothing but reflects degrees of persistence. Five indicators show the extent of an intervention's persistence:

1. Knowledge: This involves the extent to which organization members have knowledge of the behaviors associated with an intervention—whether members know enough to perform the behaviors and recognize the consequences. Job enrichment includes new behaviors such as performing greater task variety, analyzing task performance information, and making decisions about work methods.

2. Performance: This concerns the degree to which intervention behaviors are actually performed, measured by counting the proportion of relevant people performing the behaviors (e.g., 60% of employees performing job enrichment behaviors) or the frequency with which new behaviors are performed.

3. Preferences: This involves the degree to which organization members privately accept the organizational changes, as opposed to acceptance based on organizational sanctions or group pressures. Private acceptance is reflected in people's positive attitudes toward changes, measured by the direction and intensity of those attitudes across work unit members.

4. Normative consensus: This focuses on the extent to which people agree about the appropriateness of the organizational changes, reflecting how fully changes have become part of the organization's normative structure. Changes persist to the degree members feel they should support them.

5. Value consensus: This is concerned with social consensus on values relevant to the organizational changes. Values are beliefs about how people ought or ought not to behave—abstractions from more specific norms. Job enrichment is based on values promoting employee self-control and responsibility; different behaviors would persist to the extent that employees widely share these values.

These five indicators follow a specific developmental order: knowledge → performance → preferences → norms → values. People must first understand new behaviors before performing them effectively. Performance generates rewards and punishments that affect preferences. As individuals come to prefer changes, normative consensus develops. Finally, normative agreement reflecting particular values produces value consensus. Whenever a later indicator is present, all previous ones are automatically included. An OD intervention is fully institutionalized only when all five factors are present.

⭐ Key Takeaways

The successful institutionalization of OD interventions depends on three interconnected components: organization characteristics (congruence, stability, unionization), intervention characteristics (goal specificity, programmability, level of change target, internal support, sponsorship), and institutionalization processes (socialization, commitment, reward allocation, diffusion, sensing and calibration). The five institutionalization indicators follow a developmental sequence from knowledge to value consensus, and a change is fully institutionalized only when all five are present. Crucially, modern OD recognizes that change capability itself can and should be institutionalized, not just specific changes. The presence of a powerful sponsor and equitable reward systems are particularly critical for long-term persistence.

🧠 Quick Revision Questions

1. What are the three stages of change according to Lewin, and which stage corresponds to institutionalization?
2. How do organization characteristics (congruence, stability, unionization) affect the institutionalization of OD interventions?
3. What are the five intervention characteristics that influence institutionalization processes, and why is sponsorship particularly important?
4. Describe the five institutionalization processes and explain how reward allocation works through both intrinsic and extrinsic rewards.
5. What is the developmental order of the five indicators of institutionalization, and why must all five be present for full institutionalization?

📘 Lecture 28 — Process Interventions: Interpersonal and Group Process Approaches

📖 Overview: This lecture explores process interventions as a core OD skill used to help work groups become more aware of how they operate and solve their own problems. It covers four major interpersonal and group dynamics interventions—T-groups, process consultation, third-party intervention, and team building—with detailed focus on T-groups and process consultation. Understanding these approaches is essential for OD practitioners who must help groups diagnose and improve their internal processes.

🗂️ Topics Covered

The lecture covers the definition and purpose of process interventions, followed by four types of interventions targeting interpersonal relationships and group dynamics: T-groups (including goals, objectives, and application stages), process consultation (including philosophy, group processes, communications analysis, and the Johari Window), with emphasis on how these interventions help group members assess interactions and develop more effective working relationships. The lecture distinguishes process consultation from team building and explains the role of disclosure and feedback in improving communication.

📝 Lecture Summary

Process Interventions: Interpersonal and Group Process Approaches

Process interventions are an OD skill used by OD practitioners, whether managers or OD professionals, to help work groups become more effective. The purpose of process interventions is to help the work group become more aware of the way it operates and the way its members work with one another. The work group uses this knowledge to develop its own problem-solving ability. Process interventions aim at helping the work group become more aware of its own processes, including the way it operates, and uses this knowledge to solve its own problems.

The manager practicing process intervention observes individuals and teams in action and helps them learn to diagnose and solve their own problems. The manager refrains from telling them how to solve their problems but instead asks questions, focuses their attention on how they are working together, teaches or provides resources where necessary, and listens. One of the major advantages is that teams become more independent to solve problems.

💡 Why this matters: Process interventions shift the role of the manager from problem-solver to facilitator, empowering teams to develop lasting problem-solving capabilities rather than becoming dependent on external direction.

Interpersonal Relationships and Group Dynamics

Change programs relating to interpersonal relations and group dynamics are among the earliest ones devised in OD and represent attempts to improve people's working relationships with one another. The interventions are aimed at helping group members assess their interactions and devise more effective ways of working together. These interventions represent a basic skill requirement for an OD practitioner.

Interpersonal relationships and group dynamics involve four types of interventions:

1. T-group
2. Process consultation
3. Third-party intervention
4. Team building

1. T-Groups

As discussed earlier, sensitivity training, or the T-group, is an early forerunner of modern OD interventions. Its direct use in OD has lessened considerably. The National Training Laboratories (NTL) and UCLA are among the few remaining organizations that offer T-groups on a regular basis. OD practitioners often attend T-groups to improve their own functioning. For example, T-groups can help OD practitioners become more aware of how others perceive them and thus increase their effectiveness with client systems. In addition, OD practitioners often recommend that organization members attend a T-group to learn how their behaviors affect others and to develop more effective ways of relating to people.

What Are the Goals?

T-groups traditionally are designed to provide members with experiential learning about group dynamics, leadership, and interpersonal relations. The basic T-group consists of ten to fifteen strangers who meet with a professional trainer to explore the social dynamics that emerge from their interactions. Modifications of this basic design have generally moved in two directions:

• The first path has used T-group methods to help individuals gain deeper personal understanding and development. This intrapersonal focus is typically called an encounter group or a personal-growth group. It generally is considered outside the boundaries of OD and should be conducted only by professionally trained clinicians.

• The second direction uses T-group techniques to explore group dynamics and member relationships within an intact work group. Considerable training in T-group methods and group dynamics should be acquired before trying these interventions. This group focus has led to the OD intervention called team building, which is discussed later.

Extensive review of the literature reveals that there are six overall objectives common to most T-groups:

1. Increased understanding, insight, and self-awareness about one's own behavior and its impact on others, including the ways in which others interpret one's behavior.

2. Increased understanding and sensitivity about the behavior of others, including better interpretation of both verbal and nonverbal clues, which increases awareness and understanding of what other people are thinking and feeling.

3. Better understanding and awareness of group and inter-group processes, both those that facilitate and those that inhibit group functioning.

4. Increased diagnostic skills in interpersonal and inter-group situations. Accomplishing the first three objectives provides the basic tools for accomplishing the fourth objective.

5. Increased ability to transform learning into action so that real-life interventions will be successful in increasing member satisfaction, output, or effectiveness.

6. Improvement in individuals' ability to analyze their own interpersonal behavior as well as to learn how to help themselves and others with whom they come in contact, achieve more satisfying, rewarding, and effective interpersonal relationships.

These goals seem to meet many T-group applications, although any one training program may emphasize one goal more than the others. One trainer may emphasize understanding group process as applied to organizations; another may focus on group process as a way of developing individuals' understanding of themselves and others; and a third trainer may concentrate primarily on interpersonal and intrapersonal learning.

Application Stages

Application 4 illustrates the activities occurring in a typical unstructured strangers T-group, one of the most popular approaches.

🔑 Definition — Unstructured Strangers T-group: A T-group session where participants who have not previously known one another meet with a trainer who makes a brief and ambiguous statement and then lapses into silence, creating a leadership and agenda void that the group must fill.

A typical T-group session for strangers might consist of five or six T-groups of ten to fifteen members who have signed up for a session conducted by the National Training Laboratories, UCLA's Ojai program, a university, or a similar organization. The T-group sessions may be combined with cognitive learning, such as brief lectures on general theory, designed exercises, or management games.

Each T-group comprises people who have not previously known one another. If several people from the same organization attend, they are put into different T-groups. At the beginning of the training session, the trainer makes a brief and ambiguous statement about either his or her role or some ground rules and lapses into silence. Because the trainer has not taken a leadership role or provided goals for the group, a dilemma of leadership and agenda is created. The group must work out its own methods to proceed further; it must fill the void left by the lack of a leader or of group objectives.

As the group fills the void, the individuals' behaviors become the "here-and-now" basic data for the learning experiences. As the group struggles with procedure, individual members try out different behaviors and roles, many of which are unsuccessful. One T-group member might make a number of direct, forceful, and unsuccessful attempts to take over the leadership role, trying first one style, then another. Finally, he or she conspicuously withdraws from the group, falls silent, and appears to be thinking about other things. Group members might observe that this person has two basic styles of working with others; when one style is unsuccessful, he or she adopts the other—withdrawal.

As appropriate, the trainer will make an "intervention", an observation or comment about the group, its behavior, or the activities that are taking place. The type and nature of the intervention will vary, depending on the purpose of the laboratory and the trainer's own style. Usually, the trainer encourages individuals to understand what is going on in the group, their own feelings and behaviors, and the impact their behavior has on themselves and others. The primary emphasis is on the here-and-now experience, rather than on anecdotes or "back at the ranch" experiences.

The emphasis on openness and leveling in a supportive and caring environment enables the participants to gain insight into their own and others' feelings and behaviors. A better understanding of group dynamics also can make them more productive individuals.

2. Process Consultation

Process consultation (PC) is a general framework for carrying out helping relationships. It is oriented to helping managers, employees, and groups assess and improve processes, such as communication, interpersonal relations, decision making, and task performance. Schein argues that effective consultants and managers should be good helpers, aiding others in getting things done and in achieving the goals they have set. Thus, PC is more a philosophy than a set of techniques aimed at performing this helping relationship. The philosophy ensures that those who are receiving the help own their problems, gain the skills and expertise to diagnose them, and solve them themselves. Thus, it is an approach to helping people and groups help themselves.

🔑 Definition — Process Consultation: "The creation of a relationship that permits the client to perceive, understand, and act on the process events that occur in (her/his) internal and external environment in order to improve the situation as defined by the client." — Schein

The process consultant does not offer expert help in the form of solutions to problems, as in the doctor-patient model. Rather, the process consultant works to develop relationships, observes groups and people in action, helps them diagnose the way they are carrying out tasks, and helps them learn how to be more effective.

In the OD literature, team building is not clearly differentiated from process consultation. This confusion exists because most team building includes process consultation—helping the group diagnose and understand its own internal processes. However, process consultation is a more general approach to helping relationships than is team building. Team building focuses explicitly on helping groups perform tasks and solve problems more effectively. Process consultation, on the other hand, is concerned with establishing effective helping relationships in organizations. It is seen as key to effective management and consultation and can be applied to any helping relationship, from subordinate development to interpersonal relationships to group development. Thus, team building consists of process consultation plus other, more task-oriented interventions.

Group Process

Process consultation deals primarily with five important interpersonal and group processes:

1. Communications
2. The functional roles of group members
3. The ways in which the group solves problems and makes decisions
4. Group norms development
5. The use of leadership and authority

Communications

One of the process consultant's areas of interest is the nature and style of communication at both the overt and covert levels.

At the overt level, communication issues involve who talks to whom, for how long, and how often. One method for describing group communication is to keep a time log of how often and to whom people talk. For example, at an hour-long meeting conducted by a manager, the longest anyone other than the manager got to speak was one minute, and that minute was allotted to the assistant manager. Rather than telling the manager that he is cutting people off, the consultant can give descriptive feedback by citing the number of times others tried to talk and the amount of time they were given. The consultant must make certain that the feedback is descriptive and not evaluative (good or bad), unless the individual or group is ready for evaluative feedback.

By keeping a time log, the consultant also can note who talks and who interrupts. Frequently, certain people are perceived as being quiet, when in fact they have tried to say something and have been interrupted. Such interruptions are one of the most effective ways of reducing communications and decreasing participation in a meeting.

Body language and other nonverbal behavior also can be a highly informative method for understanding communication processes. For example, at another meeting conducted by a manager, the animated discussion at the start of the meeting was interrupted by the second-in-command, who said, "This is a problem-solving meeting, not a gripe session." As the manager continued to talk, the fourteen other members present assumed expressions of concentration. Within twenty-five minutes, all of them had folded their arms and were leaning backward, a sure sign that they were blocking out or shutting off the message. Within ten seconds of the manager's subsequent statement, "We are interested in getting your ideas," those present unfolded their arms and began to lean forward, a clear nonverbal sign that they were involved once again.

The manager uses several techniques to analyze the communications processes in a work group:

• Observe: How often and how long does each member talk during a group discussion? These observations can be easily recorded on paper and referred to later when analyzing group behavior. It is also useful to keep a record of who talks to whom.

• Identify: Who are the most influential listeners in the group? Noticing eye contact between members can give insights on the communication processes. Sometimes one person, and perhaps not even the person who speaks most frequently, is the one focused on by others as they speak.

• Interruptions: Who interrupts whom? Is there a pattern in the interruptions? What are the apparent effects of the interruptions?

The manager will probably share this information with the group to enable the members to better understand how they communicate with one another. Feedback may be given intermittently during the meeting or at the conclusion of the meeting. The purpose of feedback is to enable group members to learn about the way they communicate with one another.

At the covert or hidden level of communication, sometimes one thing is said but another meant, thus giving a double message. Luft has described this phenomenon in what is called the Johari Window.

🔑 Definition — Johari Window: A model developed by Luft that describes four cells representing different levels of self-awareness and communication between individuals and others.

Figure 38, a diagram of the Johari Window, shows that:

• Cell 1 (Open/Public Area): Some personal issues are perceived by both the individual and others.

• Cell 2 (Hidden/Closed Area): Other people are aware of their own issues, but they conceal them from others. People with certain feelings about themselves or others in the work group may not share with others unless they feel safe and protected; by not revealing reactions they feel might be hurtful or impolite, they lessen the degree of communication.

• Cell 3 (Blind Area): This comprises personal issues that are unknown to the individual but that are communicated clearly to others. For example, an individual may shout, "I'm not angry," as he or she slams a fist on the table, or say, "I'm not embarrassed at all," as he or she blushes scarlet. Typically, cell-3 communication conveys double messages.

📌 Example: One manager who made frequent business trips invariably told his staff to function as a team and to make decisions in his absence. The staff, however, consistently refused to do this because it was clear to them, and to the process consultant, that the manager was really saying, "Go ahead as a team and make decisions in my absence, but be absolutely certain they are the exact decisions I would make if I were here." Only after the manager participated in several meetings in which he received feedback was he able to understand that he was sending a double message. Thereafter, he tried both to accept decisions made by others and to use management by objectives with his staff and with individual managers.

• Cell 4 (Unknown Area): Represents those personal aspects that are unknown to either the individual or others. Because such areas are outside the realm of the process consultant and the group, focus is typically on the other three cells.

The consultant can encourage individuals to be more open with others about their views, opinions, concerns, and emotions, thus reducing cell 2. Further, the consultant can help individuals give feedback to others, thus reducing cell 3. Reducing the size of these two cells helps improve the communication process by enlarging cell 1, the "self" that is open to both the individual and others.

Disclosure and Feedback of Johari Window

As indicated in the Figure, movement along the vertical and horizontal dimensions enables individuals to change their interpersonal styles by increasing the amount of communication in the public or shared area.

🔑 Definition — Disclosure: The process of enlarging the public area vertically by reducing the closed area, involving open disclosure of one's feelings, thoughts, and candid feedback to others.

To enlarge the public area, a person may move vertically by reducing the closed area. As a person behaves less defensively and becomes more open, trusting, and risk taking, others will tend to react with increased openness and trust. This process, termed disclosure, involves the open disclosure of one's feelings, thoughts, and candid feedback to others. The openness of communication leads more to open and congruent relationships.

🔑 Definition — Feedback: The behavioral process used to enlarge the public area horizontally, allowing us to reduce the blind area.

The only way to become aware of our blind spots is for others to give information or feedback about our behavior. The blind area can only be reduced with the help and cooperation of others, and this requires a willingness to invite and accept such feedback.

Almost every organization finds that poor communication is the most important problem preventing organizational effectiveness.

⭐ Key Takeaways

Process interventions represent a fundamental OD approach where the practitioner helps groups become aware of their own processes and develop self-sufficient problem-solving capabilities rather than providing direct solutions. T-groups provide experiential learning about group dynamics and interpersonal relations, with six core objectives ranging from self-awareness to the ability to transform learning into action, and are typically conducted with strangers in unstructured settings where a trainer's ambiguous opening creates a leadership void that participants must fill. Process consultation is a philosophy-based helping relationship where the consultant observes, diagnoses, and helps groups understand five key processes—communications, functional roles, problem-solving, norms, and leadership—while ensuring clients own their problems and solutions. The Johari Window is a crucial diagnostic tool that reveals four communication cells (open, hidden, blind, unknown) and demonstrates how disclosure reduces the hidden area and feedback reduces the blind area, ultimately enlarging the open/public area to improve organizational communication.

🧠 Quick Revision Questions

1. What are the four types of interventions related to interpersonal relationships and group dynamics discussed in this lecture?

2. What are the six overall objectives common to most T-groups, and which two objectives are achieved through the first three?

3. How does process consultation differ from the doctor-patient model of consulting, and why is it considered more a philosophy than a set of techniques?

4. What are the four cells of the Johari Window, and how do the processes of disclosure and feedback reduce cells 2 and 3 respectively?

5. What five interpersonal and group processes does process consultation primarily deal with, and what specific techniques can a manager use to analyze communications processes in a work group?

📘 Lecture 29 — Functional Roles of Group Members

📖 Overview: This lecture examines the critical interpersonal and group processes that process consultants must understand to help groups function effectively. It covers the functional roles group members play, group problem-solving and decision-making processes, group norms and growth, leadership dynamics, and specific interventions for individuals and groups. The lecture also discusses when process consultation is appropriate and reviews research on its effectiveness.

🗂️ Topics Covered

The lecture covers five main interpersonal and group processes: functional roles of group members (task-related activities and group-maintenance actions), group problem solving and decision making (including the importance of not prematurely rejecting ideas), group norms and growth (explicit and implicit standards of behavior), leadership and authority (understanding leadership styles and their impact), and basic process interventions (individual and group interventions). It also addresses when process consultation is appropriate, results of process consultation, and includes a detailed application case study (Application 5: Process Consultation at Action Company).

📝 Lecture Summary

Functional Roles of Group Members:

The process consultant must be keenly aware of the different roles individual members take on in a group. Upon entering and remaining in a group, the individual must determine a self-identity, influence, and power that will satisfy personal needs while working to accomplish group goals. Preoccupation with individual needs or power struggles can severely reduce the effectiveness of a group. Unless the individual can expose and share those personal needs to some degree, the group is unlikely to be productive. Therefore, the process consultant must help the group confront and work through these needs. Emotions are facts, but frequently they are regarded as side issues to be avoided. Whenever an individual, usually the leader, says to the group, “Let’s stick with the facts,” it can be a sign that the emotional needs of group members are not being satisfied and are being disregarded as irrelevant.

Two other functions need to be performed if a group is to be effective: (1) task-related activities, such as giving and seeking information and elaborating, coordinating, and evaluating activities; and (2) group-maintenance actions, directed toward holding the group together as a cohesive team, including encouraging, harmonizing, compromising, setting standards, and observing. Most ineffective groups perform little group maintenance, and this is a primary reason for bringing in a process consultant.

The process consultant can help by suggesting that some part of each meeting be reserved for examining these functions and periodically assessing the feelings of the group’s members. As Schein points out, however, the basic purpose of the process consultant is not to take on the role of expert but to help the group share in its own diagnosis and do a better job in learning to diagnose its own processes: “It is important that the process consultant encourage the group not only to allocate time for diagnosis but to take the lead itself in trying to articulate and understand its own processes.” Otherwise, the group may default and become dependent on the supposed expert. In short, the consultant’s role is to make comments and to assist with diagnosis, but the emphasis should be on facilitating the group’s understanding and articulation of its own processes.

💡 Why this matters: The distinction between task and maintenance functions is fundamental; many groups fail because they focus only on task completion and neglect the emotional and relational glue that keeps the team cohesive.

Group Problem Solving and Decision Making:

To be effective, a group must be able to identify problems, examine alternatives, and make decisions. The first part of this process is the most important. Groups often fail to distinguish between problems (either task-related or interpersonal) and symptoms. Once the group identifies the problem, a process consultant can help the group analyze its approach, restrain the group from reacting too quickly and making a premature diagnosis, or suggest additional options.

📌 Example: A consultant was asked to process a group’s actions during a three-hour meeting that had been taped. The tapes revealed that premature rejection of a suggestion had severely retarded the group’s process. After one member’s suggestion at the beginning of the meeting was quickly rejected by the manager, he repeated his suggestion several times in the next hour. Each time his suggestion was rejected quickly. During the second hour, this member became quite negative, opposing most of the other ideas offered. Finally, toward the end of the second hour, he brought up his proposal again. At that time, it was thoroughly discussed and then rejected for reasons that the member accepted. During the third hour, this person was one of the most productive members of the group, offering constructive ideas. However, it was not until his first suggestion had been thoroughly discussed (even though it was finally rejected) that he was able to become a truly constructive member of the group.

Once the problem has been identified, a decision must be made. One way of making decisions is to ignore a suggestion (e.g., when one person makes a suggestion, someone else offers another before the first has been discussed). A second method is to give decision-making power to the person in authority. Sometimes decisions are made by minority rule, the leader arriving at a decision and turning for agreement to several people who will comply. Frequently, silence is regarded as consent. Decisions also can be made by majority rule, consensus, or unanimous consent.

The process consultant can help the group understand how it makes its decisions and the consequences of each decision process, as well as help diagnose which type of decision process may be the most effective in a given situation. Decision by unanimous consent or consensus, for example, may be ideal in some circumstances but too time-consuming or costly in other situations.

Group Norms and Growth:

Especially if a group of people works together over a period of time, it develops group norms or standards of behavior about what is good or bad, allowed or forbidden, right or wrong. There may be an explicit norm that group members are free to express their ideas and feelings, whereas the implicit norm is that one does not contradict the ideas or suggestions of certain group members (usually the more powerful ones). The process consultant can be very helpful in assisting the group to understand and articulate its own norms and to determine whether those norms are helpful or dysfunctional. By understanding its norms and recognizing which ones are helpful, the group can grow and deal realistically with its environment, make optimum use of its own resources, and learn from its own experiences.

Leadership and Authority:

A process consultant needs to understand processes of leadership and how different leadership styles can help or hinder a group’s functioning. In addition, the consultant can help the leader adjust her or his style to fit the situation. An important step in that process is for the leader to gain a better understanding of his or her own behavior and the group’s reaction to that behavior. It also is important that the leader become aware of alternative behaviors. For example, after gaining a better understanding of his or her assumptions about human behavior, the leader may do a better job of testing and perhaps changing those assumptions.

Basic Process Interventions:

For each of the five interpersonal and group processes described above, a variety of interventions may be used. In broad terms, these are aimed at making individuals and groups more effective.

Individual Interventions: These interventions are designed to help people be more effective or to increase the information they have about their “blind spot” in the Johari Window. Before process consultants can give individual feedback, they first must observe relevant events, ask questions to understand the issues fully, and make certain that the feedback is given to the client in a usable manner. The following are guidelines for effective feedback:

• The giver and receiver must have consensus on the receiver’s goals.
• The giver should emphasize description and appreciation.
• The giver should be concrete and specific.
• Both giver and receiver must have constructive motives.
• The giver should not withhold negative feedback if it is relevant.
• The giver should own his or her observations, feelings, and judgments.
• Feedback should be timed to when the giver and receiver are ready.

Group Interventions: These interventions are aimed at the process, content, or structure of the group.

Process interventions sensitize the group to its own internal processes and generate interest in analyzing those processes. Interventions include comments, questions, or observations about:

• Relationships between and among group members
• Problem solving and decision making
• The identity and purpose of the group

Content interventions help the group determine what it works on. They include comments, questions, or observations about:

• Group membership
• Agenda setting, review, and testing procedures
• Interpersonal issues
• Conceptual inputs on task-related topics

Structural interventions help the group examine the stable and recurring methods it uses to accomplish tasks. They include comments, questions, or observations about:

• Methods for dealing with external issues, such as inputs, resources, and customers
• Methods for determining goals, developing strategies, accomplishing work, assigning responsibility, monitoring progress, and addressing problems
• Relationships to authority, formal rules, and levels of intimacy

When Is Process Consultation Appropriate?

Process consultation, a general model for helping relationships, has wide applicability in organizations. Because PC helps people and groups own their problems and diagnose and resolve them, it is most applicable in the following circumstances:

1. The client has a problem but does not know its source or how to resolve it.
2. The client is unsure of what kind of help or consultation is available.
3. The nature of the problem is such that the client would benefit from involvement in its diagnosis.
4. The client is motivated by goals that the consultant can accept, and the consultant has some capacity to enter into a helping relationship directed at reaching those goals.
5. The client ultimately knows what interventions are most applicable.
6. The client is capable of learning how to assess and resolve her or his own problem.

Results of Process Consultation:

Although process consultation is an important part of organization development and has been widely practiced over the past thirty-five years, only a modest amount of research addresses its effect on improving the ability of groups to accomplish work. The few studies that have been conducted have produced little hard evidence of effectiveness. Research findings on process consultation are unclear, especially because the findings relate to task performance.

A number of difficulties arise in trying to measure performance improvements as a result of process consultation. One problem is that most process consultation is conducted with groups performing mental tasks (e.g., decision making); the outcomes of such tasks are difficult to evaluate. A second difficulty occurs because in many cases process consultation is combined with other interventions in an ongoing OD program. Isolating the impact of process consultation from other interventions is difficult.

Kaplan’s review of process consultation studies underscored the problems of measuring performance effects. It examined published studies in three categories: (1) reports where process intervention is the causal variable but performance is measured inadequately or not at all, (2) reports where performance is measured but process consultation is not isolated as the independent variable, and (3) research where process consultation is isolated as the causal variable and performance is adequately measured. The review suggests that process consultation has positive effects on participants, according to self-reports of greater personal involvement, higher mutual influence, group effectiveness, and similar variables. However, very little, if any, research clearly demonstrates that objective task effectiveness was increased.

Application 5: Process Consultation at Action Company:

This application, a story often told by Ed Schein and documented in several of his books about process consultation and culture, involves the senior management team of an organization that he worked with over several years. It illustrates several principles of process consultation, such as accessing your ignorance, always trying to be helpful, and understanding that errors are the prime source of learning.

The Action Company was a large and innovative high-technology organization. One salient feature of their executive committee meetings was long and loud discussions. Members interrupted each other constantly, often got into shouting matches, drifted off the subject, and moved from one agenda point to another without any clear sense of what had been decided. Initially, the process consultant made several interventions as an “expert” consultant. For example, he would ask the group to consider the consequences of interrupting each other repeatedly. This had the effect of communicating his belief that their process was “bad” and interfered with the group’s task and effectiveness. The group invariably responded with agreement and a resolution to do better, but within ten minutes was back to the same pattern.

As the consultant reflected, he noticed that he was imposing on the group his own beliefs about what an ideal team should look like. This group was clearly on a different path. Over time, he discovered that the group had a different set of shared assumptions driving their behaviors. In short, the group was trying to arrive at the “truth.” Their assumption was that truth was revealed in ideas and actions that could withstand argument and debate. If an idea could survive intense scrutiny, it must be true and worth pursuing.

Once he understood this basic premise, the process consultant asked himself what he could do that would be more helpful to the group. His answer was to work within the group’s assumptions rather than imposing his beliefs on them. Two kinds of interventions grew out of this insight. First, he went to the flipchart and wrote down the main ideas as they came out. These ideas, incomplete or undeveloped because the presenter had been interrupted, led to the second kind of intervention. Instead of punishing the group for its “bad” behavior, he looked for opportunities to turn the conversation back over to the person with the idea. For example, he would say, “John, you were trying to make a point. Did we get all of that?” The combination of these two interventions focused the group on ideas that were not on the flipchart and helped them navigate through their complex agenda. Ideas that were about to be lost were written down, resurrected, and given a fair chance.

The lesson was clear: Until the process consultant understood what the group really was trying to do, he could not focus on the right processes nor did he know how to intervene helpfully. He had to sense what the primary task was and where the group was getting stuck (incomplete idea formulation and too-quick evaluation) before he could determine what kind of intervention would be “facilitative.”

⭐ Key Takeaways

The most critical thing to remember is that effective groups need both task-related activities (getting the work done) and group-maintenance actions (keeping the team cohesive), and most ineffective groups neglect the latter. The process consultant’s role is not to be an expert who fixes problems, but to facilitate the group’s own diagnosis and understanding of its processes. The case of the prematurely rejected suggestion powerfully demonstrates that ideas must be thoroughly discussed even if ultimately rejected, or the member will become unproductive. The Action Company case teaches that imposing one’s own beliefs about “ideal” group behavior can backfire—the consultant must discover the group’s own assumptions (e.g., that truth emerges through debate) and work within them. Finally, research shows PC improves participants’ perceptions (feeling more involved, influential) but has little hard evidence of improving objective task performance, partly because mental tasks are hard to measure and PC is often mixed with other interventions.

🧠 Quick Revision Questions

1. What are the two key functions that must be performed for a group to be effective, and which one do ineffective groups typically neglect?
2. In the example of the three-hour meeting, why did the member become negative in the second hour and productive only in the third hour?
3. What is the difference between explicit norms and implicit norms in a group? Give an example of each.
4. List at least three of the seven guidelines for effective individual feedback given by a process consultant.
5. According to the Action Company case study, what was the group’s shared assumption about how truth is revealed, and how did the consultant adjust his interventions once he understood this?

📘 Lecture 30 — Third-Party Interventions

📖 Overview: This lecture examines how third-party interventions help resolve interpersonal conflicts that arise between two or more people within the same organization. It presents an episodic model of conflict that explains how conflicts cycle through latent and overt stages, and explores strategies for controlling and resolving conflict, including Walton's framework for facilitating productive dialogue between disputants.

🗂️ Topics Covered

The lecture covers the nature and sources of conflict in organizations, differentiating between substantive and interpersonal conflicts. It presents an episodic model of conflict showing how conflicts cycle through latent and overt stages, identifies four control strategies for conflict resolution, and examines Walton's factors and tactical choices for facilitating the conflict resolution process. An application case study at Balt Healthcare Corporation illustrates the challenges of implementing these interventions in practice.

📝 Lecture Summary

Third-Party Interventions

Third-party intervention focuses on conflicts arising between two or more people within the same organization. Conflict is inherent in groups and organizations and can arise from a variety of sources, including differences in personality, task orientation, and perceptions among group members, as well as competition for scarce resources. It is important to emphasize that conflict is neither good nor bad per se — conflict can enhance motivation and innovation and lead to greater understanding of ideas and views. On the other hand, it can prevent people from working together constructively, destroying necessary task interactions among group members. Consequently, third-party intervention is used primarily in situations in which conflict significantly disrupts necessary task interactions and work relationships among members.

Third-party intervention varies considerably depending on the kind of issues underlying the conflict. Conflict can arise over substantive issues, such as work methods, pay rates, and conditions of employment; or it can emerge from interpersonal issues, such as personalities and misperceptions. When applied to substantive issues, conflict resolution interventions often involve resolving labor-management disputes through arbitration and mediation. These methods require considerable training and expertise in law and labor relations and generally are not considered part of OD practice. When conflict involves interpersonal issues, however, OD has developed approaches that help control and resolve it. These third-party interventions help the parties interact with each other directly, facilitating their diagnosis of the conflict and how to resolve it.

Third-party consultation interventions cannot resolve all interpersonal conflicts in organizations, nor should they. Many times, interpersonal conflicts are not severe or disruptive enough to warrant attention. At other times, they simply may burn themselves out. Managers tend to control the process and outcomes of conflict resolution actively when they are under heavy time pressures, when the disputants are not expected to work together in the future, and when the resolution of the dispute has a broad impact on the organization.

An Episodic Model of Conflict

Interpersonal conflict often occurs in iterative, cyclical stages known as "episodes." At times, issues underlying a conflict are latent and do not present any manifest problems for the parties. Then something triggers the conflict and brings it into the open. For example, a violent disagreement or frank confrontation can unleash conflictual behavior. Because of the negative consequences of that behavior, the unresolved disagreement usually becomes latent again. And again, something triggers the conflict, making it overt, and so the cycle continues with the next conflict episode.

Conflict has both costs and benefits to the antagonists and to those in contact with them. Unresolved conflict can proliferate and expand. An interpersonal conflict may be concealed under a cause or issue that serves to make the conflict appear more legitimate. Frequently, the overt conflict is only a symptom of a deeper problem.

The episode model identifies four strategies for conflict resolution. The first three attempt to control the conflict and only the last approach tries to change the basic issues underlying it:

1. Prevent the ignition of conflict by arriving at a clear understanding of the triggering factors and thereafter avoiding or blunting them when the symptoms occur. For example, if conflict between research and production managers is always triggered by new product introductions, then senior management can warn them that conflict will not be tolerated during the introduction. However, this approach may merely drive the conflict underground until it explodes.

2. Set limits on the form of the conflict. Conflict can be constrained by informal gatherings before a formal meeting, exploration of other options, or setting rules and procedures specifying the conditions under which the parties can interact. For example, a rule can be instituted that union officials can attempt to resolve grievances with management only at weekly grievance meetings.

3. Help the parties cope differently with the consequences of the conflict. The third-party consultant may work with the people involved to devise coping techniques, such as reducing their dependence on the relationship, ventilating their feelings to friends, and developing additional sources of emotional support.

4. Eliminate or resolve the basic issues causing the conflict. As Walton points out, "There is little to be said about this objective because it is the most obvious and straightforward, although it is often the most difficult to achieve."

Facilitating the Conflict Resolution Process

Walton has identified a number of factors and tactical choices that can facilitate the use of the episode model in resolving the underlying causes of conflict. The following ingredients can help third-party consultants achieve productive dialogue between the disputants so that they examine their differences and change their perceptions and behaviors:

• Mutual motivation to resolve the conflict
• Equality of power between the parties
• Coordinated attempts to confront the conflict
• Relevant phasing of the stages of identifying differences and of searching for integrative solutions
• Open and clear forms of communication
• Productive levels of tension and stress

Among the tactical choices identified by Walton are those having to do with diagnosis, the context of the third-party intervention, and the role of the consultant. One tactic is the gathering of data, usually through preliminary interviewing. Group-process observations can also be used. Data gathering provides some understanding of the nature and type of conflict, the personality and conflict styles of the individuals involved, the issues and attendant pressures, and the participants' readiness to work together to resolve the conflict.

The context in which the intervention occurs is also important: consideration of the neutrality of the meeting area, the formality of the setting, the appropriateness of the time for the meeting (a meeting should not be started until a time has been agreed on to conclude or adjourn), and the careful selection of those who should attend.

The third-party consultant must decide on an appropriate role to assume in resolving conflict. Facilitating dialogue of interpersonal issues might include initiating the agenda for the meeting, acting as a referee, reflecting and restating the issues and differing perceptions, giving feedback and receiving comments, helping individuals diagnose the issues, providing suggestions or recommendations, and helping the parties diagnose the underlying problem.

The third-party consultant must develop considerable skill at diagnosis, intervention, and follow-up. The third-party intervener must be highly sensitive to his or her own feelings and to those of others. He or she must recognize that some tension and conflict are inevitable and that although there can be an optimum amount and degree of conflict, too much conflict can be dysfunctional. Finally, she or he must have professional expertise in third-party intervention and must be seen by the parties as neutral or unbiased regarding the issues and outcomes of the conflict resolution.

Application 6: Conflict Management at Balt Healthcare Corporation

This case describes a conflict between Pete and Dan, two managers in an IT department at Balt Healthcare Corporation. Pete was the general manager with a traditional, formal management style where communication traveled vertically through the hierarchy. Dan had recently been assigned to operate a small experimental group charged with developing e-commerce solutions, using a management style that stressed open communication and collaboration. Senior management believed Pete's operational expertise would complement Dan's design strengths.

The trouble started almost immediately. Although Pete had agreed to work with Dan, his support was lukewarm. They had a history of conflict with pent-up animosity. Operationally, Pete refused to assign resources and made it complicated for Dan to access hardware. Dan became increasingly frustrated and complained to the highest levels of management.

Dan consulted Marilyn, the vice president for information services. She requested assistance from the human resources manager and an OD specialist. The OD specialist met with Pete and Dan separately and identified that different styles and differences in work processes (routine development vs. creative, unpredictable work) were contributing to the problem. The OD specialist recommended several strategies including direct confrontation, purchasing additional hardware, and mandating cooperation. Marilyn chose to facilitate a direct process but did not follow through — she never met with Pete and Dan at the same time and began supporting Pete while criticizing Dan. Dan felt sabotaged, took a leave of absence, and eventually left the organization. Pete stayed on, the organization lost respect for Marilyn's ability to address conflict, and productivity and morale suffered.

💡 Why this matters: This case demonstrates how even well-intentioned third-party interventions can fail when the intervener lacks follow-through, sends inconsistent messages, or loses neutrality — violating the key principles of effective third-party intervention.

⭐ Key Takeaways

Third-party intervention is used when interpersonal conflict significantly disrupts necessary task interactions and work relationships. Conflict episodes cycle through latent and overt stages, triggered by specific events, and the episodic model identifies four strategies: preventing ignition, limiting conflict form, helping parties cope, and resolving underlying issues. Walton's framework emphasizes mutual motivation, equal power, coordinated confrontation, and productive tension levels for effective conflict resolution. The third-party consultant must remain neutral, gather diagnostic data through interviews, carefully manage the intervention context, and choose an appropriate facilitative role. The Balt Healthcare case shows that failure to follow through on agreements, inconsistent communication, and loss of neutrality by the intervener can worsen conflicts and damage the entire organization.

🧠 Quick Revision Questions

1. What distinguishes substantive conflicts from interpersonal conflicts in organizations, and which type is typically addressed by OD third-party interventions?
2. What are the four strategies for conflict resolution identified in the episodic model of conflict, and which one attempts to change the basic underlying issues?
3. According to Walton, what six factors can help third-party consultants achieve productive dialogue between disputants?
4. What are the three categories of tactical choices identified by Walton for third-party intervention, and what does each involve?
5. What key mistakes did Marilyn make in handling the conflict between Pete and Dan at Balt Healthcare Corporation, and how did these violate the principles of effective third-party intervention?

📘 Lecture 31 — Team Building: Interpersonal and Group Process Approaches

📖 Overview: This lecture explores the concept of team building as an organizational development technique, examining how teams function, the nature of interdependence in teams, and the processes involved in developing effective teams. It provides frameworks for understanding team dynamics through sports analogies and discusses the specific activities and processes that help teams improve their communication, cooperation, and overall effectiveness.

🗂️ Topics Covered

The lecture covers definitions of teams and teamwork, the concept of interdependence in teams illustrated through sports analogies (cricket, football, basketball), the need for team building in organizational contexts, different types of work teams, team-building activities classified into three categories (individual-focused, group operation-focused, and organization relationship-focused), and the team building process itself. A case study of Starbucks demonstrates the practical application of team principles.

📝 Lecture Summary

Introduction: Defining Teams and Teamwork

A team is defined as a group of individuals with complementary skills who depend upon one another to accomplish a common purpose or set of performance goals for which they hold themselves mutually accountable. Teamwork is work done when members subordinate their personal prominence for the good of the team. Members of effective teams are open and honest with one another, exhibit support and trust, demonstrate a high degree of cooperation and collaboration, reach decisions by consensus, maintain open communication channels, and show strong commitment to the team's goals.

Many organizations are implementing team-based programs to increase productivity, with almost 80% of all companies having some type of team-based employee involvement program. Developing teams is necessary because technology and market demands are compelling manufacturers to make their products faster, cheaper, and better.

Understanding Interdependence

The coordination of individual effort into task accomplishment is most important when team members are interdependent. Interdependence refers to situations where one person's performance is contingent upon how someone else performs.

🔑 Definition — Interdependence: Situations where one person's performance is contingent upon how someone else performs.

Understanding teamwork can be illustrated through sports parallels:

Cricket represents pooled interdependence where team member contributions are somewhat independent of one another. Players are separated on a large field, not all actively involved in every play, and they come to bat one at a time.

Football involves sequential interdependence. A flow of players and first downs are required to score. Players are closer to each other than in cricket, with a greater degree of interdependence. Players are grouped functionally (offense and defense), and unlike cricket, all players on the field are involved in every play.

Basketball exhibits the highest degree of interdependence. Players are closely grouped together and the team moves together on the court. Every player may contact any other player, and roles or functions are less defined than in football. All players are involved in offense, defense, and trying to score.

💡 Why this matters: Organizations frequently use sport teams as a model. Some organizations require close teamwork similar to basketball, whereas others require team involvement similar to cricket.

OD in Practice: Starbucks Case Study

Howard Schultz, founder and chairperson of Starbucks Coffee Company, emphasizes words like "collaborative," "teams," "empowerment," "empathize," and "vision." Starbucks has over 7,500 stores in 36 countries, with over 25 million people visiting each week.

Starbucks' six-point mission statement prioritizes: "Provide a great work environment and treat each other with respect and dignity." The overriding company philosophy is "Leave no one behind." New employees receive 24 hours of in-store training, higher-than-average salaries, and benefit packages. All employees working more than 20 hours a week receive stock options and full health-care benefits.

In employee surveys, Starbucks shows an 82% job-satisfaction rate compared to a 50% rate for all employees, and has the lowest employee turnover rate of any restaurant or fast-food company. Starbucks looks for people who are "adaptable, self-motivated, passionate, creative team players."

Need for Team Building

Work teams may be of two basic types:

1. Natural work team — people come together because they do related jobs or because of the structure of the organization's design
2. Temporary task team — groups meet for limited periods to work on a specific project or problem and disband after they solve it

Teams or work groups often have difficulty operating effectively. Problems that inhibit effective operation include lack of clear objectives, interpersonal differences or conflicts, ineffective communication, difficulty in reaching group decisions, and inappropriate power and authority levels in the group.

🔑 Definition — Team Building: A broad range of planned activities that help groups improve the way they accomplish tasks and help group members enhance interpersonal and problem-solving skills.

Team-Building Activities

A team is a group of interdependent people who share a common purpose, have common work methods, and hold each other accountable. The nature of interdependence varies, creating different types of teams: groups reporting to the same supervisor, groups with common organizational goals, temporary groups for specific one-time tasks, groups with interdependent work roles, and groups with no formal links but collective purpose.

Factors affecting outcomes of team-building activities include the length of time allocated, the team's willingness to examine its operations, how long the team has been working together, and the team's permanence.

Team-building activities can be classified into three categories:

1. Activities relevant to one or more individuals
2. Activities specific to the group's operation and behavior
3. Activities affecting the group's relationship with the rest of the organization

Activities Relevant to One or More Individuals

People come into groups with varying needs for achievement, inclusion, influence, and belonging. Team-building efforts result in members gaining a better understanding of how authority, inclusion, emotions, control, and power affect problem solving and group processes. This information gives group members a choice about their level of involvement, commitment, and investment.

📌 Example: In one team, the leader had predetermined actions for discussion items. During team building, members expressed frustration about their inability to influence decision making. The boss indicated willingness to be challenged about preconceived decisions, and team members expressed increased willingness to engage in problem-solving discussions and trust in the leader.

Activities Oriented to the Group's Operation and Behavior

The most common focus of team-building activities is behavior related to task performance and group process. In an effective team, task behavior and group process must be integrated with each other and with the needs of members.

Team-building activities often begin by clarifying the team's purpose, priorities, goals, and objectives. Groups examine communication patterns, effective use of time, planning mechanisms, workload distribution, and problem-solving techniques. As teams mature, they broaden diagnostic efforts to include interpersonal styles and their impact on other members.

Throughout this process, group norms become clearer, the team becomes more willing to take risks, and team members become more capable of facing difficulties within both the team and the larger organization. A spirit of openness, trust, and risk taking develops.

Activities Affecting the Group's Relationship with the Rest of the Organization

As the team gains better self-understanding, it focuses on its role within the organization. The team may need to clarify its organizational role and consider how this role can be improved or modified. Sometimes the team recognizes a need for more collaboration with other parts of the organization.

As the team becomes more cohesive, it usually exerts a stronger influence on other subsystems. Since team building can have negative effects in this area, the process consultant must help the group understand its role within the organization, develop diagnostic skills, and examine alternative action plans so that inter-group tensions and conflicts do not expand.

Team Building Process

Managing a team involves more than supervising people. Managers must bring a divergent group of people together to work on a common project. Since no one person can possess all the knowledge necessary to analyze and solve today's complex problems, teams are used to bring together required expertise.

The nature of work groups makes team development interventions probably the single most important and widely used OD activity.

⭐ Key Takeaways

The most critical understanding from this lecture is that teams operate on different types of interdependence—pooled (cricket-like), sequential (football-like), or reciprocal (basketball-like)—and organizations must match their team structure to their work requirements. Team building is a planned intervention that enhances communication, cooperation, and cohesiveness, and it involves three interrelated categories of activities: individual-focused, group operation-focused, and organization relationship-focused. The Starbucks case demonstrates that successful team cultures require commitment from leadership, investment in employee well-being, and a clear philosophy that prioritizes team values. Effective team building requires understanding that as teams become more cohesive, they must maintain healthy relationships with the larger organization to avoid dysfunctional isolation.

🧠 Quick Revision Questions

1. What are the three types of interdependence illustrated by cricket, football, and basketball, and how do they differ?
2. What are the two basic types of work teams, and what distinguishes them from each other?
3. What are the three categories of team-building activities, and what does each focus on?
4. What specific practices at Starbucks contribute to its high employee satisfaction and low turnover rates?
5. What potential negative effect can occur when a team becomes very cohesive, and how can this be prevented?

📘 Lecture 32 — Team Building

📖 Overview: This lecture explores the formal process of team building within organizations, detailing a structured six-step approach from initiation to evaluation. It emphasizes the critical role of the manager in facilitating team development and provides frameworks for determining when team building is appropriate and whether an outside consultant is needed. The lecture also critically examines the actual results and limitations of team building interventions.

🗂️ Topics Covered

This lecture covers the complete team building cycle, beginning with the distinction between family group diagnostic meetings and team-building meetings. It details a six-step process: initiating the meeting, setting objectives, collecting data, planning the meeting, conducting the meeting, and evaluating the process. The manager's role in team building is analyzed, including a checklist for assessing the need for a consultant. The lecture then examines when team building is applicable and appropriate, differentiates between transactional and transformational team management styles, and concludes with a critical review of the research on the results of team building.

📝 Lecture Summary

The team building process recognizes two types of activities:

1. Family Group Diagnostic Meetings – aimed at identifying group problems
2. Family Group Team-Building Meetings – aimed at improving the team’s functioning.

Most team development training meetings follow a format involving the following steps: Step 1: Initiating the Team Building Meeting
Step 2: Setting Objectives
Step 3: Collecting Data
Step 4: Planning the Meeting
Step 5: Conducting the Meeting
Step 6: Evaluating the Team Building Process

Step 1: Initiating the Team Building Meeting

The team building meeting may be initiated by a manager higher in the organization structure, who is not a member of the team. Whosoever decided, the decision to proceed is usually collaborative. During the formation stage the members of the team will probably discuss the degree to which they support team building. They will also discuss whether a team is necessary given the specific work situation.

Step 2: Setting Objectives

If a team building meeting is to be effective, there should be general agreement on the objectives before team building proceeds. The practitioner may address some pertinent questions to the work group. These might include: What is the purpose of this meeting? What do the participants and the consultant want to do? Why this group of people at this time? How does this meeting fit into the OD program? What is the priority of this project? Are the team members really interested and committed? What does the team want to accomplish? How will team building be measured or evaluated?

Step 3: Collecting Data

Some information is already gathered before the meeting, particularly during the diagnostic phase. The usefulness of this information depends on the extent to which it can be specifically identified with the team as opposed to the total organization. The members may be given additional questionnaires to fill out, or they may be interviewed. The practitioner may hold mini-group meetings with a few members at a time or with all the members to gather information.

Step 4: Planning the Meeting

The planning session will probably be attended by the practitioner, the manager, and a few of the team members. It is important at this point to restate the goals and objectives as precisely as possible, incorporating information obtained during the preceding steps. If the goals are specific behavioral objectives, the remaining work of planning the sequence of events of the meeting will flow more easily and logically. Going through this process will ensure a meeting that satisfies the needs of the participants. Planning for a team building meeting includes the logistics of the meeting, such as arranging for a time and a place. The planning stage will also ensure that all necessary personnel and resources are available.

Step 5: Conducting the Meeting

The meeting itself usually lasts two or three days. It is arranged at a place away from the work area. Reason being, it helps to put everyone – superior and subordinate – on a more equal level. It also lessens interruption.

On the morning of the 1st day, members are encouraged to share their expectations for the meeting and to develop specific norms that would guide their behaviors during the two-day meeting. This process is aided by an exercise in which the group members share their experiences about the best team they had ever worked on and in that way identified characteristics of effective teams. The norms and characteristics are placed on flipcharts and hung on the wall of the meeting room. All members agree to behave according to the norms and to assess periodically how well the norms were being followed. The consultant agrees to provide feedback on norm compliance during the session.

The meeting begins with a restatement of agreed upon objectives. The data are presented to the entire team, with attention given to problem areas or issues in which the team has expressed an interest, and then the team forms an agenda ranked in order of priority. The team critiques its own performance to prevent dysfunctional actions and improve functional activities. If the members feel that this is an opportunity for them to express open and honest feelings without fear of punishment, the leader of the team may come under attack. The success and failure of team building meeting may depend on how the manager reacts to the situation.

Once the team members have resolved their interpersonal issues, and developed a group understanding, they can move on to the task issues that need to be discussed. The purpose is to develop a specific action plan for improving the ways or processes it uses to reach its organizational goals. The first day ends with several unfinished lists of value statements, core purposes, and thoughts. An evaluation of the day was done. An overall rating and comments about the group were made.

The next day begins by feeding back the data from the evaluation and the important issues that remain to be addressed. The consultant then writes several important points on a flipchart and asks the group to identify the most important agenda items. Quickly they decide that they wanted to finish the core-values work and then discuss their core purpose. The consultant facilitates the conversation that is now under the control of the group members. Within a couple of hours, the group produces a list of core values, develops a process for involving the rest of the organization in creating a final list of values and crafts a core purpose that describes the essence of the organization. Before the meeting ends, the team should make a list of action items to be dealt with, who will be responsible for each item, and a time schedule.

Step 6: Evaluating the Team Building Process

At this meeting, the team examines the action items, exploring those that have been or are being carried out and those that are not working. It determines how well the implemented action items have aided the team’s operation and what else can be done. It reconsiders any action items that are not working and discards those that seem unnecessary. Items that appear to be helpful may now be given additional attention and support. The team will also explore how to resolve ongoing problems and what can be done to enhance continuous improvement.

The Manager’s Role in Team Building

Ultimately, the manager is responsible for group functioning, although this responsibility obviously must be shared by the group itself. Therefore, it is management’s task to develop a work group that can stop regularly to analyze and diagnose its own effectiveness and work process. With the group’s involvement, the manager must diagnose the group’s effectiveness and take appropriate actions if the work unit shows signs of operating difficulty or stress.

Many managers, however, have not been trained to perform the data gathering, diagnosis, planning, and action necessary to maintain and improve their teams continually. Thus, the issue of who should lead a team-building session is a function of managerial capability. The initial use of a consultant usually is advisable if a manager is aware of problems, feels that she or he may be part of the problem, and believes that some positive action is needed to improve the operation of the unit, but is not sure how to go about it.

Dyer has provided a checklist for assessing the need for a consultant (Table 11). Some of the questions ask the manager to examine problems and establish the degree to which she or he feels comfortable in trying out new and different things, the degree of knowledge about team building, whether the boss might be a major source of difficulty, and the openness of group members.

🔑 Definition — Consultant's Role: The consultant works closely with the manager (and members of the unit) to a point at which the manager is capable of engaging in team-development activities as a regular and ongoing part of overall managerial responsibilities. Two key principles guide this relationship: (1) the manager ultimately is responsible for all team-building activities, even though the consultant’s resources are available, and (2) the goal of the consultant’s presence is to help the manager learn to continue team-development processes with minimum consultant help or without the ongoing help of the consultant.

Thus, in the first stages the consultant might be much more active in data gathering, diagnosis, and action planning; particularly in a one- to three-day off-site workshop is considered. In later stages, the consultant takes a much less active role, with the manager becoming more active and serving as both manager and team developer.

Table 11. Assessing the Need for a Consultant — Scoring: if you have circled six or more “yes” responses, you probably do not need an outside consultant. If you have circled four or more “no” responses, you probably do need a consultant. If you have a mixture of “yes”, “no”, and “?” responses, invite a consultant to talk over the situation and make a joint decision.

When Is Team Building Applicable?

Team building is applicable in a large number of situations, from starting a new team, to resolving conflicts among members, to revitalizing a complacent team. Lewis has identified the following conditions as best suited to team building:

1. Patterns of communication and interaction are inadequate for good group functioning.
2. Group leaders desire an integrated team.
3. The group’s task requires interaction among members.
4. The team leader will behave differently as the result of team building, and members will respond to the new behavior.
5. The benefits outweigh the costs of team building.
6. Team building must be congruent with the leader’s personal style and philosophy.

When is Team Building Appropriate?

• To permit members to gain new expertise and experience and to develop and educate members.
• To build and enhance communication and interaction, because teams offer increased levels of participation in decisions.
• To build consensus and commitment on a controversial issue.
• Group leaders desire an integrated team.
• To allow more creative discussions by pulling together people of unusual and different backgrounds and interests.
• Team building must be congruent with the leader’s personal style and philosophy.

Team Management Styles

There are two main styles of team management.

1. A transactional, task oriented approach: Managers view the behavior of team members as an extension of team processes, and they attempt to modify that behavior through punishment and rewards.

2. A transformational, people oriented approach: Managers who apply a transformational approach, developing team members’ knowledge, skills, abilities, and careers, rather than focusing on the processes.

The Results of Team Building

The research on team building has a number of problems. First, it focuses mainly on the feelings and attitudes of group members. Little evidence supports that group performance improves as a result of team-building experiences. One study, for example, found that team building was a smashing success in the eyes of the participants. However, a rigorous field test of the results over time showed no appreciable effects on either the team’s functioning and efficiency or the larger organization’s functioning and efficiency. Second, the positive effects of team building typically are measured over relatively short time periods. Evidence suggests that the positive effects of off-site team building are short-lived, often fading after the group returns to the organization. Third, team building rarely occurs in isolation. Usually it is carried out in conjunction with other interventions leading to or resulting from team building itself. For this reason it is difficult to separate the effects of team building from those of the other interventions.

💡 Why this matters: This critical evaluation is crucial for OD practitioners. It cautions against assuming team building is a universal panacea and highlights the need for rigorous evaluation, follow-up activities, and integration with other organizational changes to ensure lasting impact.

⭐ Key Takeaways

The team building process is a structured, collaborative intervention consisting of six sequential steps: initiation, objective setting, data collection, planning, conducting (typically a 2-3 day off-site meeting), and evaluation. The manager retains ultimate responsibility for team functioning, though a consultant may be necessary, especially when the manager feels part of the problem or lacks expertise; Dyer's checklist helps assess this need. Team building is most applicable when communication is inadequate, the leader desires an integrated team, and the task requires member interaction, but it must be congruent with the leader's philosophy. Critically, while participants often perceive team building as highly successful, research shows that its positive effects on actual performance are often minimal and short-lived, and are difficult to isolate from other interventions.

🧠 Quick Revision Questions

1. What is the primary difference between a Family Group Diagnostic Meeting and a Family Group Team-Building Meeting?
2. According to Dyer's checklist, what scoring indicates that a manager likely does NOT need an outside consultant for team building?
3. Describe the purpose of establishing group norms on the first morning of a team building meeting.
4. What are the three main criticisms of team building research discussed in the lecture?
5. How do transactional and transformational styles of team management differ in their focus?

📘 Lecture 33 — Organization Process Approaches

📖 Overview: This lecture examines system-wide process interventions—change programs directed at improving organizational problem-solving, leadership, and inter-group coordination across major subsystems or entire organizations. It covers four key approaches: the organization confrontation meeting, inter-group relations interventions, large-group interventions, and Grid Organization Development, providing practical frameworks for mobilizing organizational resources and driving large-scale change.

🗂️ Topics Covered

This lecture begins with the organization confrontation meeting, an early intervention designed to mobilize problem-solving resources by having members identify pressing issues. It then examines inter-group relations interventions, including microcosm groups and inter-group conflict resolution meetings. The third major approach is large-group interventions (such as search conferences and open-space meetings), which bring many stakeholders together simultaneously to address organizational problems. Finally, the lecture covers Grid Organization Development, a normative six-phase packaged program focused on achieving corporate excellence through changing managerial styles and organizational culture.

📝 Lecture Summary

Organization Confrontation Meeting

The confrontation meeting is an intervention designed to mobilize the resources of the entire organization to identify problems, set priorities and action targets, and begin working on identified problems. Originally developed by Beckhard, the intervention can be used at any time but is particularly useful when the organization is in stress and when there is a gap between the top and the rest of the organization (such as when a new top manager joins). General Electric’s “Work-Out” program is a recent example of how the confrontation meeting has been adapted to fit today’s organizations. Although the original model involved only managerial and professional people, it has since been used successfully with technicians, clerical personnel, and assembly workers.

The application stages involve ten steps: scheduling a group meeting of all involved; appointing groups representing all departments (with no subordinate in the same group as their boss, and top management forming its own group); stressing openness and honesty in identifying problems; allowing one to two hours for problem identification; reconvening in a central meeting place for reporting; categorizing problems to eliminate duplication; dividing participants into new problem-solving groups; having each group rank problems, develop tactical action plans, and set timetables; having groups periodically report priorities and plans; and establishing schedules for periodic follow-up meetings to ensure continuing action.

🔑 Definition — Confrontation Meeting: An intervention designed to mobilize the resources of the entire organization to identify problems, set priorities and action targets, and begin working on identified problems.

Inter-group Relations Interventions

The ability to diagnose and understand inter-group relations is important for OD practitioners because groups often must work with and through other groups to accomplish goals; groups within the organization often create problems and place demands on each other; and the quality of relationships between groups can affect the degree of organizational effectiveness. Two OD interventions—microcosm groups and inter-group conflict resolution—are described here. A microcosm group uses members from several groups to help solve organization-wide problems. Inter-group conflict resolution helps two groups work out dysfunctional relationships. Together, these approaches help improve inter-group processes and lead to organizational effectiveness.

💡 Why this matters: The quality of inter-group relationships directly impacts organizational effectiveness, making diagnostic skills in this area essential for OD practitioners.

Microcosm Groups

A microcosm group consists of a small number of individuals who reflect the issue being addressed. For example, a microcosm group composed of members representing a spectrum of ethnic backgrounds, cultures, and races can be created to address diversity issues. This group, assisted by OD practitioners, can create programs and processes targeted at specific problems. In addition to addressing diversity problems, microcosm groups have been used to carry out organization diagnoses, solve communications problems, integrate two cultures, smooth the transition to a new structure, and address dysfunctional political processes.

Microcosm groups work through parallel processes, which are the unconscious changes that take place in individuals when two or more groups interact. After groups interact, members often find that their characteristic patterns of roles and interactions change to reflect the roles and dynamics of the group with whom they were relating. Put simply, groups seem to "infect" and become "infected" by the other groups. The lecture provides an example where a diagnostic team role-played a department head meeting they had never observed—the simulated meeting closely approximated the actual session, demonstrating how parallel processes work.

🔑 Definition — Parallel Processes: The unconscious changes that take place in individuals when two or more groups interact, causing characteristic patterns of roles and interactions to reflect the dynamics of the other group.

The five application stages are: (1) Identify an issue—finding a system-wide problem from an organizational diagnosis or member idea; (2) Convene the group—forming the microcosm group with membership reflecting the appropriate mix of stakeholders, and giving the group status and credibility; (3) Provide group training—training in problem-solving and decision-making, with OD practitioners observing how the group reflects the larger organization's problem; (4) Address the issue—solving the problem and implementing solutions, using a communication plan, visible and accessible members, and appropriate participation levels; (5) Dissolve the group—disbanding after successful implementation.

Large Group Interventions

The third system-wide process intervention is called large-group intervention. Such change programs have been referred to variously as "search conferences," "open-space meetings," "open-systems planning," and "future searches." They focus on issues that affect the whole organization or large segments of it, such as developing new products, responding to environmental change, or introducing new technology. The defining feature of large-group intervention is bringing together large numbers of organization members and other stakeholders, often more than one hundred, for a two- to four-day meeting where attendees work together to identify and resolve organization-wide problems, design new approaches, or propose future directions.

Large-group interventions can vary on several dimensions, including purpose, size, length, structure, and number. The purpose can range from solving particular problems to envisioning future strategic directions. Groups have included less than fifty to more than two thousand participants, lasting between one and five days. Some processes are relatively planned and structured; others are more informal.

Preparing for the Large-Group Meeting: A design team comprising OD practitioners and several organization members addresses three key ingredients: (1) a compelling meeting theme—a powerful reason for change such as managing mergers or responding to threats; (2) appropriate participants—inviting as many stakeholders as possible to "get the whole system in the room"; (3) relevant tasks to address the conference theme—assigned to several subgroups responsible for examining the theme.

Open-Systems Methods: These approaches help organizations assess their environments systematically and develop strategic responses. The six steps are: (1) Map the current environment surrounding the organization, identifying and prioritizing external groups; (2) Assess the organization's responses to environmental expectations; (3) Identify the core mission of the organization as revealed in behavior, not official statements; (4) Create a realistic future scenario assuming no changes; (5) Create an ideal future scenario without worrying about constraints; (6) Compare the present with the ideal future and prepare an action plan with three timeframes: tomorrow, six months, and two years.

Open-Space Methods: This approach is distinguished by its lack of formal structure. It temporarily restructures or "self-organizes" participants around interests and topics. The three steps are: (1) Set the conditions for self-organizing—announcing the theme and norms, including the "Law of Two Feet" (taking responsibility for one's own behavior) and the "Four Principles" (whoever comes is the right people; whatever happens is the only thing that could have; whenever it starts is the right time; when it is over, it is over); (2) Create the agenda—participants describe topics they have passion for and sign up for sessions; (3) Coordinate activity through information—using community meetings and one-page summaries posted in a "newsroom."

Following Up on Meeting Outcomes: Follow-up efforts are vital to implementing action plans, involving communicating results, gaining wider commitment, and structuring the change process.

Grid Organization Development: A Normative Approach

Grid OD is one of the most widely used approaches to system-wide planned change. It is a systematic approach aimed at achieving corporate excellence, based on the belief that managers and organizations can only be made more effective if the basic culture of the system is changed. Grid OD starts with a focus on individual behavior, specifically on the Managerial Grid describing managerial styles, and moves through sequential phases involving the work team, inter-group relationships, and finally the overall organizational culture.

According to the Managerial Grid, an individual's style can be described according to his or her concern for production and concern for people. Concern for production covers behaviors like accomplishing tasks, developing creative ideas, and making quality decisions. Concern for people encompasses issues like personal worth, working conditions, commitment, security, and relationships. Managers with high concern for production and low concern for people minimize attitudes and feelings; those with high concern for people and low concern for production focus on comfort and security. The most effective style shows high concern for both, overcoming the communications barrier by allowing employees to think and influence the organization.

The six phases of Grid OD are: Phase 1: The Grid Seminar—a one-week program where participants analyze their personal styles and learn team methods of problem-solving, with learning objectives including analyzing thinking, increasing objectivity, achieving clear communication, working in teams, managing conflict, and analyzing corporate culture.

Phase 2: Teamwork Development—begins with the top manager and direct reports, then cascades down through the entire organization, with teams setting group and individual goals.

Phase 3: Inter-group Development—improves relations between units by having groups describe actual and ideal relationships, compare perceptions, and work on making relationships more productive.

Phase 4: Developing an Ideal Strategic Organization Model—top managers work toward a model incorporating six factors: clear financial objectives, character of activities, scope of markets, integrating structure, basic policies, and approaches to growth.

Phase 5: Implementing the Ideal Strategic Model—organizations are divided into segments with planning teams, a corporate headquarters team, and a coordinator ensuring clear understanding.

Phase 6: Systematic Critique—determines the degree of organization excellence using a 100-question survey investigating behavior, teamwork, inter-group relations, and corporate strategy, with measurements taken at each phase.

⭐ Key Takeaways

The four system-wide process interventions each serve distinct purposes: confrontation meetings mobilize resources by having all departments identify and prioritize problems, inter-group interventions use microcosm groups and conflict resolution to address relationships between units, large-group interventions bring many stakeholders together to address complex organizational issues through either structured open-systems methods or flexible open-space methods, and Grid OD provides a comprehensive six-phase program focused on changing organizational culture through the Managerial Grid's concern for production and people. The defining feature of large-group interventions is "getting the whole system in the room" to accelerate change. Microcosm groups work through parallel processes, where small representative groups unconsciously reflect and solve problems present in the larger organization. For the exam, remember: the ten steps of confrontation meetings, the five steps of microcosm groups, the six steps of open-systems methods, the three steps of open-space methods with their Law of Two Feet and Four Principles, and the six phases of Grid OD.

🧠 Quick Revision Questions

1. What is the purpose of an organization confrontation meeting, and when is it particularly useful?
2. How do parallel processes operate in microcosm groups, and why are they important for solving organization-wide problems?
3. What are the six steps in open-systems methods for large-group interventions?
4. Explain the "Law of Two Feet" and the "Four Principles" that govern open-space methods.
5. What are the six phases of Grid Organization Development, and what is the central focus of the Managerial Grid?

📘 Lecture 34 — Restructuring Organizations

📖 Overview: This lecture examines techno-structural interventions that focus on changing an organization’s technology and structure. It explores how organizations are moving from traditional, rigid bureaucratic structures to leaner, more flexible forms in response to global competition and rapid change. The lecture covers structural design, downsizing, reengineering, and five distinct organizational structures including functional, self-contained-unit, matrix, process-based, and network-based forms.

🗂️ Topics Covered

The lecture begins by examining structural design and its contingency factors including environment, size, technology, strategy, and worldwide operations. It then explores five major organizational structures in detail: the functional organization, self-contained-unit organization, matrix organization, process-based structures, and network-based structures. For each structure, the lecture provides definitions, advantages, disadvantages, and specific contingency conditions. The lecture also briefly introduces downsizing and reengineering as restructuring interventions.

📝 Lecture Summary

Structural Design

Organization structure describes how the overall work of the organization is divided into subunits and how these subunits are coordinated for task completion. It is a key feature of an organization’s strategic orientation. Based on a contingency perspective shown in Figure 41, organization structures should be designed to fit with at least five factors: the environment, organization size, technology, organization strategy, and worldwide operations. Organization effectiveness depends on the extent to which its structures are responsive to these contingencies.

Organizations traditionally have structured themselves into one of three forms: functional departments that are task specialized; self-contained units that are oriented to specific products, customers, or regions; or matrix structures that combine both functional specialization and self-containment. Faced with accelerating changes in competitive environments and technologies, organizations increasingly have redesigned their structures into more integrative and flexible forms including process-based structures and network-based structures.

The Functional Organization

The functional structure is perhaps the most widely used organizational structure in the world today. The organization is usually subdivided into functional units such as engineering, research, operations, human resources, finance, and marketing. This structure is based on early management theories regarding specialization, line and staff relations, span of control, authority, and responsibility. The major functional subunits are staffed by specialists, and it is considered easier to manage specialists if they are grouped together under the same head who has training and experience in that particular discipline.

🔑 Definition — Functional Structure: An organizational structure that subdivides the organization into departments based on specialized functions such as engineering, finance, and marketing.

Table 12 lists the advantages and disadvantages of functional structures. On the positive side, functional structures promote specialization of skills and resources by grouping people who perform similar work and face similar problems. This grouping facilitates communication within departments and allows specialists to share their expertise. It also enhances career development within the specialty, whether it is accounting, finance, engineering, or sales. The functional structure reduces duplication of services because it makes the best use of people and resources.

On the negative side, functional structures tend to promote routine tasks with a limited orientation. Department members focus on their own tasks rather than on the organization’s total task, which can lead to conflict across functional departments. Coordination and scheduling among departments can be difficult when each emphasizes its own perspective.

📌 Contingencies: The functional structure works best in small-to-medium sized firms in environments that are relatively stable and certain. These organizations typically have a small number of products or services. This structure is best suited to routine technologies with interdependence within functions, and to organizational goals emphasizing efficiency and technical quality.

The Self-Contained-Unit Organization

The self-contained-unit structure, also known as a product or divisional structure, represents a fundamentally different way of organizing. It was developed at about the same time by General Motors, Sears, Standard Oil of New Jersey (Exxon), and DuPont. It groups organizational activities on the basis of products, services, customers, or geography. All or most of the resources necessary to accomplish a specific objective are set up as a self-contained unit headed by a product or division manager. In effect, a large organization may set up smaller (sometimes temporary) special-purpose organizations, each geared to a specific product, service, customer, or region.

🔑 Definition — Self-Contained-Unit Structure: An organizational structure that groups activities based on products, services, customers, or geography, with all necessary resources placed in a single unit.

Table 13 lists the advantages and disadvantages. These organizations recognize key interdependencies and coordinate resources toward an overall outcome. This strong outcome orientation ensures departmental accountability and promotes cohesion among those contributing to the product. These structures provide employees with opportunities for learning new skills and expanding knowledge because workers can move more easily among different specialties.

On the negative side, self-contained-unit organizations may not have enough specialized work to use people’s skills fully. Specialists may feel isolated from their professional colleagues. The structures may promote allegiance to department rather than organization objectives and place multiple demands on people, thereby creating stress.

📌 Contingencies: The self-contained-unit structure works best in conditions almost opposite to those favoring a functional organization. The organization needs to be relatively large to support duplication of resources. Because each unit is designed to fit a particular niche, the structure adapts well to uncertain conditions. It helps coordinate technical interdependencies falling across functions and is suited to goals promoting product or service specialization and innovation.

The Matrix Organization

The matrix organization maximizes the strengths and minimizes the weaknesses of both the functional and self-contained-unit structures. It superimposes the lateral structure of a product or project coordinator on the vertical functional structure. Matrix organizational designs originally evolved in the aerospace industry where changing customer demands and technological conditions caused managers to focus on lateral relationships between functions. Matrix organizations now are used widely in manufacturing, service, nonprofit, governmental, and professional organizations.

🔑 Definition — Matrix Organization: An organizational structure that superimposes a lateral product or project structure on a vertical functional structure, creating dual chains of command.

Every matrix organization contains three unique and critical roles: the top manager, who heads and balances the dual chains of command; the matrix bosses (functional, product, or area), who share subordinates; and the two-boss managers, who report to two different matrix bosses. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a project manager while working on that project.

📌 Example: In a matrix organization, each project manager reports directly to the vice president and the general manager. Since each project represents a potential profit center, the power and authority used by the project manager come directly from the general manager.

Table 14 lists the advantages and disadvantages. On the positive side, the matrix structure allows multiple orientations. Specialized functional knowledge can be applied to all projects. New products or projects can be implemented quickly by using people flexibly. Matrix organizations can maintain consistency among departments and projects by requiring communication among managers.

On the negative side, these organizations can be difficult to manage. Implementation requires heavy managerial costs and support. When people are assigned to more than one department, there may be role ambiguity and conflict, and overall performance may be sacrificed if there are power conflicts between functional departments and project structures.

📌 Three Conditions for Matrix: First, there must be outside pressures for a dual focus — many customers with unique demands and strong requirements for technical sophistication. Second, the matrix is appropriate when the organization must process a large amount of information — when external demands change unpredictably, when the organization produces a broad range of products, and when there is reciprocal interdependence among tasks. Third, there must be pressures for shared resources — when valuable human and physical resources are likely to be scarce. If any of these conditions is not met, a matrix organization is likely to fail.

Process-Based Structures

A radically new logic for structuring organizations is to form multidisciplinary teams around core processes such as product development, order fulfillment, sales generation, and customer support. Process-based structures emphasize lateral rather than vertical relationships. All functions necessary to produce a product or service are placed in a common unit usually managed by someone called a “process owner.” There are few hierarchical levels, and the senior executive team is relatively small.

🔑 Definition — Process-Based Structure: An organizational structure that forms multidisciplinary teams around core work processes, emphasizing lateral relationships and customer focus.

Process-based structures eliminate many hierarchical and departmental boundaries that can impede task coordination and slow decision making. They reduce the enormous costs of managing across departments up and down the hierarchy. These structures enable organizations to focus most of their resources on serving customers, both inside and outside the firm.

Six Key Features of Process-Based Structures:

1. Processes drive structure — organized around three to five key processes, each governed by a process owner with clear performance goals.
2. Work adds value — simplified by eliminating nonessential tasks and reducing layers of management; enriched by combining tasks so teams perform whole processes.
3. Teams are fundamental — self-managing teams manage everything from task execution to strategic planning.
4. Customers define performance — the primary goal is customer satisfaction.
5. Teams are rewarded for performance — appraisal systems focus on team performance against customer satisfaction goals.
6. Teams are tightly linked to suppliers and customers — through designated members with direct relationships.

Table 15 lists advantages and disadvantages. The most frequently mentioned advantage is intense focus on meeting customer needs, which can result in dramatic improvements in speed, efficiency, and customer satisfaction. Process-based structures remove layers of management, so information flows more quickly. Because process teams comprise different functional specialties, boundaries between departments are removed.

A major disadvantage is the difficulty of changing to this new organizational form. These structures typically require radical shifts in mindsets, skills, and managerial roles. Process-based structures may result in expensive duplication of scarce resources and, if teams are not skilled adequately, in slower decision making.

📌 Contingencies: Process-based structures are particularly appropriate for highly uncertain environments where customer demands and market conditions are changing rapidly. They enable organizations to manage non-routine technologies and coordinate highly interdependent work flows. They generally appear in medium- to large-sized organizations having several products or projects, with a heavy focus on customer-oriented goals.

⭐ Key Takeaways

A student must remember that organization structure describes how work is divided and coordinated, and that structures must fit five contingency factors: environment, size, technology, strategy, and worldwide operations. The four major structural forms each have distinct advantages, disadvantages, and contingency conditions — functional structures suit stable environments with routine technology, self-contained units suit uncertain environments with cross-functional interdependence, matrix structures require dual focus on product and technical demands with shared resources, and process-based structures require highly uncertain environments with customer-oriented goals. The matrix organization involves dual command with three critical roles (top manager, matrix bosses, and two-boss managers), while process-based structures emphasize lateral relationships, teams, and customer satisfaction. All structural forms should be evaluated based on their fit with organizational contingencies, not as universally superior designs.

🧠 Quick Revision Questions

1. What are the five contingency factors that influence which organizational structure is appropriate?

2. Under what conditions is a functional structure most appropriate, and what is its main disadvantage?

3. What three unique and critical roles exist in every matrix organization, and what happens if any of the three conditions for matrix is not met?

4. What are the six key features of process-based structures, and why is the difficulty of changing to this form considered a major disadvantage?

5. How do the contingency conditions for functional structures differ from those for self-contained-unit structures?

📘 Lecture 35 — Network-Based Structures: Restructuring Organizations

📖 Overview: This lecture explores how organizations restructure through network-based structures, downsizing, and reengineering. It explains the different types of networks, their advantages and disadvantages, and provides detailed application stages for both downsizing and reengineering interventions. Understanding these restructuring approaches is critical for managing organizational change in complex and dynamic environments.

🗂️ Topics Covered

The lecture begins by defining and categorizing four types of network structures: internal market, vertical market, inter-market, and opportunity networks. It then details the characteristics of network structures including vertical desegregation, brokers, and coordinating mechanisms, followed by their advantages and disadvantages. The second major section covers downsizing interventions, including conditions leading to downsizing, application stages, and research results. The final section addresses reengineering as a radical redesign approach, its application stages, and its relationship to downsizing and process-based structures.

📝 Lecture Summary

Network-Based Structures

A network-based structure manages the diverse, complex, and dynamic relationships among multiple organizations or units, each specializing in a particular business function or task. Four basic types of networks exist:

🔑 Definition — Internal market network: Exists when a single organization establishes each subunit as an independent profit center allowed to buy and sell services and resources from each other and from the external market. Example: ABB’s fifty worldwide businesses consist of twelve hundred companies organized into forty-five hundred profit centers.

🔑 Definition — Vertical market network: Composed of multiple organizations linked to a focal organization that coordinates resource movement from raw materials to end consumer. Example: Nike manufactures shoes in different plants and organizes distribution through retail outlets.

🔑 Definition — Inter-market network: Represents alliances among organizations in different markets, exemplified by the Japanese keiretsu and Korean chaebol.

🔑 Definition — Opportunity network: The most advanced form; a temporary constellation of organizations brought together to pursue a single purpose. Once accomplished, the network disbands.

These types are distinguished by whether they are single or multiple organizations, single or multiple industry, and stable or temporary. An internal market network is stable, single-organization, single-industry; an opportunity network is temporary, multiple-organization, spanning several industries.

Network structures redraw organizational boundaries and link separate business units to facilitate task interaction. Network organizations use strategic alliances, joint ventures, research and development consortia, licensing agreements, and wholly owned subsidiaries. They are known as shamrock organizations, virtual, modular, or cellular corporations.

Characteristics of Network Structures

Vertical desegregation: Breaking up business functions into separate organizations performing specialized work. In the film industry, separate organizations for transportation, cinematography, special effects, set design, music, actors, and catering work together under a broker organization (the studio). Disintermediation — replacement of whole steps in the value chain by information technology, especially the Internet — has fueled network structure development.

Brokers: Networks are often managed by broker organizations that locate and assemble member organizations. The broker may play a central role and subcontract, or specialize in linking equal partners. In construction, the general contractor assembles and manages drywall, mechanical, electrical, plumbing, and other specialties.

Coordinating mechanisms: Network organizations are not controlled by hierarchical arrangements or plans. Coordination falls into three categories:

• Informal relationships: Depend on interpersonal relationships; conflicts resolved through reciprocity; trust is built over time.
• Contracts: Formal contracts such as ownership control, licensing arrangements, or purchase agreements.
• Market mechanisms: Spot payments, performance accountability, and information systems.

Advantages and Disadvantages of Network Structures

Advantages: Highly flexible and adaptable to changing conditions; enables "best-of-the-best" company to exploit global opportunities; allows each member to exploit distinctive competence; can accumulate resources for large, complex tasks; can produce synergistic effects where the whole exceeds the sum of its parts.

Disadvantages: Managing lateral relations across autonomous organizations is difficult; motivating members to relinquish autonomy is troublesome; sustaining membership and benefits is problematic; may expose proprietary knowledge/technology to partners.

Contingencies: Best suited to highly complex and uncertain environments; applies to organizations of all sizes; fits goals emphasizing specialization and innovation; appropriate for highly uncertain technologies and worldwide operations.

💡 Why this matters: Network structures require matrix skills of managing lateral relations across organizational boundaries, but lack the ability to appeal to a higher authority to resolve conflicts — making administration particularly challenging for hierarchically managed organizations.

Downsizing

Downsizing refers to interventions aimed at reducing the size of the organization, typically by decreasing the number of employees through layoffs, attrition, redeployment, or early retirement, or by reducing organizational units or managerial levels through divestiture, outsourcing, reorganization, or delayering.

An important consequence is the rise of the contingent workforce — less expensive temporary or permanent part-time workers. The American Management Association found nearly a third of 720 firms rehired recently terminated employees as independent contractors because downsizings had not been matched by appropriate workload reduction.

Four major conditions leading to downsizing:

1. Mergers and acquisitions: One in nine job cuts during 1998 resulted from integration of two organizations.
2. Organization decline: Caused by loss of revenues, market share, technological and industrial change. In southern California, over 100,000 defense industry jobs were lost.
3. Implementation of new organizational structures: Network-based structures involve outsourcing non-essential work.
4. Beliefs that smaller is better: The conviction that organizations should be leaner and more flexible. Hamel and Prahalad warned against "corporate anorexia" — downsizing for its own sake, losing key employees and leaving a legacy of mistrust.

Application Stages of Downsizing

Stage 1: Clarify the organization's strategy. Leaders specify corporate strategy and communicate how downsizing relates to it, making clear that downsizing is not a goal itself but a restructuring process for achieving strategic objectives. Leaders provide visible support and opportunities for members to voice concerns.

Stage 2: Assess downsizing options and make relevant choices. Table 17 describes three primary downsizing methods:

🔑 Definition — Workforce reduction: Aimed at headcount reduction, short-term implementation. Includes attrition, retirement incentives, outplacement services, and layoffs.

🔑 Definition — Organization redesign: Aimed at organization change, moderate-term implementation. Includes merging units, eliminating layers, eliminating products, redesigning tasks.

🔑 Definition — Systemic change: Aimed at culture change, long-term implementation. Involves changing responsibilities and work behaviors of everyone, fostering continuous improvement as a way of life.

Case (manufacturer of heavy construction equipment) used multiple methods: eliminating money-losing product lines, narrowing product breadth, bringing customers for design input, shifting production to outside vendors, restructuring debt, spinning off stores, closing five plants, and reducing payroll by almost 35%.

Stage 3: Implement the changes. Best controlled from top down; identify and target specific areas of inefficiency and high cost; link specific actions to strategy; communicate frequently using multiple media.

Stage 4: Address needs of survivors and those who leave. When layoffs occur, remaining employees take on additional responsibilities, often without compensation increases, leading to "survivor syndrome" — self-absorbed, risk-averse behaviors that threaten organizational survival. Survivors are preoccupied with whether additional layoffs will occur, guilt over receiving pay while coworkers struggle, and career advancement uncertainty.

Organizations can address survivor concerns through communication that shifts from explaining who left to clarifying visions, strategies, and goals; training and development for new work; and promoting involvement in decision making.

For laid-off employees: outplacement counseling, personal and family counseling, severance packages, office support for job searches, relocation services, and job retraining.

Stage 5: Follow through with growth plans. Implementing an organization renewal and growth process. A study of 1,020 HR directors found only 44% shared details of growth plans with employees; only 34% told employees how they would fit into the new strategy.

Results of Downsizing

Empirical research on downsizing is mostly negative. The National Research Council concluded: "From the research produced thus far, downsizing as a strategy for improvement has proven to be, by and large, a failure."

Key findings:

• Fewer than half of firms met cost targets
• Only 22% achieved expected productivity gains
• About 80% needed to rehire some previously terminated people
• Fewer than 33% reported profits increased as expected
• Only 21% achieved satisfactory shareholder return on investment
• Individual problems: increased stress and illness, loss of self-esteem, reduced trust and loyalty, marriage and family disruptions

Financial performance studies: One study of 210 companies found that layoff announcements produced initial improvements, but gains were temporary and not sustained at even pre-layoff levels. Another study of sixteen firms found stock prices declined below market by 17% to 48% two years after layoff announcements.

Cautions in interpreting results:

1. Survey responses from HR specialists may view downsizing negatively
2. Financial performance studies may include biased samples of poorly managed firms
3. Disappointing results may reflect poor implementation rather than downsizing itself

Companies like Florida Power and Light, General Electric, Motorola, Texas Instruments, Boeing, Chrysler, and Hewlett-Packard posted solid returns following downsizing. A study of thirty automobile firms showed that those implementing the process effectively scored significantly higher on performance measures.

Reengineering

Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance. It transforms how organizations traditionally produce and deliver goods and services.

Reengineering addresses problems created by the Industrial Revolution's fragmentation of work into specialized units. It breaks down specialized work units into more integrated, cross-functional work processes, streamlining work and making it more responsive to changes in competitive conditions, customer demands, product life cycles, and technologies.

Reengineering requires revolutionary change, questioning unexamined assumptions about how organizations perform work. This differs from continuous improvement and total quality management, which emphasize incremental changes. Reengineering seeks dramatic increases in performance.

Modern information technology enables reengineering. At IBM Credit, an integrated information system with expert systems technology enables one employee to handle all stages of credit delivery. SAP is the most popular software system for supporting process-based work, integrating information flow among different business parts.

Reengineering overlaps with downsizing, shift from functional to process-based structures, and work design. It can result in fewer people and management layers, and helps break down the vertical orientation of functional organizations.

Application Stages of Reengineering

Stage 1: Prepare the organization. Clarify and assess competitive environment, strategy, and objectives. At GTE Telephone Operations, executives determined deregulation would spread to local networks, presenting an enormous competitive challenge.

Stage 2: Specify organization strategy and objectives. Business strategy determines focus of reengineering. GTE set dramatic goals: doubling revenues while halving costs and reducing product development time by 75%. Communications program lasted a year and a half.

Stage 3: Fundamentally rethink the way work gets done. Three activities:

a. Identify and analyze core business processes. Core processes are essential for strategic success. Develop a process map listing different activities required to deliver products/services. GTE characterized core processes as "choose, use, and pay."

Analysis can include assigning costs to each phase of work flow. At Dana Corporation, traditional accounting showed salaries and fringe benefits accounted for 82% of costs. Process-based accounting showed 44% of costs involved expediting, resolving, and reissuing orders — half their costs were associated with reworking deficient orders.

Processes can be assessed in terms of value-added activities. Corky's Pest Control provides customers with a self-addressed, stamped envelope — adding cost but paying for itself in customer loyalty and reduced accounts receivables. Conversely, a Denver hospital had an employee checking a pump that no longer required physical inspection, wasting resources.

📐 Value-added analysis: Process activities that contribute value to product/service → decisions about which activities to keep or eliminate.

b. Define performance objectives. Set challenging goals for speed, quality, cost. Andersen Windows set targets for ease of ordering, manufacturing, and delivery. By 1995, sales tripled at some locations, products increased to 188,000, and fewer than 1 in 200 shipments had discrepancies.

c. Design new processes. Start with a clean sheet addressing: "If we were starting this company today, what processes would we need for sustainable competitive advantage?" Guidelines include:

• Begin and end with customer needs
• Simplify by combining and eliminating steps
• Use "best of what is"
• Attend to technical and social aspects
• Do not be constrained by past practice
• Identify critical information at each step
• Perform activities in natural order
• Assume work gets done right first time
• Listen to people who do the work

"Early wins" or "quick hits" — implementing obvious redundancies and inefficiencies immediately — help generate momentum.

Stage 4: Restructure the organization around the new business processes. Implement new information and measurement systems that shift from measuring behaviors (absenteeism, grievances) to assessing outcomes (productivity, customer satisfaction, cost savings). Information technology is a key driver because it drastically reduces cost and time for integrating business processes.

⭐ Key Takeaways

Network structures represent a fundamental shift from traditional hierarchies to relationship-based coordination across organizational boundaries. Four distinct types exist — internal market, vertical market, inter-market, and opportunity networks — each suited to different organizational arrangements. Downsizing interventions, while aimed at reducing costs and improving efficiency, have largely negative empirical results unless implemented carefully following the five-stage process with attention to strategy, options assessment, implementation, survivor support, and growth follow-through. Reengineering provides the most radical restructuring approach by fundamentally rethinking business processes from the ground up, often enabled by information technology, with its own four-stage application process. The success of all restructuring interventions depends more on how effectively they are applied than on the scale of layoffs or structural changes.

🧠 Quick Revision Questions

1. What are the four types of network structures, and how can they be distinguished from one another?

2. What three categories of coordinating mechanisms are used in network organizations, and how do they differ from hierarchical control?

3. What is "survivor syndrome" in the context of downsizing, and what practices can organizations use to address it?

4. What are the three primary downsizing tactics (workforce reduction, organization redesign, systemic change) and how do they differ in implementation timeframe and focus?

5. How does reengineering differ from continuous improvement and total quality management, and what role does information technology play in enabling it?

📘 Lecture 36 — Employee Involvement

📖 Overview: This lecture examines employee involvement (EI) as a critical OD intervention for enhancing participation, commitment, and productivity. It explores how organizations empower employees by moving decision-making authority downward, and details major EI applications including parallel structures, cooperative union-management projects, and quality circles. The lecture uses the case of Michael Dell to illustrate why even successful companies must address employee engagement.

🗂️ Topics Covered

The lecture opens with the Michael Dell case study showing the consequences of neglecting employee involvement. It then defines employee involvement through four key elements: power, information, knowledge and skills, and rewards. The relationship between EI and productivity is explained through communication, motivation, and capability improvements. Finally, the lecture covers parallel structures including their application stages, cooperative union-management projects, and presents case examples from GE Medical Systems and GTE California.

📝 Lecture Summary

Changing Michael Dell’s DNA

Dell Inc. is one of the world’s largest PC manufacturers and topped the Fortune 500 list in 10-year total return to investors. CEO Michael Dell still manages with urgency and determination from his college dorm days. However, a recent employee survey revealed that half of Dell’s employees would leave if they got the chance. Internal interviews showed that subordinates felt Michael Dell was impersonal and emotionally detached, while president Kevin Rollins was autocratic and antagonistic.

Michael Dell believes the status quo is never good enough—once a problem is uncovered, it should be dealt with quickly. In the 1990s, seasoned managers recruited from IBM and Intel quickly bailed out because they were unwilling to work in Dell’s demanding culture. An executive coach who worked with Dell since 1995 said, “They need to work a lot on appreciating people.” Fearing an exodus of talent, Dell went before his management team and offered an honest self-critique. He acknowledged his shyness made him appear removed and uncaring, and promised to build tighter relationships with his team. A videotape of the meeting was shown to every manager in the company.

Like Dell, a growing number of companies recognize that empowered employees are the difference between success and failure in the long run. Faced with competitive demands for lower costs, higher performance, and greater flexibility, organizations increasingly turn to employee involvement (EI) to enhance participation, commitment, and productivity.

🔑 Definition — Employee Involvement (EI): A broad term that has been variously referred to as “empowerment,” “participative management,” “work design,” “industrial democracy,” and “quality of work life.” It seeks to increase members’ input into decisions that affect organization performance and employee well-being.

🔑 Definition — Empowerment: Giving employees power to make decisions about work.

Firms that have transformed their culture claim increased productivity, more clients, a sense of ownership in each employee, and increased profits. OD interventions in this area aim at moving decision-making downward in the organization, closer to where actual work takes place—i.e., delegation of power. Major EI applications discussed include: parallel structures (including cooperative union-management projects and quality circles), high-involvement organizations, and total quality management. Work design and reward system interventions are discussed in later chapters.

💡 Why this matters: The Dell case demonstrates that even highly successful companies can face a talent crisis if employees feel undervalued. Employee involvement is presented not as optional but as essential for long-term organizational survival and competitiveness.

Employee Involvement: What is it?

Employee involvement is the current label for practices and philosophies that started with the quality-of-work-life (QWL) movement in the late 1950s. The phrase “quality of work life” was used to stress the prevailing poor quality of life at the workplace. Both the term QWL and its meaning have undergone considerable change and development.

A Working Definition of Employee Involvement

Employee involvement seeks to increase members’ input into decisions that affect organization performance and employee well-being. It is described in terms of four key elements that promote worker involvement:

1. Power: Providing people with enough authority to make work-related decisions covering work methods, task assignments, performance outcomes, customer service, and employee selection. The amount of power can vary enormously—from simply asking for input, to joint manager-worker decisions, to employees making decisions themselves.

2. Information: Timely access to relevant information is vital for making effective decisions. Organizations can promote EI by ensuring necessary information flows freely to those with decision authority, including data about operating results, business plans, competitive conditions, new technologies, work methods, and ideas for improvement.

3. Knowledge and skills: Employee involvement contributes to organizational effectiveness only to the extent that employees have the requisite skills and knowledge to make good decisions. Organizations can facilitate EI by providing training and development programs covering performing tasks, making decisions, solving problems, and understanding how the business operates.

4. Rewards: Because people generally do things for which they are recognized, rewards powerfully affect getting people involved. Meaningful involvement opportunities can provide internal rewards like feelings of self-worth and accomplishment. External rewards like pay and promotions can reinforce EI when linked directly to performance outcomes resulting from participation in decision-making.

These four elements are interdependent and must be changed together to obtain positive results. For example, giving members more power without information or knowledge/skills makes involvement negligible. Increasing power, information, and knowledge/skills without linking rewards to performance gives members little incentive to improve.

The farther that all four elements are moved downward throughout the organization, the greater the employee involvement. Parallel structures (union-management cooperative efforts and quality circles) are limited in moving these elements downward; high-involvement organizations and total quality management provide far greater opportunities.

💡 Why this matters: The four elements form a system—changing only one or two elements will likely fail. This explains why many EI initiatives fail: organizations give power but not training, or provide information but no rewards.

How Employee Involvement Affects Productivity

An assumption underlying much EI literature is that such interventions will lead to higher productivity. Studies have found a consistent relationship between EI practices and productivity measures such as financial performance, customer satisfaction, labor hours, and waste rates.

The traditional explanation—that involvement raises job satisfaction which then raises productivity—is now considered too simplistic and sometimes wrong. A more realistic explanation shows three ways EI interventions improve productivity:

1. Communication and coordination: EI improves communication and coordination among employees and departments, helping integrate different jobs or departments that contribute to an overall task.

2. Employee motivation: EI improves employee motivation, particularly when it satisfies important individual needs. Motivation translates into improved performance when people have necessary skills and knowledge and when technology and work situations allow people to affect productivity. Some jobs are so rigidly controlled that individual motivation has little impact.

3. Employee capabilities: EI improves employee capabilities, enabling them to perform better. For example, participation in decision-making generally includes skill training in group problem-solving and communication.

Secondary effects include increased employee well-being and satisfaction by providing a better work environment and more fulfilling job. Improved productivity also increases satisfaction, particularly when it leads to greater rewards. Increased satisfaction ultimately attracts good employees to join and remain with the organization.

In sum, EI interventions increase productivity by improving communication and coordination, employee motivation, and individual capabilities, plus secondary effects of increased employee well-being and satisfaction. Recent data support the conclusion that relatively modest levels of EI produce moderate improvements, while higher levels of EI produce correspondingly higher levels of performance.

Employee Involvement Applications

This section describes three major EI applications varying in how much power, information, knowledge/skills, and rewards are moved downward: parallel structures (including cooperative projects and quality circles), high-involvement organizations, and total quality management.

Parallel Structures

Parallel structures involve members in resolving ill-defined, complex problems and build adaptability into bureaucratic organizations. Also known as “collateral structures,” “dualistic structures,” or “shadow structures,” they operate in conjunction with the formal organization. They provide an alternative setting where members can address problems and propose innovative solutions free from formal structure and culture. For example, members may attend periodic off-site meetings to improve quality, or be temporarily assigned to special projects to devise new products or solutions.

Parallel structures facilitate problem-solving and change by providing time and resources for members to think, talk, and act in completely new ways. Norms and procedures in parallel structures are entirely different from the formal organization.

OD in Practice: A Work-Out Meeting at General Electric Medical Systems Business

As part of large-scale change, CEO Jack Welch and managers at General Electric devised Work-Out—a process for gathering relevant people to discuss important issues and develop a clear action plan. The program has four goals: use employees’ knowledge and energy to improve work, eliminate unnecessary work, build trust by allowing employees to speak without fear, and engage in constructing an organization ready for the future.

At GE Medical Systems (GEMS), internal consultants conducted extensive interviews revealing dissatisfaction with performance management (too many measurements, not enough customer focus, unfair rewards, unrealistic goals), career development, and organizational climate. Managers reported feeling their hands were tied and needing help delegating.

Based on compiled information, about fifty GEMS employees and managers gathered for a five-day Work-Out session. Participants included the group executive, his staff, employee relations managers, and informal leaders from key functional areas thought to be risk-takers who would challenge the status quo. Teams engaged in “bureaucracy busting” by identifying CRAP (Critical Review Appraisals) in the organization—needless approvals, policies, meetings, and reports that stifled productivity. Senior managers were not part of these discussions to encourage free thinking.

At week’s end, senior management listened to concerns, proposals, and action plans. According to traditional Work-Out methods, managers must make instant, on-the-spot decisions about each idea: approve, reject with clear reasons, or request more data with a decision within one month. The session ended with individuals and functional teams signing nearly one hundred written contracts to implement new processes or drop unnecessary work. One important outcome was involving suppliers in internal email networks, leading to joint new-product prototypes, cost reductions, improved design quality, and decreased cycle times.

Since 1988, hundreds of Work-Outs have been held, evolving into best-practice investigations, process mapping, and change-acceleration programs. The process is based on the confrontation meeting model where a large group gathers to identify issues and plan actions.

Application Stages

Parallel structures fall at the lower end of the EI scale. Member participation is typically restricted to making proposals and suggestions because management reserves decisions about implementation. Membership tends to be limited to volunteers and numbers for which there are adequate resources. Management heavily influences authority, information sharing, training, and monetary rewards.

Parallel structures are most appropriate for organizations with little or no history of employee participation, top-down management styles, and bureaucratic cultures. They are implemented in the following steps:

1. Define the purpose and scope: Define the purpose and initial expectations. Organizational diagnosis clarifies which problems to address (productivity, absenteeism, service quality). Management training includes discussions about commitment, resources, openness, and willingness to experiment and learn.

2. Form a steering committee: Composed of acknowledged leaders from various functions and constituencies. Tasks include refining scope and purpose, developing a vision, guiding creation and implementation, establishing linkage mechanisms between parallel and formal structures, creating problem-solving groups, and ensuring senior management support. OD practitioners help develop norms of learning and innovation, create vision statements, and specify objectives, strategies, expectations, resources, and rewards.

3. Communicate with organization members: Communicating purpose, procedures, and rewards promotes involvement. Employee participation in developing vision and purpose increases ownership and visibly demonstrates the “new way” of working. Continued communication ensures member awareness.

4. Form employee problem-solving groups: These are the primary means of accomplishing the parallel structure’s purpose. Formation involves selecting and training group members, identifying problems, and providing facilitation. Members need to represent appropriate hierarchical levels, expertise, functions, and constituencies relevant to the problems at hand. Training may include the vision, specific problems, and problem-solving methods. Group norms promoting openness, creativity, and integration must be established. Facilitation, though expensive, yields benefits in problem-solving efficiency and quality by helping disparate groups cooperate.

5. Address the problems and issues: Groups use an action research process—diagnosing problems, planning solutions, implementing and evaluating them. Effective relationships between groups and the steering committee permit appropriate direction, resource acquisition, support, and approval of action plans, ensuring solutions are appropriately linked to the formal organization.

6. Implement and evaluate the changes: Implement appropriate organizational changes and assess results. Change proposals need steering committee and formal authority structure support. Feedback on changes helps the organization learn to adapt and innovate.

Cooperative Union-Management Projects

Cooperative union-management projects are one of the oldest EI applications of parallel structures. They are associated with the original QWL movement and its focus on workplace change, though recent approaches have broadened to include productivity improvement. Such dual involvement has a long history in Scandinavian countries. These interventions have the following structural characteristics:

1. Steering committee: A top-level labor-management committee serving as the basic center for planning, created during project start-up. It comprises key representatives from management (president or COO) and each union/employee group (local union presidents). The mandate is to begin activities improving both quality of working life and organizational effectiveness. Members are encouraged to be open about the need for productivity improvements. Unionists are told that because projects are jointly controlled, they need not fear productivity motives.

2. Multiple-level committees: Because the steering committee cannot oversee all aspects, additional labor-management committees are established at selected levels (plant, department, shop-floor) to reflect differing interests and knowledge. Lower-level committees deal with day-to-day activities.

3. Ad hoc committees: Labor-management committees may initiate particular projects involving workers and managers in specific parts of the organization. Employees themselves frequently initiate action toward particular goals. Ad hoc committees are established with specific tasks and limited lifetimes.

4. External consultants: External change agents act as third-party facilitators, offering guidance and assistance to labor-management committees and providing problem-solving and teamwork training. The steering committee typically selects the consultants.

5. External researchers: In some projects, researchers assess overall results. Separate roles for change agents and evaluation researchers allow consultants to focus on client needs and researchers to provide objective assessments.

Almost every major union and corporation has become involved in these efforts, including UAW, Communications Workers of America, Ford, General Motors, and AT&T.

Application 7: Union-Management Cooperation at GTE California

GTE of California (GTEC) and the Communications Workers of America began a cooperative union-management project in fall 1984 in response to the court-ordered breakup of AT&T. Deregulation removed guaranteed returns, monopoly territories, and “cradle-to-grave” employment. Traditional management was characterized by centralized decision-making, lackadaisical service orientation, and little cross-functional teamwork.

Under the new conditions, GTEC management and union leadership believed the usual way of operating needed to change. Working with OD consultants from the University of Southern California’s Center for Effective Organizations, senior managers and union leaders began discussing how to increase worker participation and decentralize decision-making without treading on traditional collective bargaining issues. The result was a cooperative union-management partnership called Employee Involvement, aimed at improving employees’ quality of working life and productivity.

The steering committee established a parallel structure with twenty-six thousand employees at GTEC, comprising three area coordinating committees responsible for implementing EI in respective geographic regions. Each created support committees for functional areas, which in turn established EI teams to identify and solve work-related problems. All organization members attended a two-hour orientation conducted by both GTEC management and local union presidents. A three-day union-management training program was conducted for all supervisors and union officials—managers and union leaders trained separately for the first two days, then together on the third day. Support committee and EI team members attended a five-day training program on meeting-management skills, problem-solving techniques, and group dynamics, with internal facilitators available.

Initially, EI teams focused on quality-of-work-life issues like bottled drinking water rather than productivity-related changes. Responsible committees modified the process to align more closely with productivity objectives—problem-solving training emphasized performance issues, committee compositions were revised to increase senior management and union leadership involvement and accountability, a new incentive compensation system rewarded cross-functional teamwork, and facilitators were permanently assigned to functional areas to focus on operating problems.

The EI process produced many successes. One team worked for over two years to simplify how field employees reported their time, producing savings of more than $3 million by increasing productive time and consolidating offices. Between 1987 and 1988, evaluation concluded the program had produced net savings of more than $1 million after costs. By 1991, GTEC surpassed competitors in customer satisfaction measures for large and medium-sized businesses, becoming the benchmark. Several cost measures also decreased significantly. The EI program survived two union contract negotiations and massive corporate changes that reduced workforce size.

⭐ Key Takeaways

The critical message is that employee involvement is not a single practice but a system of four interdependent elements—power, information, knowledge/skills, and rewards—that must all be moved downward together for success. The Dell case demonstrates that even the most successful companies face a talent crisis when employees feel undervalued, and that meaningful change requires authentic self-critique from top leadership. The lecture establishes that EI improves productivity not simply through satisfaction but through three proven mechanisms: better communication and coordination, enhanced motivation, and improved employee capabilities. Parallel structures offer a low-risk entry point for bureaucratic organizations by creating alternative settings for problem-solving, with the six application stages providing a clear roadmap for implementation. Finally, the GTE California case shows that cooperative union-management projects can succeed even in deregulated, rapidly changing environments—but require persistent attention to aligning goals, training, and reward systems with productivity objectives rather than just quality-of-work-life concerns.

🧠 Quick Revision Questions

1. What are the four key elements of employee involvement, and why must they be changed together rather than independently?
2. How does employee involvement affect productivity through the three mechanisms described in the lecture?
3. What are the six application stages for implementing parallel structures, and why are they considered appropriate for bureaucratic organizations?
4. What structural characteristics distinguish cooperative union-management projects from other parallel structures?
5. How did the GTE California case demonstrate the importance of aligning EI goals with productivity objectives rather than focusing solely on quality-of-work-life issues?

📘 Lecture 37 — Quality Circles: Employee Involvement

📖 Overview: This lecture examines employee involvement interventions, focusing on Quality Circles as a parallel structure approach originating in Japan and adapted in the United States. It covers the structure, implementation, and evaluation of quality circles through a detailed case study, then explores High-Involvement Organizations and Total Quality Management as more comprehensive employee involvement systems. Understanding these approaches is critical because they represent foundational strategies for increasing worker participation, improving quality, and enhancing organizational effectiveness in modern enterprises.

🗂️ Topics Covered

The lecture covers three major employee involvement approaches: Quality Circles as parallel structures with voluntary group problem-solving, including their typical program components and an in-depth application study at H.E.B. Grocery Company; High-Involvement Organizations (HIOs) as comprehensive designs featuring mutually reinforcing elements across structure, job design, information systems, career systems, training, rewards, personnel policies, and physical layout; and Total Quality Management (TQM) as a systematic philosophy focusing on continuous improvement, customer satisfaction, and organization-wide quality initiatives illustrated through the L.L. Bean case study, along with a comparison of TQM and OD values.

📝 Lecture Summary

Quality Circles: Employee Involvement

Quality circles, also called "employee involvement teams" in the United States, are small groups of employees who meet voluntarily to identify and solve productivity problems. Originally developed in Japan in the mid-1950s, these circles are natural outgrowths of Japanese managerial practices emphasizing decentralized decision making and collective responsibility. Estimates once put total circle membership at as many as ten million Japanese workers.

Quality circles were introduced in the United States in the mid-1970s. Their growth through the early 1980s was astounding, with some four thousand companies adopting some version of the circles approach. The popularity of quality circles can be attributed in part to the widespread drive to emulate Japanese management practices and achieve quality improvements and cost savings. However, the Japanese philosophy of decentralized, collective decision making, which supports and nurtures the circles approach, may be overlooked. Thus, quality circles may be more difficult to implement in the more autocratic, individualistic situations that characterize many American companies.

🔑 Definition — Quality Circles: Small groups of employees who meet voluntarily to identify and solve productivity problems, following a parallel structure approach to employee involvement.

Structure of a Typical Quality Circles Program

Circle programs generally are implemented with a parallel structure consisting of several circles, each having three to fifteen members. Membership is voluntary, and members of a circle share a common job or work area. Circles meet once each week for about one hour on company time. Several consulting companies have developed training packages as part of standardized programs for implementing quality circles.

Members are trained in different problem identification and analysis techniques and they apply their training to identify, analyze, and recommend solutions to work-related problems. When possible, they implement solutions that affect only their work area and do not require higher management approval.

Each circle has a leader, who is typically the supervisor of the work area represented by circle membership. The leader trains circle members and guides the weekly meetings, setting the agenda and facilitating the problem-solving process.

Facilitators can be a key part of a quality circles program. They coordinate the activities of several circles and may attend the meetings, especially during the early development stages. Facilitators train circle leaders and help them start the circles. They also help circles obtain needed inputs from support groups and keep upper management apprised of progress. Because facilitators are the most active promoters of the program, their role may be full time.

A steering committee is the central coordinator of the quality circles program. Generally, it is composed of the facilitators and representatives of the major functional departments in the organization. The steering committee determines the policies and procedures of the program and the issues that fall outside of circle attention, such as wages, fringe benefits, and other topics normally covered in union contracts. The committee also coordinates training programs and guides program expansion.

🔑 Definition — Facilitator: A key role that coordinates activities of several circles, trains circle leaders, helps obtain inputs from support groups, and keeps upper management apprised of progress.

🔑 Definition — Steering Committee: The central coordinator of the quality circles program, composed of facilitators and representatives of major functional departments, determining policies, procedures, and issues outside circle attention.

📐 Figure 49 Reference: [Diagram illustrating a typical quality circles program structure]

📌 Example — Quality Circles at H.E.B. Grocery Company: A quality circles program was implemented as a pilot project at a large warehouse of the H.E.B. Grocery Company in Texas. This eighty-person, two-shift warehousing operation volunteered to adopt the program as part of a larger corporate strategy to increase employee involvement. All but four workers volunteered to be part of the pilot circles. The program consisted of four circles, each composed of ten people representing a cross section of workers familiar with the warehousing operation. Circles met for two hours at two-week intervals. Periodic rotations replaced some circle members with new volunteers after five months. Each circle had a worker-leader trained in communication techniques, group process, and problem-solving skills. Leaders also formed a leader circle that met regularly to exchange ideas. Supervisors were trained and served as resources. Corporate human resources department members served as facilitators. The department head and several top managers formed the steering committee.

Evaluation Results of the H.E.B. Program

Researchers conducted a thorough evaluation comparing the warehouse department with a similar control group that had not participated in the program. Comparison measures included survey data at three points in time (five months before the program, three months after beginning, and ten months after start) and unobtrusive measures of productivity, absenteeism, and accidents collected at four-week intervals beginning one year before the program.

In contrast to the control group, the warehouse department showed slightly more positive trends in productivity. Specifically, the quantity of production increased slightly, and small decreases were shown in costs, absenteeism, labor expense, overtime, and accidents. The survey data showed that attitudes of warehouse employees changed little during the program but, unexpectedly, the attitudes of members of the control group suffered in regard to feeling informed, being involved in decision making, and receiving feedback from supervisors.

Examination of interview and observational data revealed a more negative assessment. The initial months were marked by a flurry of activity and improvement suggestions, including efforts to improve equipment maintenance procedures, reduce warehouse congestion, and prevent damage. After several months, attendance at meetings began to wane, and circle members found it increasingly difficult to identify significant issues within their sphere of expertise and influence. Supervisors started to admit that the circles were draining time and energy.

A second flurry of activity took place after the voluntary rotation of members, but this energy also subsided as members became frustrated with the difficulty of systematic problem solving, the slowness of implementation, and the failure of the program to affect their jobs. As workload increased, management allowed the circles to become inactive.

Observations and interviews suggested several reasons why the program gradually died:

• The level of group functioning did not noticeably improve
• There was no indication that systematic problem-solving techniques were followed
• Implementation of several ideas was unduly delayed in bureaucratic channels, resulting in member perceptions of low management commitment
• Little indication that enthusiasm translated into greater motivation on the job
• Many active participants became disenchanted with their jobs and sought ways to enter supervisory ranks
• Some members felt inadequately compensated for generating money-saving ideas

💡 Why this matters: The H.E.B. case demonstrates that quality circles require sustained management commitment, systematic problem-solving discipline, and rapid implementation of ideas to maintain employee enthusiasm. The contradictory evaluation results show that research on quality circles must go beyond glowing testimonials to include whether such programs affect valued individual and organization outcomes.

High-Involvement Organizations

High-Involvement Organizations (HIOs) create organizational conditions that support high levels of employee participation. What makes HIOs unique is the comprehensive nature of their design process. Unlike parallel structures that do not alter the formal organization, in HIOs almost all organization features are designed jointly by management and workers to promote high levels of involvement and performance, including structure, work design, information and control systems, physical layout, personnel policies, and reward systems.

🔑 Definition — High-Involvement Organizations (HIOs): Interventions that create organizational conditions supporting high levels of employee participation through comprehensive design where almost all organization features are designed jointly by management and workers.

Features of High Involvement Organizations

In HIOs, employees have considerable influence over decisions. To support such a decentralized philosophy, members receive extensive training in problem-solving techniques, plant operation, and organizational policies. Both operational and issue-oriented information is shared widely and obtained easily by employees. Rewards are tied closely to unit performance, as well as to knowledge and skill levels. These disparate aspects of the organization are mutually reinforcing and form a coherent pattern that contributes to employee involvement.

Flat, lean organization structures contribute to involvement by pushing scheduling, planning, and controlling functions typically performed by management and staff groups toward the shop floor. Mini-enterprise, team-based structures oriented to a common purpose help focus employee participation on a shared objective. Participative structures, such as work councils and union-management committees, create conditions in which workers can influence the direction and policies of the organization.

Job designs that provide employees with high levels of discretion, task variety, and meaningful feedback can enhance involvement. Self-managed teams encourage employee responsibility by providing cross-training and job rotation, giving people a chance to learn about different functions contributing to organizational performance.

Open information systems tied to jobs or work teams provide the necessary information for employees to participate meaningfully in decision making. Goals and standards of performance set participatively can provide employees with a sense of commitment and motivation.

Career systems providing different tracks for advancement and counseling help employees plan for long-term development. Open job posting makes employees aware of jobs that can further their development. Selection can be improved through realistic job previews providing information about what it will be like to work in such situations.

Training for necessary knowledge and skills to participate effectively is a heavy commitment in HIOs, including education on the economic side of the enterprise as well as interpersonal skill development. Peer training is emphasized as a valuable adjunct to formal, expert training.

Reward systems contribute when information about them is open and rewards are based on acquiring new skills and sharing gains from improved performance. Participation is enhanced when people can choose among different fringe benefits and when reward distinctions among hierarchical levels are minimized.

Personnel policies that are participatively set and encourage stability of employment provide employees with a strong sense of commitment to the organization.

Physical layouts that support team structures and reduce status differences among employees reinforce the egalitarian climate needed for employee participation.

🔑 Definition — Table 18 Reference: Presents design features for a participative system across Organization Structure, Job Design, Information System, Career System, Selection, Training, Reward System, Personnel Policies, and Physical Layout.

💡 Why this matters: HIO design features are mutually reinforcing – they all send a message that people are important, respected, valued, capable of growing, and trusted, and that their understanding of and involvement in the total organization is desirable and expected. These components motivate and focus organizational behavior in a strategic direction, leading to superior effectiveness and competitive advantage.

Total Quality Management

Total Quality Management (TQM) is the most recent and, along with high-involvement organizations, the most comprehensive approach to employee involvement. Also known as "Continuous process improvement" and "continuous quality," TQM grew out of a manufacturing emphasis on quality control and represents a long-term effort to orient all of an organization's activities around the concept of quality. Quality is achieved when organizational processes reliably produce products and services that meet or exceed customer expectations.

Like high-involvement designs, TQM increases workers' knowledge and skills through extensive training, provides relevant information to employees, pushes decision-making power downward in the organization, and ties rewards to performance. When implemented successfully, TQM is aligned closely with a firm's overall business strategy and attempts to change the entire organization toward continuous quality improvement.

🔑 Definition — Total Quality Management (TQM): A philosophy and set of guiding principles for continuous improvement based on customer satisfaction, teamwork, and empowerment of individuals, applying human resources and analytical tools to focus on meeting or exceeding customer's current and future needs.

Characteristics of TQM

TQM usually has several principles or components in common:

• Organization-wide: Takes place in production, accounting, human resource management, marketing, sales, and other service and staff areas
• CEO and top management support: Everyone from top managers to hourly employees operates under TQM with a reward system ensuring continual support
• Three or more years: Requires allocation of significant resources for training
• Ingrained value in corporate culture: Continuous improvement penetrates the culture and values
• Partnership with customers and suppliers: Product or service must meet or exceed customer expectations; results – not slogans – represent quality
• Everyone has a customer: Customer may be internal or external
• Reduced cycle time: Focus on doing the job faster
• Techniques range in scope: Include statistical quality control, job design, empowerment, and self-managed work teams
• Do it right the first time: Quality is built in at every stage, not obtained by rejecting at the end
• Organization values and respects everyone: Includes customers, suppliers, employees, owners, community, and environment (stakeholders)
• No single formula works for everyone: What worked at one company may not work at another

📌 Example — Motorola's TQM Commitment: Motorola developed a University teaching in twenty-seven languages, allocates at least 1.5 percent of its budget to education, and every employee must take a minimum of forty hours of training per year to support the company's goals of "six sigma" quality – a statistical measure implying 99.9997% perfection.

📌 Example — Garments Company Cycle Time Reduction: A leading garments company found retailers were out of stock on 30 percent of items 100 percent of the time. In response, the company revamped its systems to fill orders within twenty-four hours 95 percent of the time.

Application: Total Quality Management at L.L. Bean

L.L. Bean, a Maine-based mail-order company with a reputation for superior customer service dating back to 1912, applied for the Malcolm Baldridge National Quality Award in 1988. Despite its reputation, no award was given in the service category that year.

The Baldridge feedback prompted Bean to examine its quality culture. The award committee cited Bean's customer service as "world class" but thought the firm was not achieving customer satisfaction in a productive way. Bean had been satisfying customers through a guarantee-based approach; the committee thought Bean should ensure things happen right the first time.

The diagnostic information revealed that Bean needed more employee involvement. This surprised management because the firm prided itself on a participative culture and had been one of the first US organizations to implement quality circles ten years earlier. However, decision making had usually taken place at a high level.

Based on the feedback, the organization first developed a definition for "total quality" (TQ): "managing an enterprise to maximize customer satisfaction in the most efficient and effective way possible by totally involving people in improving the way work is done."

Next, L.L. Bean focused on training. It spent approximately ten months familiarizing its three thousand employees with TQ methods. All salaried employees received three days of TQ training, and all hourly workers received one day. Senior executives were trained first so each level could support total quality as the next level learned about it.

Bean's human resources department explored ways to change the infrastructure to support greater employee involvement. It concluded that because L.L. Bean is a service organization, decisions influencing quality occur every time a customer calls a phone center. Thus, frontline, customer-contact employees needed to be knowledgeable and empowered, requiring a new managerial role.

Soon after training, Bean enlisted seventy members to form seven cross-functional teams composed of both managers and workers. One team defined the manager's role as coach and developer. Another team constructed a feedback instrument that became part of a performance management process linking managers' compensation to improvements in specific behaviors.

Employee involvement paid big dividends in process improvement. At the manufacturing division, a manager shut down an entire work line and spent the morning teaching workers how a shoe is costed out. Employees found enough savings that day to pay for all training conducted in the department for the entire year. In another case, stockers and pickers swapped jobs temporarily, applied TQ methods like work-flow mapping, and realized there was no reason for packaging items between the distribution center and retail store.

The human resources department reengineered itself from a functional structure to a customer-oriented organization, with service teams supporting each major division.

Most gratifyingly, through all the changes, customer satisfaction remained high and job satisfaction among the workforce increased more than 12 percent. Although L.L. Bean was only halfway through its TQ intervention, it experienced increased profitability, return on sales, and return on equity.

TQM and OD Have Similar Values

TQM and OD share certain values. Both are system-wide, depend on planned change, believe in empowerment and involvement, are self-renewing and continuous, base decision-making on data-based activities, and view people as having inherent desire to contribute in meaningful ways.

There are differences, however. Some OD practitioners argue that their core values differ, and they caution against OD practitioners assuming the role of "quality management expert." The OD practitioner enters the organization as a neutral party and resists advocating any particular method of change, viewing organization problems as having a variety of causes with no predefined solutions. A TQM consultant, on the other hand, views organization problems as having TQM solutions.

TQM can be applied as one change methodology along with an accompanying array of other interventions. TQM is more likely to be successful when combined with employee involvement. The two are complementary, and the impact of either is diminished by the absence of the other.

💡 Why this matters: Understanding the similarities and differences between TQM and OD is crucial for practitioners. While both share values of empowerment and data-based decision making, OD practitioners maintain neutrality while TQM consultants advocate specific quality solutions. The most effective approach combines both methodologies.

⭐ Key Takeaways

The critical points to remember from this lecture are: first, Quality Circles are parallel structure approaches to employee involvement originating in Japan, characterized by voluntary membership, small groups meeting weekly, and a structure including leaders, facilitators, and steering committees. Second, the H.E.B. Grocery case demonstrates that quality circles require sustained management commitment, rapid implementation of ideas, and systematic problem-solving to maintain momentum – without these, programs tend to die out despite initial enthusiasm. Third, High-Involvement Organizations are comprehensive designs where all organizational features (structure, job design, information systems, rewards, training, policies, and physical layout) are mutually reinforcing and jointly designed by management and workers to support participation. Fourth, Total Quality Management is a comprehensive philosophy focused on continuous improvement, customer satisfaction, and organization-wide quality efforts requiring extensive training, top management support, and partnership with customers and suppliers. Finally, TQM and OD share values of empowerment and data-based decision making but differ in that OD practitioners maintain neutrality while TQM consultants advocate specific quality solutions – and the two approaches are most effective when combined.

🧠 Quick Revision Questions

1. What are the four key structural components of a typical Quality Circles program, and what is the function of each?
2. According to the H.E.B. Grocery Company case study, what were the main reasons the quality circles program gradually died despite initial enthusiasm and activity?
3. How do High-Involvement Organizations differ from parallel structure approaches like Quality Circles in terms of their design approach?
4. List at least six of the common principles or components of Total Quality Management as described in the lecture.
5. What are the key similarities and differences between TQM and Organization Development (OD) in terms of values and practitioner roles?

📘 Lecture 38 — Work Design

📖 Overview: This lecture examines three major approaches to work design in organizations: the engineering approach focused on efficiency, the motivational approach centered on employee satisfaction and enrichment, and the sociotechnical systems approach that optimizes both social and technical aspects. Understanding these approaches is critical for organizational development practitioners who need to design work systems that enhance both productivity and employee well-being.

🗂️ Topics Covered

The lecture covers three primary approaches to work design: the engineering approach based on scientific management principles from Frederick Taylor, which produces traditional jobs and work groups focused on efficiency and specialization; the motivational approach derived from Herzberg's two-factor theory and Hackman and Oldham's job characteristics model, including core job dimensions, the Motivation Potential Score formula, and application stages for job enrichment; and the sociotechnical systems approach, which examines joint optimization of social and technical systems, open systems theory, and self-managed work teams as the primary application.

📝 Lecture Summary

The Engineering Approach:

The engineering approach is the oldest and most prevalent method of designing work, based on Frederick Taylor's scientific management principles. This approach scientifically analyzes workers' tasks to discover procedures that produce maximum output with minimum input of energy and resources. It results in work designs with high levels of specialization and specification.

This approach produces two kinds of work design: traditional jobs and traditional work groups. Traditional jobs are created when work can be completed by one person (e.g., bank tellers, telephone operators) and tend to be simplified with routine, repetitive tasks. Traditional work groups are developed when work requires coordination among people (e.g., automobile assembly lines) and consist of members performing routine yet related tasks broken into discrete parts.

🔑 Definition — Scientific Management: A theory developed by Frederick Taylor that analyzes work methods to determine the most efficient procedures for maximum output with minimum input.

📐 Formula: Efficiency = Maximum Output ÷ Minimum Input of Energies and Resources → Work designs that achieve the highest productivity with the lowest resource consumption.

📌 Example: In the 1950s and 1960s, American automobile manufacturers popularized assembly lines where tasks were broken into simpler, discrete parts assigned to group members. Each member performed routine and repetitive tasks coordinated through schedules, rigid work flows, and supervisors.

💡 Why this matters: The engineering approach remains important because its immediate cost savings and efficiency can be measured readily, and it is well understood and easily implemented. However, critics argue it ignores workers' social and psychological needs.

The Motivational Approach:

The motivational approach views work effectiveness primarily as a function of member needs and satisfaction and seeks to improve performance by enriching jobs. This method provides people with opportunities for autonomy, responsibility, closure (doing a complete job), and performance feedback.

This approach is associated with Herzberg's two-factor theory of motivation, which proposed that "motivators" (advancement, recognition) increase job satisfaction, while "hygiene factors" (company policies, working conditions, pay, supervision) prevent dissatisfaction. However, Herzberg's theory faced criticism for difficulty in measuring motivators and hygiene factors, excluding important worker characteristics, and failing to involve employees in the enrichment process.

🔑 Definition — Two-Factor Theory: Herzberg's theory proposing that motivators (advancement, recognition) increase job satisfaction, while hygiene factors (policies, pay, supervision) prevent dissatisfaction but do not produce satisfaction.

📌 Example: Successful job enrichment experiments at AT&T, Texas Instruments, and Imperial Chemical Industries in the 1960s helped popularize job enrichment, though Herzberg's underlying theory has since been questioned.

The Core Dimensions of Jobs:

The Hackman and Oldham model of job design identifies five core job dimensions that affect three critical psychological states, which in turn produce personal and job outcomes including high internal work motivation, high-quality performance, satisfaction, and low absenteeism and turnover.

Skill Variety, Task Identity, and Task Significance:

These three core characteristics influence the extent to which work is perceived as meaningful. Skill variety refers to the number and types of skills used to perform a task. Task identity describes the extent to which an individual performs a whole piece of work. Task significance represents the impact that work has on others.

🔑 Definition — Job Rotation: A form of job enrichment where skill variety is increased by moving a person from one job to another.

🔑 Definition — Job Enlargement: A form of job enrichment that combines increases in skill variety with task identity, blending several narrow jobs into one larger, expanded job.

📌 Example: At Lechmere's retail chain in Florida, employees can work as warehouse stock clerks, cashiers, and salespeople. An employee who completes an entire wheel assembly for an airplane (including tire, chassis, brakes, and electrical systems) has more task identity than someone who only assembles the braking subsystem.

Autonomy:

Autonomy refers to the amount of independence, freedom, and discretion that the employee has to schedule and perform tasks. Employees are more likely to experience responsibility for their work outcomes when high amounts of autonomy exist.

📌 Example: Salespeople often have considerable autonomy in how they contact, develop, and close new accounts, whereas assembly-line workers must adhere to work specifications detailed in policy-and-procedure manuals.

Feedback from the Work Itself:

Feedback from the work itself represents the information workers receive about the effectiveness of their work. It can derive from the work itself or from external sources. Because feedback from the work itself is direct and generates intrinsic satisfaction, it is considered preferable to external feedback.

📐 Formula: Motivation Potential Score (MPS) = Job Meaningfulness × Autonomy × Job Feedback

Where Job Meaningfulness = (Skill Variety + Task Identity + Task Significance) ÷ 3

This formula can be refined as: MPS = [(Skill Variety + Task Identity + Task Significance) ÷ 3] × Autonomy × Job Feedback

📌 Example: A score of near zero on either autonomy or job feedback will produce an MPS of near zero, while a low score on skill variety, task identity, or task significance will reduce the MPS but not completely undermine motivational potential.

Individual Differences:

Not all people react similarly to job enrichment interventions. Three key individual differences affect responses: a worker's knowledge and skill levels, growth-need strength (intrinsic motivation to grow and develop personally), and satisfaction with contextual factors (reward systems, supervisory style, co-worker satisfaction).

📌 Example: If employees lack appropriate skills, increasing skill variety may not improve a job's meaningfulness. If workers lack intrinsic motivation to grow, providing increased autonomy may be resisted.

Application Stages:

The basic steps for job enrichment include: making a thorough diagnosis, forming natural work units, combining tasks, establishing client relationships, vertical loading, and opening feedback channels.

Making a Thorough Diagnosis:

The most popular diagnostic method is the Job Diagnostic Survey (JDS), which produces the motivating potential score. The survey profiles jobs, determines whether motivation and satisfaction are problems, and isolates specific job aspects causing difficulties.

Forming Natural Work Units:

Natural work units should be formed by grouping interrelated task activities together. The basic question is "How can one increase 'ownership' of the task?" This increases task identity and task significance.

Combining Tasks:

Divided jobs can be put back together to form new, larger jobs. This increases task identity and allows workers to use greater variety of skills.

📌 Example: At Corning Glass Works' Medfield, Massachusetts plant, assembling laboratory hotplates was redesigned by combining previously separate tasks. After the change, each hotplate was completely assembled, inspected, and shipped by one operator, resulting in increased productivity of 84%. Controllable rejects dropped from 23% to less than 1%, and absenteeism dropped from 8% to less than 1%.

Establishing Client Relationships:

When jobs are split up, workers have little contact with the ultimate user. Improvements can be realized on three core dimensions by encouraging workers to establish direct relationships with clients. Three steps are needed: (1) identify the client, (2) establish direct contact, and (3) create criteria and procedures for judging quality.

📌 Example: At Indiana Bell Telephone Company, telephone directory compilers were given accountability for specific geographic areas, resulting in substantial improvements in satisfaction and performance.

Vertical Loading:

Vertical loading decreases the gap between doing the job and controlling the job. A vertically loaded job has responsibilities and controls formerly reserved for management. Autonomy is invariably increased, leading to greater feelings of personal accountability.

📌 Example: At an IBM plant manufacturing circuit boards, assembly workers were trained to measure production accuracy and speed and to test finished product quality. This made their work more "whole" and autonomous, freeing engineers to design better products and more efficient manufacturing methods.

Opening Feedback Channels:

Approaches exist in almost all jobs to open feedback channels and help people learn whether their performance is improving or deteriorating. The most advantageous feedback occurs when workers learn about performance as the job is performed.

📌 Example: In the hotplate department at Corning Glass Works, assembling and inspecting the entire instrument dramatically increased the quantity and quality of performance information available to operators.

Barriers to Job Enrichment:

Four organizational systems can constrain job enrichment implementation:

1. The technical system: Technology can limit job enrichment by constraining the number of ways jobs can be changed. Long-linked technology like assembly lines is highly programmed and standardized.

2. The personnel system: Formalized job descriptions that are rigidly defined limit flexibility. Union agreements may require major renegotiation before jobs can be enriched.

3. The control system: Budgets, production reports, and accounting practices can limit the complexity and challenge of jobs.

4. The supervisory system: Autocratic methods and controlled work-related feedback make jobs difficult to enrich.

💡 Why this matters: The staying power of job enrichment depends on how well it fits and is supported by other organizational practices, including training, compensation, and supervision.

The Sociotechnical Systems Approach:

The sociotechnical systems (STS) approach is currently the most extensive body of scientific and applied work underlying employee involvement and innovative work designs. Its techniques and design principles derive from extensive action research across diverse national cultures.

Conceptual Background:

STS theory was developed at the Tavistock Institute of Human Relations in London and has spread to most industrialized nations. In Europe and Scandinavia, STS interventions are almost synonymous with work design. In the United States and Canada, STS concepts underlie many innovative work designs and team-based structures.

🔑 Definition — Sociotechnical System: A combined system consisting of a social part (people and relationships) and a technical part (tools, techniques, and methods) that must act together to accomplish tasks.

Sociotechnical System:

The first premise of STS theory is that whenever human beings are organized to perform tasks, a sociotechnical system is operating. The social part operates according to biological and psychosocial laws, while the technical part functions according to mechanical and physical laws. The term "sociotechnical" signifies the joint relationship between these parts.

Because a sociotechnical system produces two kinds of outcomes—products (goods and services) and social/psychological consequences (satisfaction and commitment)—the key issue is joint optimization: designing the relationship between parts so both outcomes are positive.

📌 Example: Intel Corporation, United Technologies, General Mills, and Procter & Gamble are among organizations applying the STS approach to transforming how work is designed and performed.

Environmental Relationship:

The second major premise is that STS systems are open systems that must interact with their environments to survive and develop. The key issue is boundary management: designing the interface between the STS and its environment so the system has sufficient freedom while exchanging effectively.

📌 Example: STS practitioners structure environmental relationships to protect the system from external disruptions while facilitating the exchange of necessary resources and information.

Self-Managed Work Teams:

Self-managed work teams (also called self-directed, self-regulating, or high-performance work teams) are the most prevalent application of the STS approach. These teams consist of members performing interrelated tasks, are responsible for a complete product or service, control members' task behaviors, and make decisions about task assignments and work methods.

Team Task Design:

Three task design elements are necessary for creating self-managed work teams:

1. Task differentiation: The extent to which the team's task is autonomous and forms a relatively self-completing whole. High levels provide an identifiable team boundary.

2. Boundary control: The extent to which team members can influence transactions with their task environment, including a well-defined work area and group responsibility for boundary-control decisions.

3. Task control: The degree to which team members can regulate their own behavior to produce finished products or services, including freedom to choose work methods and schedule activities.

📌 Example: At Johnsonville Sausage, self-managed teams comprise seven to fourteen members—large enough to accomplish interrelated tasks but small enough for face-to-face meetings. In hospitals, nursing teams may be responsible for particular groups of patients or specific work processes.

Team Process Interventions:

Team process interventions such as process consultation and team building can resolve problems like poor communication, dysfunctional roles and norms, and faulty problem solving. Because self-managed teams need to be self-reliant, members generally acquire their own team process skills through training or on-the-job learning with OD practitioners.

Organization Support Systems:

The success of self-managed teams depends on support systems different from traditional management methods. An organic structure with flexibility, few formal rules, and decentralized authority is more likely to support these teams.

A particularly important support system is external leadership. The team leader (often called a team facilitator) performs two major functions: working with and developing team members, and assisting the team in managing its boundaries.

📌 Example: The leader helps team members organize themselves to become more independent and responsible, encourages self-reinforcing behavior for high performance, and may act as a buffer to reduce environmental uncertainty by mediating with other organizational units.

Characteristics of Self-managed Work Teams:

Common characteristics across all self-managed work team sites include:

• Structure based on team concepts with few managerial levels and job descriptions
• Egalitarian culture with lack of status symbols (no special dining rooms, parking, or dress codes)
• Physical work site with functional boundaries members can identify
• Teams of five to fifteen members
• Teams order material, set goals, determine rewards, and have voice in hiring/firing
• Shared vision providing direction
• Strong partnership between team members, management, and unions
• Diverse membership providing variety of viewpoints
• Open information sharing with well-developed information systems
• Members skilled in technical, interpersonal, and financial areas
• Extensive cross-training required
• Managers knowledgeable about customers, competitors, and suppliers

⭐ Key Takeaways

The lecture presents three distinct approaches to work design, each with different assumptions and applications. The engineering approach focuses on efficiency through specialization and specification, producing traditional jobs and work groups, but critics argue it ignores workers' social and psychological needs. The motivational approach, based on Hackman and Oldham's model, identifies five core job dimensions—skill variety, task identity, task significance, autonomy, and feedback—that affect three critical psychological states, with the Motivation Potential Score formula showing how these dimensions combine to predict motivation. The sociotechnical systems approach integrates social and technical components through joint optimization and boundary management, with self-managed work teams as its primary application. For job enrichment implementation, the lecture outlines six application stages and identifies four barriers (technical, personnel, control, and supervisory systems) that must be overcome. The most critical concept for exam preparation is understanding how the five core dimensions, three psychological states, and the MPS formula interrelate in the Hackman and Oldham model.

🧠 Quick Revision Questions

1. What are the five core job dimensions in Hackman and Oldham's model, and which three combine to determine job meaningfulness?

2. How does the Motivation Potential Score (MPS) formula work, and what happens if autonomy or job feedback scores near zero?

3. What are the four organizational systems that can constrain job enrichment implementation, and give an example of each?

4. What is the difference between job rotation and job enlargement, and how does each relate to the core job dimensions?

5. What are the three task design elements necessary for creating self-managed work teams, and how do they contribute to team effectiveness?

📘 Lecture 39 — Performance Management

📖 Overview: This lecture explores performance management as an integrated process of defining, assessing, and reinforcing employee work behaviors and outcomes. It covers the three core components—goal setting, performance appraisal, and reward systems—and explains how these practices align with business strategy, workplace technology, and employee involvement to drive organizational performance.

🗂️ Topics Covered

The lecture presents a model of performance management showing how goal setting, performance appraisal, and reward systems jointly influence performance within the context of business strategy, workplace technology, and employee involvement. It then examines goal setting in depth, including characteristics, application stages, the goal-setting model, and Management by Objectives (MBO). Performance appraisal is covered with traditional versus high-involvement approaches, application stages, and design criteria. Finally, reward systems are discussed, including how rewards affect performance based on value expectancy theory and six key factors for effective rewards.

📝 Lecture Summary

A Model of Performance Management

Performance management is an integrated process of defining, assessing, and reinforcing employee work behaviors and outcomes. Organizations with a well-developed performance management process often outperform those without this element of organization design. Performance management includes practices and methods for goal setting, performance appraisal, and reward systems. These practices jointly influence the performance of individuals and work groups. Goal setting specifies the kinds of performances desired; performance appraisal assesses those outcomes; reward systems provide the reinforces to ensure desired outcomes are repeated.

Three contextual factors determine how these practices affect work performance: business strategy, workplace technology, and employee involvement. High levels of work performance tend to occur when goal setting, performance appraisal, and reward systems are aligned jointly with these contextual factors.

Business strategy defines the goals and objectives needed for an organization to compete successfully, and performance management focuses, assesses, and reinforces member work behaviors toward those objectives. Workplace technology affects whether performance management practices should be based on the individual or the group. When technology is low in interdependence and work is designed for individual jobs, goal setting, performance appraisal, and reward systems should aim at individual work behaviors. Conversely, when technology is highly interdependent and work is designed for groups, performance management should aim at group behaviors. The level of employee involvement determines the nature of performance management practices—in bureaucratic organizations, practices should be formalized and administered by management; in high-involvement situations, performance management should be heavily participative.

💡 Why this matters: The alignment of performance management practices with contextual factors ensures that work behaviors are strategically driven, appropriately targeted at individuals or groups, and matched to the organization's level of employee involvement.

Goal Setting

OD in Practice: Big Hairy Audacious Goals Employees at General Electric aim at "stretch goals" —encouraging employee teams to try for huge gains in productivity and quality even though, at the outset, it is unclear how they will get there. At other companies, these are called BHAG – big hairy audacious goals. One major goal GE is striving for is called Six Sigma—a statistical term for 3.4 defects per million products, translating to near-perfect manufacturing. GE began implementing Six Sigma in the mid-1990s, borrowed from Motorola via AlliedSignal. Currently, GE is running at three to four Sigma level, and the gap between that and a six level costs GE between $8 billion and $12 billion a year in lost productivity and inefficiencies. Last year, GE spent $600 million on Six Sigma projects.

Goal setting involves managers and subordinates in jointly establishing and clarifying employee goals. In some cases, such as management by objectives (MBO), it can also facilitate employee counseling and support. Goal setting affects performance in several ways: it influences what people think and do by focusing their behavior, motivates people to put forth effort to reach difficult goals, and prompts persistence over time.

Characteristics of Goal Setting:

Challenging goals produce better performance: Goals are only effective if they are difficult and challenging. Increasing the difficulty of employee goals, also known as "stretch goals," can increase perceived challenge and enhance effort expended.

Specific hard goals are better than "do your best" goals: When given specific goals, workers perform higher than when they are simply told to "do their best" or receive no guidance.

People may abandon goals if too hard: People must be able to attain or at least approach goals; otherwise, they will view the goal as impossible, become discouraged, and may abandon it.

Participation in setting goals increases commitment and attainment: Employees are more committed to self-set goals than to goals assigned by a manager. It gives them ownership.

Feedback and goals improve performance: Information about performance outcomes, whether a goal was met or not, should be included, along with information about how to adjust.

Individual differences tend not to affect goal setting: Goal-setting programs are successful regardless of education and position—production workers, clerical workers, maintenance workers, and managers can all use goal setting successfully.

Goal-setting in teams deserves special consideration: Setting difficult individual goals for an interdependent team task will likely result in poorer performance than when a team goal is set.

Support of management is critical: Leaders should maintain optimism, supervisors should encourage goal acceptance, help improve skills, and give timely feedback.

Application Stages:

1. Diagnosis: Thorough diagnosis of the job, work group, employee needs, and the three contextual factors (business strategy, workplace technology, employee involvement).
2. Preparation for goal setting: Prepares managers and employees by increasing interaction and communication, and offering formal training in goal-setting methods.
3. Setting of goals: Challenging goals are established and methods for goal measurement are clarified.
4. Review: The goal-setting process is assessed so modifications can be made if necessary.

Goal-Setting Model: Goals can be established in a variety of ways, with the best being joint participation between employee and supervisor. Goal commitment can be achieved through trust in upper management, support by management, effective reward and incentive systems, and sometimes competition. Resistance to goal acceptance can be overcome by providing special training, rewards and incentives, and participation in setting goals.

Goals should be specific, measurable, and compatible with goals formulated at higher levels of the organization. For example, Bell Canada's telephone operators are required to answer calls within 23 seconds, and Federal Express customer agents are expected to answer customer questions within 140 seconds.

🔑 Definition — Stretch Goals: Goals that encourage employees to try for huge gains in productivity and quality even when it is unclear how they will get there.

📐 Formula: Six Sigma = 3.4 defects per million products

📌 Example: GE currently operates at three to four Sigma level. The gap between that and Six Sigma costs GE between $8 billion and $12 billion per year. GE spent $600 million on Six Sigma projects in one year.

Management by Objectives

MBO is a specific technique used by organizations to set goals. It is a process aimed at the integration of individual and organization goals. MBO may be defined as a system of management set up to help in planning, organizing, problem-solving, motivating, and other important managerial activities. It involves the participation of subordinates and their managers in setting and clarifying goals.

A leading MBO consultant defines it as a process whereby the superior and subordinate managers of an organization jointly identify common goals, define each individual's major areas of responsibility in terms of results expected, and use these measures as guides for operating the unit and assessing the contribution of each member.

MBO approaches goal-setting on the assumption that people have higher-level needs for competence and achievement, and want to satisfy these needs in their work.

Steps in MBO Process:

1. Work group involvement: Members of the primary work group define overall group and individual goals and establish action plans.
2. Joint manager-subordinate goal setting: Attention is given to job duties and responsibilities of individual role incumbents.
3. Establishment of action plans for goals: The subordinate develops action plans for goal accomplishment.
4. Establishment of criteria, or yardsticks, of success: Manager and subordinate agree on success criteria. This is the most important step—arriving at joint understanding and agreement.
5. Review and recycle: Three stages—subordinate reviews progress, manager discusses work plans, and general discussion covers future ambitions.
6. Maintenance of records: Working documents may be forwarded to a third party, but evidence suggests MBO suffers when papers are reviewed regularly by a third party.

Criticism of MBO: Implementing MBO is expensive and time-consuming, and usually entails great effort. Use has traditionally been limited to managerial and professional employees. Some programs encounter difficulties because management does not recognize that proper implementation requires improved managerial skills. Critics question whether joint goal-setting among unequals is possible. MBO may be too quantitative, and communication may become top-down instead of open. There is a danger that MBO will focus only on certain aspects of the job and ignore other areas.

🔑 Definition — MBO: A system of management that helps in planning, organizing, problem-solving, and motivating through joint participation of subordinates and managers in setting and clarifying goals.

📌 Example: Bell Canada's telephone operators were required to answer calls within 23 seconds; Federal Express customer agents were expected to answer questions within 140 seconds. Both goals were considered very difficult when initially set but employees eventually met and exceeded them.

Performance Appraisal

Performance appraisal is a feedback system that involves the direct evaluation of individual or work group performance by a supervisor, manager, or peers. Most organizations have some kind of evaluation system used for performance feedback, pay administration, and counseling and developing employees. One survey found 90 percent used performance appraisal to determine merit pay increases, 87 percent used it to review performance, and 79 percent used it as an opportunity to set goals for the next period.

However, abundant evidence indicates organizations do a poor job appraising employees—32 percent of managers surveyed rated their performance appraisal process as very ineffective.

The Performance Appraisal Process: The lecture contrasts traditional bureaucratic approaches with newer, high-involvement approaches across five elements:

• Purpose: Traditional focuses on organizational/legal needs; newer focuses on developmental and integrative needs.
• Appraiser: Traditional uses supervisor/managers; newer includes appraisee, co-workers, and others (360-degree feedback).
• Role of appraisee: Traditional is passive recipient; newer is active participant.
• Measurement: Traditional is subjective, concerned with validity; newer includes both objective and subjective measures.
• Training: Traditional is periodic, fixed, administratively driven; newer is dynamic, timely, employee or work-driven.

360-degree feedback expands the appraiser role beyond managers to include multiple raters. This broader approach is used more for member development than for compensation purposes. It provides different views of performance and can lead to a more comprehensive assessment.

Application Stages:

1. Select the right people: Include human resources staff, legal representatives, senior management, and system users.
2. Diagnose the current situation: Assess contextual factors, current practices, satisfaction, work design, and existing goal-setting and reward systems.
3. Establish the system's purposes and objectives: Potential purposes include rewards, career planning, human resources planning, and performance improvement.
4. Design the performance appraisal system: Include choices about appraiser, involvement, measurement, and feedback frequency. Criteria include:
   • Timeliness: Information should precede performance evaluation.
   • Accuracy: Inaccurate data prevents determining if performance meets targets.
   • Acceptance: Participation in goal-setting ensures commitment.
   • Understanding: Information must be understood to have problem-solving value.
   • Critical control points: Information must align with business strategy, performance, and rewards.
   • Economic feasibility: Benefits should exceed costs.
5. Experiment with implementation: Use a pilot test before system-wide implementation.
6. Evaluate and monitor the system: Track user satisfaction and legal defensibility.

🔑 Definition — Performance Appraisal: A feedback system involving direct evaluation of individual or work group performance by a supervisor, manager, or peers.

🔑 Definition — 360-Degree Feedback: A performance appraisal approach that expands the appraiser role beyond managers to include multiple raters such as the appraisee, co-workers, and others having direct exposure to the employee's performance.

Reward Systems

Organizational rewards are powerful incentives for improving employee and work group performance. OD traditionally has relied on intrinsic rewards (enriched jobs, opportunities for decision making) to motivate performance. More recently, OD practitioners have expanded to include extrinsic rewards (pay, stock options, bonuses, gain sharing, promotions, benefits). Both intrinsic and extrinsic rewards can enhance performance and satisfaction.

How Rewards Affect Performance: The most popular model describing the relationship between rewards and performance is value expectancy theory. This model posits that employees will expend effort to achieve performance goals that they believe will lead to outcomes they value. Ongoing motivation depends on the extent to which attaining desired performance goals results in valued outcomes.

Based on value expectancy theory, the ability of rewards to motivate desired behavior depends on six factors:

1. Availability: Rewards must be not only desired but also available. Too little of a desired reward is no reward at all.
2. Timeliness: Rewards should be given in a timely manner.
3. Performance contingency: Rewards should be closely linked with particular performances. Forty percent of employees nationwide believe there is no linkage between pay and performance.
4. Durability: Intrinsic rewards tend to last longer than extrinsic rewards.
5. Equity: Internal equity concerns comparison of personal rewards to those holding similar jobs in the organization. External equity concerns comparison of rewards with those of other organizations in the same labor market.
6. Visibility: Organization members must be able to see who is getting the rewards.

🔑 Definition — Value Expectancy Theory: A model positing that employees will expend effort to achieve performance goals they believe will lead to outcomes they value.

🔑 Definition — Intrinsic Rewards: Rewards derived from the work itself, such as enriched jobs and opportunities for decision making.

🔑 Definition — Extrinsic Rewards: External rewards such as pay, stock options, bonuses, gain sharing, promotions, and benefits.

📌 Example: Merit increases in 1988 were concentrated between 4 and 5 percent nationwide—almost everyone, regardless of performance level, got about the same raise, showing poor performance contingency.

⭐ Key Takeaways

Performance management is an integrated process combining goal setting, performance appraisal, and reward systems that must be aligned with business strategy, workplace technology, and employee involvement. Goal setting is most effective when goals are specific, challenging, participative, and supported by feedback and management—with stretch goals like Six Sigma producing dramatic improvements. MBO provides a structured six-step process for integrating individual and organizational goals but faces criticism for being expensive, time-consuming, and potentially top-down in practice. Performance appraisal is evolving from traditional bureaucratic approaches toward high-involvement models featuring 360-degree feedback, active participant roles, and multiple measurement methods. Reward systems are most effective when they are available, timely, performance-contingent, durable, equitable, and visible—principles derived from value expectancy theory.

🧠 Quick Revision Questions

1. What are the three components of performance management, and how do they interact with the three contextual factors?
2. What are the six characteristics of effective goal setting, and what problem can arise when setting goals for interdependent teams?
3. What are the six steps in the MBO process, and why is step 4 (establishment of success criteria) considered the most important?
4. How do traditional and high-involvement performance appraisal approaches differ across the five elements (purpose, appraiser, role of appraisee, measurement, and training)?
5. What are the six factors that determine a reward system's ability to motivate desired behavior according to value expectancy theory?

📘 Lecture 40 — Developing and Assisting Members

📖 Overview: This lecture presents three human resources management interventions concerned with developing and assisting the well-being of organization members: career planning and development, workforce diversity management, and wellness interventions. It explores how organizations must adapt to changing career needs, technological shifts, global competition, and evolving social contracts between employers and employees.

🗂️ Topics Covered

The lecture covers career planning and development interventions including the four career stages (establishment, advancement, maintenance, withdrawal), career planning resources and processes, career development interventions such as realistic job previews, job pathing, performance feedback and coaching, assessment centers, mentoring, developmental training, work-life balance planning, job rotation, dual-career accommodations, consultative roles, and phased retirement. It also addresses organization decline and career halt issues, workforce diversity challenges, and wellness interventions including employee assistance and stress management programs.

📝 Lecture Summary

Career Planning and Development Interventions

Career planning and development have received increased attention as employees seek more control over their work lives. With organizations downsizing and restructuring, there is less trust in organizations to provide job security. Employees are taking active roles in planning their careers, particularly women, mid-career employees, and college recruits. Organizations are becoming more reliant on their intellectual capital, and providing career development opportunities helps recruit and retain skilled workers. Companies like General Electric, Xerox, Intel, and Cisco Systems have adopted these programs to improve work quality, performance, employee retention, and respond to equal employment legislation.

🔑 Definition — Career Planning: The process of individuals choosing occupations, organizations, and positions at each stage of their careers, involving assessing interests, capabilities, values, and goals.

🔑 Definition — Career Development: Organizational practices that help employees attain their career objectives, including skill training, performance feedback, coaching, job rotation, mentoring, and continuing education.

📌 Example: Many companies experience turnover costs among recent college graduates reaching 50 percent after five years. Career planning and development programs help attract and retain such highly talented employees.

Career Stages

A career consists of a sequence of work-related positions occupied during a lifetime. Today, careers are defined more holistically, including attitudes and experiences. People may move horizontally through different functional areas and still have successful careers without upward promotion.

The four distinct career stages are:

1. Establishment stage (ages 21-26): The outset of a career where people are uncertain about their competence and dependent on others for guidance and feedback. They make initial choices about committing to a specific career, organization, and job.

2. Advancement stage (ages 26-40): Employees become independent contributors concerned with achieving and advancing. They need less guidance and develop closer ties with colleagues, while clarifying long-term career options.

3. Maintenance stage (ages 40-60): Involves leveling off and holding onto career successes. Some help less-experienced subordinates, while others experiencing dissatisfaction may face "midlife crisis," reappraising circumstances and redirecting efforts.

4. Withdrawal stage (ages 60+): Concerned with leaving a career, letting go of organizational attachments, and preparing for retirement. Major contributions involve imparting knowledge and experience to others.

💡 Why this matters: These stages provide insight about personal and career issues people face at different phases. Employees go through phases at different rates and experience issues differently—one person may see maintenance as a positive opportunity to develop others, while another experiences it as stressful leveling off.

Career Planning

Career planning involves setting individual career objectives through assessing interests, capabilities, values, and goals; examining alternative careers; making decisions affecting current jobs; and planning how to progress. The four career stages can be used to make career planning more effective.

Career planning resources include:

• Communication about career opportunities and resources
• Workshops to encourage assessment of interests and abilities
• Career counseling by managers or HR personnel
• Self-development materials (books, videotapes, other media)
• Assessment programs testing vocational interests, aptitudes, and abilities

📍 Table 19: Career Stages and Career Planning Issues

• Establishment: What are alternative occupations? What are my interests and capabilities? How do I get work accomplished? Am I performing as expected?
• Advancement: Am I advancing as expected? What long-term options are available? How do I get more exposure and visibility? How do I integrate career choices with personal life?
• Maintenance: How do I help others become established? Should I reassess myself and redirect my action?
• Withdrawal: What are my interests outside work? What postretirement options exist? How can I be financially secure?

📌 Application 9 — Career Planning Centers at Pacific Bell: Pacific Bell operates ten career centers with reference libraries, job posting systems, and computerized career-life planning programs. Employees can make confidential appointments with career development specialists who help answer: "Who am I? How am I seen? Where do I want to go? How do I get there?" The centers were created in response to strategic changes, changing work environments, and shifting employee values including lower loyalty and fewer upward advancement opportunities.

Career Development

Career development helps individuals achieve their career objectives through organizational practices including skill training, performance feedback, coaching, job rotation, mentoring, and continuing education. These interventions can be linked to different career stages.

📍 Table 20: Career Development Interventions

Career development interventions traditionally focus on younger employees with longer contribution periods. However, as the workforce ages, organizations must increasingly address career needs of older employees, recognizing and rewarding their contributions.

Realistic Job Preview

This intervention provides members with realistic expectations about the job during recruitment. It provides information about whether the job is consistent with their needs and career plans. Research shows people may develop unrealistic expectations and suffer reality shock when those expectations are not fulfilled, leading to turnover or disgruntled, unmotivated employees.

📌 Application 10 — Realistic Job Preview at Nissan: Nissan's preemployment program at its Smyrna, Tennessee plant involves job seekers working up to 360 unpaid hours doing assembly exercises. Participants get realistic expectations about the demanding work, while Nissan screens candidates. One participant noted: "It gave me a chance to see what Nissan expected of me without their having to make a commitment to me or me to them."

Job Pathing

This intervention provides members with a carefully developed sequence of work assignments leading to a career objective. It helps employees in establishment and advancement stages develop skills, knowledge, and competencies by performing jobs requiring new abilities. Research suggests employees receiving challenging assignments early in their careers perform better in later jobs.

🔑 Definition — Job Pathing: A gradual stretching of people's talents by moving them through selected jobs of increasing challenge and responsibility.

📌 Example: A Los Angeles bank used job pathing to prepare employees to become branch managers through a sequence including teller, loan officer, credit manager, and commercial loan manager positions.

Performance Feedback and Coaching

One of the most effective interventions during establishment and advancement phases includes feedback about job performance and coaching to improve performance. Employees need continual feedback about goal achievement and support to improve. Companies like Intel and Monsanto separate career development aspects of performance appraisal from salary review to ensure career needs receive equal attention.

Assessment Centers

Traditionally designed to select and develop employees with high potential for managerial jobs, assessment centers have been extended to career development and selection for new work designs like self-managing teams. Participants spend two to three days on site, receiving comprehensive interviews, tests, and participating in individual and group exercises simulating managerial work.

📌 Application 11 — Assessment Center at Hamilton-Standard: United Technologies' division created an assessment center to select employees for a high-involvement work design with self-managed teams. Activities included information sessions, technical and business interviews, tests measuring generic work skills and social competence, and team-consensus exercises building model airplanes. All hiring decisions were made by group consensus, allowing the division to hire and retain a talented cross-functional workforce with certified skills in over fifty-two areas.

Mentoring

Mentoring is a powerful intervention establishing a close link between an experienced manager and a less experienced member. For those in establishment stage, mentors guide and sponsor careers. For older employees in maintenance stage, mentoring provides opportunities to share knowledge. Research shows about two-thirds of top executives had mentors during early career stages, and those with mentors received more compensation, had more advanced degrees, and were more satisfied with their careers.

📌 Example: Boeing's divisions pair high-potential members with corporate managers who volunteer as mentors, helping employees gain skills, experience, and visibility necessary for advancement.

Developmental Training

This intervention helps employees gain skills for training and coaching others, including workshops on human relations, communications, active listening, and mentoring. Many organizations offer tuition reimbursement programs for advanced degrees. Programs typically target mid-career managers who have good technical skills but limited coaching experience.

Work-Life Balance Planning

This relatively new intervention helps employees better integrate and balance work and home life. Restructuring, downsizing, and global competition have contributed to longer work hours and more stress. Programs include flexible hours, job sharing, day care, and interventions like middlaning—a legitimate alternative career track that acknowledges choices about living life in the "fast lane."

🔑 Definition — Middlaning: An intervention helping people redesign their work and income-generating activities so more time and energy are available for family and personal needs, involving education in work addiction, guilt, and anxiety; skill development in work contract negotiation; and exploration of alternative career options.

Job Rotation and Challenging Assignments

These interventions provide employees with experience and visibility needed for career advancement or the challenge needed to revitalize a stagnant career at maintenance stage. Unlike job pathing, job rotation is less planned and may not be promotion-oriented.

Companies identify "comers" (managers under 40 with top management potential) and "hipos" (high-potential candidates) and provide cross-divisional job experiences. Some firms create fallback positions—jobs identified before transfer that employees can return to without negative consequences if transfers don't work out.

For maintenance stage employees, research suggests rotating workers to challenging jobs at three-year intervals prevents loss of job motivation. "Plateaued employees" (those with little chance of further advancement) can have satisfying careers if they accept their new role and are given challenging assignments with high performance standards.

Dual-Career Accommodations

These practices help employees cope with dual careers where both the employee and spouse pursue full-time careers. The U.S. Department of Labor reports over 80 percent of marriages involve dual careers. The biggest problem involves job transfers during advancement stage.

Common accommodations include recognition of dual-career problems, help with relocation, flexible working hours, counseling, family daycare centers, improved career planning, and policies making it easier for two family members to work in the same organization. Some companies establish cooperative arrangements with other firms to share job opportunities for dual-career couples.

Consultative Roles

These provide late-career employees with opportunities to apply their wisdom and knowledge to help others develop and solve organizational problems. Unlike mentoring, consultative roles are not focused on guiding younger employees' careers but on helping others deal with complex problems or projects.

📌 Example: A large aluminum forging manufacturer temporarily assigned an old-line production manager nearing retirement to consult with salespeople and estimators about bidding on new business. The consultant applied years of forging experience to help them make more accurate estimates, and the pre-retirement manager felt he made a significant contribution—something he hadn't experienced for years.

Phased Retirement

This provides older employees with an effective way of withdrawing from the organization through various forms of part-time work. Employees gradually devote less time to the organization and more to leisure pursuits. It lessens the reality shock often experienced by those who retire all at once and helps employees grow accustomed to leisure life while withdrawing emotionally from the organization.

📌 Example: IBM offers tuition rebates for courses on any topic taken within three years of retirement, and many pre-retirees have used this program to prepare for second careers.

Organization Decline and Career Halt

Decreasing demand, mergers, acquisitions, and restructuring have resulted in layoffs, reduced job opportunities, and severe career disruptions. People experience career halt, resulting in increased personal stress, financial and family disruption, and loss of self-esteem.

Methods for managing layoffs and premature career halts include:

• Equitable layoff policies spread throughout organizational ranks
• Keeping people informed about problems and layoff possibilities
• Setting realistic expectations rather than excessive hope
• Generous relocation and transfer policies
• Helping people find new jobs through outplacement services and retraining
• Treating people with dignity and respect

💡 Why this matters: OD practitioners are likely to become increasingly involved in helping people manage career dislocation and halt as organization decline, downsizing, and restructuring continue.

⭐ Key Takeaways

The four career stages—establishment, advancement, maintenance, and withdrawal—provide a developmental framework for understanding the unique concerns, needs, and challenges employees face at different career phases. Career planning involves individuals setting objectives while career development involves organizational practices to help employees achieve those plans, and these must be integrated with corporate business objectives for effectiveness. Key career development interventions include realistic job previews, job pathing, performance feedback and coaching, assessment centers, mentoring, developmental training, work-life balance planning, job rotation, dual-career accommodations, consultative roles, and phased retirement, each relevant to specific career stages. Organizations must address workforce diversity through appropriate management perspectives and strategic responses, and implement wellness interventions like employee assistance and stress management programs to address social trends including fitness, drug abuse, and work-life balance. In the context of organization decline, layoffs, and career halt, equitable policies, open communication, realistic expectations, and dignified treatment of employees are essential human resources practices.

🧠 Quick Revision Questions

1. What are the four career stages, and what are the age ranges and primary concerns associated with each stage?

2. How does career planning differ from career development, and what resources are commonly used in career planning programs?

3. According to Table 20, which career development interventions apply to the withdrawal stage, and why has the OD field been relatively lax in developing methods for older employees?

4. What is "reality shock" in the context of realistic job previews, and how do organizations like Nissan help prevent it?

5. What is the difference between job pathing and job rotation, and how do "fallback positions" help employees in the advancement stage?

📘 Lecture 41 — Developing and Assisting Members

📖 Overview: This lecture examines how organizations can design human resources systems to address workforce diversity across multiple dimensions, including age, gender, disability, culture, and sexual orientation. It also explores employee wellness interventions, particularly Employee Assistance Programs (EAPs) and stress management programs, which help organizations maintain a productive workforce by supporting employees' physical and psychological wellbeing.

🗂️ Topics Covered

The lecture covers two major areas: workforce diversity interventions including a framework for managing diversity, the five dimensions of workforce diversity (age, gender, disability, culture and values, sexual orientation) with corresponding OD interventions; and employee wellness interventions including Employee Assistance Programs (EAPs) with their three-component model and implementation steps, and stress management programs covering occupational stressors, individual differences, diagnosis methods, and intervention techniques for alleviating stress.

📝 Lecture Summary

Workforce Diversity Interventions

Several profound trends are shaping labor markets. Contemporary workforce characteristics differ radically from twenty years ago. Employees represent every ethnic background; range from highly educated to illiterate; vary in age from eighteen to eighty; may appear healthy or have a terminal illness; may be single parents or part of dual-income, divorced, same-sex, or traditional families; and may be physically or mentally challenged. Workforce diversity is more than a euphemism for cultural or ethnic differences—such a definition is too narrow. Diversity results from people who bring different resources and perspectives to the workplace and who have distinctive needs, preferences, expectations, and lifestyles.

Organizations must design human resources systems that account for these differences to attract and retain a productive workforce and turn diversity into a competitive advantage.

Diversity Framework

A general framework for managing diversity is presented. First, an organization's diversity approach is a function of internal and external pressures for and against diversity. Pro-diversity forces argue that organization performance is enhanced when workforce diversity is embraced as an opportunity. Diversity is often discouraged by those who fear that too many perspectives, beliefs, values, and attitudes dilute concerted action.

Second, management's perspective and priorities regarding diversity can range from resistance to active learning and from marginal to strategic. Organizations can resist diversity by implementing only legally mandated policies such as affirmative action, equal employment opportunity, or Americans with Disabilities Act requirements. A learning and strategic perspective can lead management to view diversity as a source of competitive advantage.

Third, within management's priorities, the organization's strategic responses can range from reactive to proactive. Diversity efforts at Texaco and Denny's had little momentum until embarrassing race-based events forced a response.

Fourth, the organization's implementation style can range from episodic to systemic. A diversity approach will be most effective when strategic responses and implementation style fit with management's intent and internal/external pressures.

Only 5 percent of over 1,400 companies surveyed thought they were doing a "very good job" of managing diversity. Organizations like MBNA Corporation, Lockheed Martin, St. Paul Companies, Levi Strauss, Procter & Gamble, Monsanto, and Wisconsin Electric are taking bolder steps—adopting learning perspectives and systemically weaving diversity-friendly values into the cultural fabric.

Age

The average age of the U.S. workforce is rising. Between 1998 and 2008, workers aged 25-54 will grow 5.5 percent, and the 55+ category is expected to increase almost 48 percent. This results from the baby boom between 1946 and 1964. Organizations face a predominantly middle-aged and older workforce with average ages over forty.

Older workers place heavy demands on healthcare, are less mobile, and have fewer career advancement opportunities. This requires specialized work designs accounting for physical capabilities, career development using their experience, and benefit plans accommodating medical and psychological needs. Younger workers require more challenging jobs, advancement opportunities, and enriched quality of work life.

OD interventions include work design, wellness programs, career planning and development, and reward systems. At Builder's Emporium, the store clerk job was redesigned to eliminate heavy lifting by assigning night crews to replenish shelves and emphasizing sales ability over strength.

🔑 Definition — Workforce Diversity (Age dimension): The range of age-related differences in the workforce requiring differentiated HR practices for older workers (healthcare, mobility, security) and younger workers (challenge, autonomy, advancement). 💡 Why this matters: Age diversity requires organizations to simultaneously accommodate different career stages, physical capabilities, and motivational needs within the same workforce.

Gender

By 2008, almost 48 percent of the U.S. workforce will be women, representing more than half of new entrants between 1998 and 2008. Three-quarters of working women are in their childbearing years, and more than half of all mothers work. Healthcare costs will increase, and demands for child care, maternity/paternity leaves, and flexible working arrangements will pressure work systems.

Work design, reward systems, and career development are important interventions. Jobs can be modified to accommodate working mothers. Organizations like Digital Equipment, Steelcase, and Hewlett-Packard have instituted job sharing, by which two people perform tasks associated with one job, allowing female employees to pursue both family and work careers.

Reward system interventions, especially fringe benefits, can offer special leaves, child-care options, flexible working hours, and health/wellness benefits. Organizations like Polaroid, Hoechst Celanese, and Ameritech have instituted job pathing, challenging assignments, and mentoring programs to retain key female members.

📐 Formula — Job Sharing: Two people performing the tasks associated with one job → Allows employees to balance family and work careers 📌 Example: Digital Equipment, Steelcase, and Hewlett-Packard implemented job sharing to allow female employees to pursue both family and work careers simultaneously.

Disability

The workforce of the twenty-first century comprises people with various physical and mental disabilities. The high school dropout rate remained above 4 percent through the 1990s, and approximately 21 percent of the population over age 16 have only rudimentary reading and writing skills. In 1990, the federal Americans with Disabilities Act banned discrimination based on physical or mental disability in hiring and promotion and required organizations to modify physical plants and office buildings.

The productivity of disabled workers often surprises managers; training is required to increase awareness. OD interventions include work design, career planning and development, and performance management. Traditional job design can simplify work for physically handicapped workers. Career tracks need to be developed for these workers.

Performance management interventions including goal setting, monitoring, and coaching are important. At Blue Cross and Blue Shield of Florida, a supervisor learned sign language to communicate with a deaf employee whose productivity was low but quality was high. Two other deaf employees were transferred to that supervisor's department; over two years, the deaf workers' performance improved 1,000 percent with no loss in quality.

📌 Example: At Blue Cross and Blue Shield of Florida, a supervisor learned sign language to communicate with deaf employees. Over two years, the deaf workers' performance improved 1,000 percent with no loss in quality.

Culture and Values

Different cultures represent a variety of values, work ethics, and norms. Not all cultures want the same things from work. Management practices must align with cultural values and support both career and family orientations. English is a second language for many people, and jobs must be adjusted accordingly.

Several planned change interventions can be used: employee involvement, reward systems, and career planning and development. Employee involvement practices can be adapted to needs for participation. People from Scandinavia are more likely to respond to high-involvement policies; Latin American cultures view participation with reservation.

Reward systems can focus on increasing flexibility. Flexible working hours enable employees to meet personal obligations without sacrificing organizational objectives. Work locations can be varied—Pacific Telesis, Eddie Bauer, and Marriott allow telecommuting. Floating holidays allow people from different cultures to match religious and family occasions with work schedules.

Child-care and dependent-care assistance support different lifestyles. At Stride Rite Corporation, the Stride Rite Intergenerational Day Care Center houses 55 children (ages 15 months to 6 years) and 24 elders (over 60 years old). The center was established after a survey found 25 percent of employees provided elder care and 13 percent anticipated doing so within five years.

📌 Example: Stride Rite's Intergenerational Day Care Center serves both children (15 months to 6 years) and elders (over 60), established after a survey revealed 25% of employees provided elder care.

Sexual Orientation

Diversity in sexual and affectional orientation, including gay, lesbian, and bisexual individuals, increasingly affects organizational HR thinking. The primary implication is discrimination. When strong emotional reactions interact with gender, culture, and values trends, the likelihood of overt and unconscious discrimination is high.

The most frequent intervention is education and training, which increases members' awareness and decreases overt discrimination. Human resources practices regarding Equal Employment Opportunity (EEO) and fringe benefits can address sexual orientation parity. Some organizations have modified EEO statements to address sexual orientation. Firms like Advanced Micro Devices, Fujitsu, Ben & Jerry's, and Dow Chemical have communicated that hiring, promotion, and transfer decisions cannot be made regarding sexual orientation.

Organizations increasingly offer domestic-partner benefit plans. Companies like Microsoft, Apple, Lotus Development Corporation, and Inprise Borland have extended healthcare and other benefits to same-sex partners. A 1992 Newsweek poll found 78 percent of respondents favored extending benefits to domestic partners of lesbians and gay men.

A national survey revealed 75 percent of firms either have or plan to begin diversity efforts. Diversity interventions are especially prevalent in large organizations with diversity-friendly senior management and HR policies.

Employee Wellness Interventions

Organizations have become increasingly aware of the relationship between employee wellness and productivity. Stress-related ailments cost industry more than $200 billion per year globally. In the United Kingdom, stress and stress-related illness cost £12 billion each year. Employee assistance programs (EAPs) and stress management interventions have grown as organizations take more responsibility for employee welfare.

EAPs are primarily reactive efforts that identify, refer, and treat employee problems (drug abuse, marital difficulties, depression) affecting worker performance. Stress management, both proactive and reactive, helps employees alleviate or cope with negative consequences of stress at work.

Employee Assistance Programs

The 1992 National Household Survey on Drug Abuse reported that 66.5 percent of current illicit drug users aged 18+ were working full- or part-time. Alcohol and drug use costs U.S. business an estimated $102 billion per year in lost productivity, accidents, and turnover. Britain's Royal College of Psychiatrists suggested up to 30 percent of British employees would experience mental health problems, with 115 million workdays lost yearly from depression.

EAPs help identify, refer, and treat workers whose personal problems affect their performance. Started in the 1940s to combat alcoholism, these programs have expanded to deal with emotional, family, marital, and financial problems, and more recently, drug abuse.

Central to the underlying philosophy: although the organization has no right to interfere in employees' private lives, it does have a right to impose work performance standards and establish sanctions when these are not met. Anyone whose work performance is impaired due to a personal problem is eligible for admission.

Research has demonstrated that EAPs can positively affect absenteeism, turnover, and job performance. At AT&T, 59 employees close to losing their jobs were enrolled in an EAP and successfully returned to work; hiring replacements would have been more costly.

🔑 Definition — Employee Assistance Program (EAP): A reactive organizational intervention that identifies, refers, and treats employees whose personal problems (e.g., drug abuse, marital difficulties, depression) affect their work performance.

The Employee Assistance Program Model

Figure 56 displays three components of a typical EAP:

1. Identification and Referral: Entry into the program through formal or informal referral. Formal referral involves identifying employees with performance problems and getting them to consider entering the EAP. Informal referral occurs when an employee initiates admission even though performance problems may not exist or may not have been detected.

Organizational activities supporting this step include: a written policy with clear procedures; top management and HR publicly supporting the EAP with good publicity; training and development equipping supervisors to identify and document performance problems; and safeguarding confidentiality of employees using the program.

2. EAP Office: The program office accepts an employee, provides problem evaluation and initial counseling, refers the employee to treatment resources and agencies, monitors progress during treatment, and reintegrates the employee into the workforce. In some large organizations, counseling and treatment resources are located in-house. In most EAPs, the employee is referred to outside agencies contracting with the organization.

Good management is required. The program's relationship to disciplinary procedures must be clear. Maintaining confidential records about treatment is essential.

3. Treatment: Resources include inpatient and outpatient care, social services, and self-help groups. Resources tapped by EAPs vary from program to program.

Implementing an Employee Assistance Program

Seven steps in establishing an EAP:

1. Develop an EAP policy and procedure: Establish specific guidelines concerning the EAP and its availability. Include policies on confidentiality, disciplinary procedures, communication, training, and program philosophy. Use senior management and union involvement.

2. Select and train a program coordinator: Designate a person responsible for overall coordination of program activities—training, publicity, evaluation, troubleshooting, and ongoing support.

3. Obtain employee/union support: Meet with key representatives for input on significant features; review policy/procedural components; share endorsements from other organizations.

4. Publicize the program: Communicate the EAP's availability and increase employee awareness of procedures, resources, and benefits. Both formal and informal referrals assume awareness of its existence.

5. Establish relationships with healthcare providers and insurers: Review health insurance policies for mental health and chemical dependency coverage. Summarize information for EAP users. Interview, screen, and select potential providers.

6. Schedule EAP training: Ensure training methods and materials are up-to-date and accurate. Include role plays for handling difficult employees and methods for referring workers.

7. Continually administer and manage the plan: Develop a plan for reviewing program effectiveness—auditing procedures, measuring user satisfaction, determining whether to add or delete treatment options. Provide ongoing staff training on changing legal requirements, new treatment options, and organizational changes.

Stress Management Programs

Concern about managing dysfunction caused by stress is growing. Stress is linked to hypertension, heart attacks, diabetes, asthma, chronic pain, allergies, headache, backache, skin disorders, cancer, immune system weakness, alcoholism, and drug abuse. One study reported one in three workers thought about quitting due to stress; one in two said job stress reduced productivity; one in five took sick leave because of stress in the preceding month.

Each employee suffering from a stress-related illness loses an average of 16 workdays per year. The Research Triangle Institute estimated annual cost to the U.S. economy from stress-related disorders at $187 billion.

Stress management is often facilitated by psychologists, physicians, and health professionals specializing in work stress. There has been a growing tendency to include stress management as part of larger OD efforts.

🔑 Definition — Stress: The reaction of people to their environments, involving both physiological and psychological responses to environmental conditions, causing people to change or adjust their behaviors.

Definition and Model

Stress involves the fit of people's needs, abilities, and expectations with environmental demands, changes, and opportunities. A good person-environment fit results in positive reactions to stress; a poor fit leads to negative consequences. Stress is generally positive at moderate levels, contributing to effective motivation, innovation, and learning. For example, a promotion is a stressful event experienced positively.

Stress can be dysfunctional when excessively high (or low) or persisting over a long period. It can overpower coping abilities, causing physical and emotional exhaustion. A boss who is excessively demanding and unsupportive can cause subordinates undue tension, anxiety, and dissatisfaction, leading to withdrawal behaviors, ailments like headaches and high blood pressure, and lowered performance.

📐 Formula — Person-Environment Fit: Good fit → positive reactions to stress; Poor fit → negative stress consequences (anxiety, poor decision making, increased blood pressure, low productivity)

Figure 57 presents a stress model showing that almost any dimension of the organization can cause negative stress. Virtually all OD interventions can play a role in stress management.

Occupational Stressors

Figure 57 identifies several organizational sources of stress including structure, role on the job, physical environment, and relationships. Extensive research has focused on three key organizational sources: work overload, role conflict, and role ambiguity.

Work overload can be a persistent source of stress, especially among managers processing complex information. Quantitative overload consists of having too much to do in a given time period. Qualitative overload refers to having work too difficult for one's abilities. Both too much and too little work can have negative consequences. When workload balances with people's abilities, stress has a positive impact; when workload exceeds abilities (overload) or fails to challenge (underload), people experience stress negatively.

A role is defined as the sum total of expectations that the individual and significant others have about how the person should perform a specific job. Problems arise when there is role ambiguity (the person doesn't clearly understand what others expect) or role conflict (the employee receives contradictory expectations that cannot be satisfied simultaneously).

Role ambiguity and conflict are prevalent in organizations, especially among managerial jobs. Managerial job descriptions are typically so general that it's difficult to know precisely what is expected. Role ambiguity and conflict can cause severe stress, resulting in increased tension, dissatisfaction, withdrawal, and reduced commitment and trust.

🔑 Definition — Role: The sum total of expectations that the individual and significant others have about how the person should perform a specific job.

Individual Differences

Figure 57 identifies individual differences affecting responses to occupational stressors: hardiness, social support, age, education, occupation, race, negative affectivity, and Type A behavior pattern.

Type A behavior is characterized by impatience, competitiveness, and hostility. Type A personalities invest long hours working under tight deadlines, putting themselves under extreme time pressure. Type B personalities are less hurried, aggressive, and hostile.

Extensive research shows Type A people are especially prone to stress. A longitudinal study of 3,500 men found Type As had twice as much heart disease, five times as many second heart attacks, and twice as many fatal heart attacks as Type Bs. Researchers explain Type A susceptibility in terms of inability to deal with uncertainty. One study showed 60 percent of managers were clearly Type A and only 12 percent were distinctly Type B.

🔑 Definition — Type A Behavior Pattern: A personality pattern characterized by impatience, competitiveness, and hostility; individuals invest long hours working under tight deadlines and try to do more work in less time. 🔑 Definition — Type B Behavior Pattern: A personality pattern characterized by being less hurried, aggressive, and hostile than Type A personalities.

Diagnosis and Awareness of Stress and Its Causes

This preventive approach starts with diagnosis of the current situation, including employees' self-awareness of their stress and its sources. Two methods for diagnosing stress:

1. Charting Stressors: Identifying organizational and personal stressors operating in a particular situation, guided by a conceptual model. Data is collected through questionnaires and interviews. Standardized instruments measure work overload, role conflict and ambiguity, promotional issues, opportunities for participation, managerial support, and communication. Specific instruments measure individual differences like hardiness, social support, and Type A/B behavior. It's necessary to measure stress consequences such as subjective moods, performance, job satisfaction, absenteeism, blood pressure, and cholesterol level.

2. Health Profiling: Aimed at identifying stress symptoms for corrective action. Starts with a questionnaire asking for medical history, personal habits, current health, and vital signs (blood pressure, cholesterol, triglyceride levels). Information is analyzed by computer to calculate the individual's health profile, comparing characteristics with an average person of the same gender, age, and race. The profile identifies future health prospects and indicates how risks can be reduced.

Alleviating Stressors and Coping with Stress

Interventions fall into two groups: those aimed at changing organizational conditions causing stress and those directed at helping people cope better. Two methods for alleviating stressful conditions:

1. Role Clarification: A systematic process for revealing others' expectations and arriving at consensus about activities constituting a particular role. Methods include Job Expectation Technique (JET) and Role Analysis Technique (RAT). Steps: (a) Identify relevant people and bring them together away from the organization; (b) Role holder discusses perceived job duties and responsibilities while others comment; (c) When consensus is reached, the role holder writes a description distributed to all participants; (d) Participants periodically check whether the role is being performed as intended.

2. Supportive Relationships: Establishing trusting and genuinely positive relationships among employees including bosses, subordinates, and peers. Supportive relationships can buffer people from stress. A study of managers at AT&T undergoing turmoil from corporate breakup showed that employees under considerable stress but with supportive bosses suffered half as much illness, depression, impaired sexual performance, and obesity as employees with unsupportive bosses.

Two interventions aimed at helping people cope more positively:

3. Stress Inoculation Training: Programs to help employees acquire skills and knowledge to cope positively with stressors. Participants learn stress warning signals (difficulty making decisions, disrupted sleeping/eating, greater frequency of headaches), then develop concrete coping plans. A coping self-statement procedure involves verbalizing questions or statements addressing four stages: Preparation ("What am I going to do about these stressors?"), Confrontation ("I must relax and stay in control."), Coping ("I must focus on the present set of stressors."), and Self-reinforcement ("I handled it well.").

4. Health Facilities: Organizations provide facilities for coping with stress. Elaborate exercise facilities are maintained by Xerox, Weyerhaeuser, and PepsiCo. Over 500 companies (Exxon, Mobil, Chase Manhattan Bank) operate cardiovascular fitness programs. Companies like McDonald's and Equitable Life Assurance Society provide biofeedback facilities where managers take relaxation breaks using devices to monitor respiration and heart rate. Some companies provide time for meditation; others have stay-well programs encouraging healthy diets and lifestyles.

📌 Example: A study of AT&T managers during corporate breakup found that those with supportive bosses suffered half as much illness, depression, impaired sexual performance, and obesity as those with unsupportive bosses.

⭐ Key Takeaways

Workforce diversity is a multi-dimensional concept encompassing age, gender, disability, culture and values, and sexual orientation—each requiring tailored OD interventions rather than a one-size-fits-all approach. The framework for managing diversity emphasizes that effective implementation requires alignment between management's perspective (from resistance to strategic learning) and the organization's implementation style (from episodic to systemic). Employee Assistance Programs follow a three-component model (identification/referral, EAP office, treatment) and require seven implementation steps focusing on policy development, training, communication, and confidentiality. Stress management requires understanding occupational stressors (work overload, role conflict, role ambiguity) and individual differences (Type A/B behavior patterns), followed by diagnosis through charting stressors or health profiling, and intervention through role clarification, supportive relationships, stress inoculation training, or health facilities. Organizations must recognize that wellness interventions are not optional additions but strategic necessities that directly impact productivity, turnover, and healthcare costs.

🧠 Quick Revision Questions

1. What are the five dimensions of workforce diversity discussed in this lecture, and what specific OD interventions are recommended for each dimension?

2. Describe the four components of the framework for managing diversity in organizations, explaining how each component influences the overall diversity approach.

3. What are the three components of a typical Employee Assistance Program (EAP), and how do formal and informal referrals differ in the identification and referral process?

4. What are the key differences between Type A and Type B behavior patterns, and how do these differences affect how individuals respond to occupational stressors?

5. Identify and explain at least four of the seven steps for implementing an Employee Assistance Program, and discuss why each step is critical for program success.

📘 Lecture 42 — Organization and Environment Relationships

📖 Overview: This lecture explores how organizations, as open systems, must relate to their environments to acquire resources and deliver valued outputs. It provides a comprehensive framework for understanding environmental types, dimensions, and organizational responses, culminating in three key interventions: integrated strategic change, transorganizational development, and mergers and acquisitions. Understanding these concepts is critical for managers who need to navigate external constraints and leverage environmental opportunities.

🗂️ Topics Covered

The lecture begins with an organization and environment framework describing environmental types (general, task, and enacted environments) and environmental dimensions (information uncertainty and resource dependence). It then covers three classes of organizational responses: administrative, competitive, and collective responses. The remainder of the lecture details three specific interventions: integrated strategic change (ISC), transorganizational development (TD), and mergers and acquisitions (M&As), including their stages, applications, and the roles of change agents in each.

📝 Lecture Summary

Organization and Environment Framework

Organizations are open systems that must relate to their environments by acquiring resources and delivering valued products or services. An organization's strategy—how it acquires resources and delivers outputs—is shaped by environmental features. Organizations can devise responses from internal administrative responses (creating special units to scan the environment) to external collective responses (forming strategic alliances).

Environments can be described in two ways. First, there are different types of environments consisting of specific components or forces—organizations must understand these, select appropriate parts to respond to, and develop effective relationships. For example, a manufacturing firm must understand raw materials markets, labor markets, customer segments, and production technology alternatives. Second, useful dimensions capture the nature of organizational environments—some are rapidly changing and complex, requiring different responses than stable, simple environments.

💡 Why this matters: The framework establishes that organizations are dependent on their environments and must manage external constraints and contingencies while taking advantage of opportunities through methods like political lobbying, advertising, and public relations.

Environmental Types

The general environment consists of all external forces that can influence an organization, categorized into technological, legal and regulatory, political, economic, social, and ecological components. Each force can affect the organization in both direct and indirect ways—for example, economic recessions directly impact product demand, while general environment forces can affect organizations indirectly through linkages between external agents (e.g., a supplier's labor dispute affecting raw material availability).

The task environment consists of specific individuals and organizations that interact directly with the organization and can affect goal achievement: customers, suppliers, competitors, producers of substitute products or services, labor unions, financial institutions, and so on. These direct relationships are the medium through which organizations and environments mutually influence one another.

The enacted environment consists of the organization's perception and representation of its general and task environments. Environments must be perceived before they can influence decisions about how to respond. Only the enacted environment can affect which organizational responses are chosen, while general and task environments influence whether those responses are successful or ineffective.

🔑 Definition — General environment: all external forces that can influence an organization, categorized into technological, legal/regulatory, political, economic, social, and ecological components. 🔑 Definition — Task environment: specific individuals and organizations that interact directly with the organization and can affect goal achievement. 🔑 Definition — Enacted environment: the organization's perception and representation of its general and task environments.

Environmental Dimensions

One perspective views environments as information flows and suggests organizations need to process information to relate to their environments. The key dimension is information uncertainty, or the degree to which environmental information is ambiguous. Organizations seek to remove uncertainty so they know how to transact with the environment—for example, using focus groups and surveys to discern customer needs. The greater the uncertainty, the more information processing is required.

Another perspective views environments as consisting of resources for which organizations compete. The key dimension is resource dependence, or the degree to which an organization relies on other organizations for resources. Organizations seek to manage critical sources of resource dependence while remaining autonomous—for example, contracting with several suppliers to avoid over-dependence on one vendor.

These two dimensions can be combined to show the degree to which organizations are constrained by their environments. Organizations have the most freedom when both information uncertainty and resource dependence are low—U.S. automotive manufacturers in the 1950s faced these conditions. Organizations are more constrained as both dimensions increase—financial institutions, high-technology firms, and health-care facilities face unprecedented amounts of both.

🔑 Definition — Information uncertainty: the degree to which environmental information is ambiguous. 🔑 Definition — Resource dependence: the degree to which an organization relies on other organizations for resources.

Organizational Responses

Organizations employ methods to influence and respond to their environments, buffer their technology from external disruptions, and link themselves to sources of information and resources. Three classes of responses are described: administrative, competitive, and collective.

Administrative Responses include the formation or clarification of the organization's mission; the development of objectives, policies, and budgets; or the creation of scanning units. These can be proactive or reactive and aim at defining the organization's purpose and key tasks in relation to particular environments. An effective mission clearly differentiates the organization from others in its competitive environment—for example, 3M's core purpose is to "solve unsolved problems innovatively." Scanning units (market research, regulatory relations departments) include specialists who scan particular parts of the environment, interpret relevant information, and communicate it to decision makers.

Competitive Responses seek to enhance the organization's performance by establishing a competitive advantage over rivals. To sustain competitive advantage, organizations must achieve an external position or perform internally in ways that are unique, valuable, and difficult to imitate.

• Uniqueness: Organizations must identify the bundle of resources and processes that make them distinct—financial resources, reputational resources, technological resources, and human resources. Processes and capabilities that are unique are called distinctive competencies and represent the cornerstone of competitive advantage.
• Value: Competitive advantage is achieved when resources and processes deliver outputs that warrant a higher-than-average price or are exceptionally low in cost. Mercedes automobiles are valuable because perceived benefits exceed price; Chevrolet automobiles are valuable because they provide basic transportation at a low price.
• Imitability: Sustainable competitive advantage is achieved when unique and valuable resources and processes are difficult to mimic. Organizations can protect advantage by making it difficult for competitors to identify their distinctive competence, aggressively pursuing opportunities, or retaining key human resources through attractive compensation.

🔑 Definition — Distinctive competencies: processes and capabilities that are unique to the organization and represent the cornerstone of competitive advantage.

Collective Responses help control interdependencies among organizations and include bargaining, contracting, coopting, and creating joint ventures, federations, strategic alliances, and consortia. Contemporary organizations increasingly turn to these arrangements for sharing resources for large-scale R&D, spreading innovation risks, applying diverse expertise, and overcoming barriers to entry into foreign markets. Major barriers in the United States include organizations' drive to act autonomously and government policies discouraging coordination, while Japanese policies promote cooperation among organizations.

💡 Why this matters: The three interventions discussed—integrated strategic change, transorganizational development, and mergers and acquisitions—derive from this framework and help organizations assess their environments and make appropriate responses.

Integrated Strategic Change

Integrated Strategic Change (ISC) is a recent intervention that brings an OD perspective to traditional strategic planning, developed in response to complaints that good business strategies often are not implemented. Traditional strategic planning artificially separates strategic thinking from operational actions and ignores contributions that planned change processes can make to implementation. In the traditional process, participation is limited to top management, resulting in little understanding of the need for change and little ownership of new behaviors.

Key Features:

1. The relevant unit of analysis is the organization's strategic orientation comprising its strategy and organization design, considered as an integrated whole.
2. Creating the strategic plan, gaining commitment, planning implementation, and executing it are treated as one integrated process.
3. Individuals and groups throughout the organization are integrated into analysis, planning, and implementation to create a more achievable plan and maintain strategic focus.

Application Stages:

1. Performing the strategic analysis: Begins with diagnosis of the organization's readiness for change and its current strategy and organization (S1/O1). The most important indicator of readiness is senior management's willingness and ability to carry out strategic change. Understanding current strategy and organization design involves examining the organization's industry, current financial performance, and effectiveness. Strategic analysis actively involves organization members through search conferences, employee focus groups, and interviews.

2. Exercising strategic choice: A new strategic orientation must be designed. Strategic analysis may reveal misfits among environment, strategic orientation, and performance. Senior management formulates visions for the future and broadly defines two or three alternative sets of objectives and strategies. This step determines the content or "what" of strategic change—the desired strategy (S2) defines products/services to offer and markets to serve, while the desired organization design (O2) specifies structures and processes necessary to support the new strategy.

3. Designing the strategic change plan: A comprehensive agenda for moving from current (S1/O1) to future (S2/O2) strategic orientation. The change plan describes types, magnitude, and schedule of change activities, costs, and how changes will be implemented given power and political issues, organizational culture, and current ability to implement change.

4. Implementing the strategic change plan: Draws heavily on knowledge of motivation, group dynamics, and change processes. Requires senior managers to champion change elements, initiate action, allocate resources, set high but achievable goals, provide feedback, hold people accountable, institutionalize changes, and solve problems as they arise.

🔑 Definition — Strategic orientation: comprising the organization's strategy and organization design, considered as an integrated whole.

Transorganizational Development

Transorganizational development (TD) is a form of planned change aimed at helping organizations develop collective and collaborative strategies with other organizations. Many tasks facing organizations today are too complex for a single organization—for example, Sematech involved many large organizations (Intel, AT&T, IBM, Xerox, Motorola) to improve U.S. semiconductor industry competitiveness.

Transorganizational systems (TSs) are groups of organizations that have joined together for a common purpose, including licensing agreements, strategic alliances, joint ventures, and public-private partnerships. TSs are under organized: relationships among member organizations are loosely coupled; leadership and power are dispersed among autonomous organizations; commitment and membership are tenuous as member organizations act to maintain their autonomy while jointly performing.

Application Stages:

1. Identification stage: Identifying potential member organizations of the TS. Change agents work with initiating organizations to clarify their own goals, explore alternatives to collaboration, understand the tradeoff between loss of autonomy and value of collaboration, and specify criteria for membership. Key stakeholders who can affect creation and subsequent performance of the TS are identified as possible members.

2. Convention stage: Bringing potential members together to assess whether creating a TS is desirable and feasible. Face-to-face meetings enable exploration of motivations and perceptions of the joint task. Change agents may need to structure and manage interactions to facilitate airing of differences and arriving at consensus.

3. Organization stage: When the convention stage results in a decision to create a TS, members establish structures and mechanisms that promote communication and interaction. This may involve creating a coordinating council, developing rules and operating procedures, and voluminous contracting about members' contributions and returns.

4. Evaluation stage: Assessing how the TS is performing through feedback data including performance outcomes, member satisfactions, and indicators of how well members are interacting jointly. This may signal the need to return to previous stages for necessary corrections.

Roles and Skills of the Change Agent: Because TSs are under organized, change agents need to play activist roles in creating and developing them—providing leadership and direction, educating potential members about benefits, and structuring face-to-face encounters. Because TSs are composed of multiple organizations, change agents must maintain a neutral role, treating all members alike and working on behalf of the total system. Skills needed include political competence (to understand and resolve conflicts of interest) and networking skills (to manage lateral relations among autonomous organizations).

🔑 Definition — Transorganizational systems (TSs): groups of organizations that have joined together for a common purpose, existing intermediately between single organizations and societal systems.

Mergers and Acquisitions

Mergers and acquisitions (M&As) involve the combination of two organizations. Merger refers to the integration of two previously independent organizations into a completely new organization; acquisition involves the purchase of one organization by another for integration into the acquiring organization. M&As are distinct from TSs because at least one organization ceases to exist.

M&A Rationale: Reasons include diversification or vertical integration; gaining access to global markets, technology, or other resources; and achieving operational efficiencies, improved innovation, or resource sharing. M&As are preferred when internal development is too slow or when alliances or joint ventures do not offer sufficient control over key resources.

Application Stages:

Pre-combination Phase:

1. Search for and select candidate: Developing screening criteria, agreeing on a first-choice candidate, assessing regulatory compliance, establishing initial contacts, and formulating a letter of intent. OD practitioners can add value by encouraging screening criteria that include managerial, organizational, and cultural components as well as technical and financial aspects.

2. Create an M&A team: Senior leaders appoint a team to establish the business case, oversee due diligence, and develop a merger integration plan. OD practitioners can facilitate team formation through human process interventions and help establish clear goals and leadership structure.

3. Establish the business case: Developing a prima facie case that combining the two organizations will result in competitive advantage exceeding their separate advantages. This includes specifying the strategic vision, competitive strategy, and systems integration potential.

4. Perform a due diligence assessment: Evaluating whether the two organizations actually have the managerial, technical, and financial resources each assumes the other possesses. Attention to cultural features of M&As is becoming more prevalent due to evidence that culture clashes can ruin expected financial gains.

5. Develop merger integration plans: Specifying how the two organizations will be combined—integration objectives, scope and timing, organization design criteria, Day 1 requirements, and responsibility assignments.

Legal Combination Phase: Involves legal and financial aspects—settling deal terms, registering with regulatory agencies, communicating with shareholders, and filing legal documents.

Operational Combination Phase:

1. Day 1 activities: Communications and actions that officially start implementation—announcements about key executives, headquarters location, task structure, and layoff areas.
2. Operational and technical integration activities: Physical moves, structural changes, work designs, and procedures to accomplish strategic objectives and expected cost savings.
3. Cultural integration activities: Building new values and norms—encouraging members from both organizations to solve business problems together.

Practical suggestions: implement sooner rather than later, communicate clearly and in a timely fashion, have members from both organizations work together to solve implementation problems, and continually assess the implementation process.

🔑 Definition — Merger: integration of two previously independent organizations into a completely new organization. 🔑 Definition — Acquisition: purchase of one organization by another for integration into the acquiring organization.

⭐ Key Takeaways

Organizations are open systems that must manage three environmental types (general, task, and enacted) and two key dimensions (information uncertainty and resource dependence) to determine appropriate responses. Three classes of organizational responses exist—administrative (mission, objectives, scanning units), competitive (uniqueness, value, imitability), and collective (strategic alliances, joint ventures, consortia)—and organizations can use combinations of these to navigate environmental constraints. Integrated Strategic Change is a highly participative process that integrates strategy and organization design across four stages (strategic analysis, strategic choice, change plan design, and implementation) to overcome traditional implementation failures. Transorganizational Development helps multiple organizations collaborate through four stages (identification, convention, organization, evaluation) despite the inherent challenges of under-organized multi-organization systems. Mergers and Acquisitions involve complex three-phase processes where cultural integration and change management are as critical as financial and legal considerations for success.

🧠 Quick Revision Questions

1. What are the three types of organizational environments described in the lecture, and how do they differ from one another?
2. Explain how information uncertainty and resource dependence combine to determine the degree of environmental constraint on an organization.
3. What are the three criteria for achieving sustainable competitive advantage through competitive responses, and what does each criterion mean?
4. List the four stages of Integrated Strategic Change (ISC) and briefly describe what happens in each stage.
5. What are the major differences between Transorganizational Development (TD) and Mergers and Acquisitions (M&As) in terms of organizational outcomes and change agent roles?

📘 Lecture 43 — Organization Transformation

📖 Overview: This lecture explores organization transformation as a radical, revolutionary change process that fundamentally alters how organizations perceive, think, and behave. It distinguishes transformational change from incremental improvements, examines its key characteristics, and details the critical role of senior leadership in driving such change. The lecture also provides a comprehensive framework for understanding organizational culture and how cultural context influences change efforts.

🗂️ Topics Covered

The lecture covers the distinguishing features of revolutionary change efforts, including how change is triggered by environmental and internal disruptions, the systemic and revolutionary nature of transformation, the demand for a new organizing paradigm, the driving role of senior executives and line management, and the importance of continuous learning. It then details three kinds of interventions—culture change, self-design, and organization learning—with a deep focus on culture change, including its levels (artifacts, norms, values, basic assumptions), a case study of "The Action Company," and the cultural context of change through five key national values.

📝 Lecture Summary

Organization Transformation

Organization transformation is a recent advance in organization development, characterized by radical changes in how members perceive, think, and behave at work. These changes go far beyond making the existing organization better or fine-tuning the status quo; they are concerned with fundamentally altering organizational assumptions about functioning and how the organization relates to the environment. Transformations can occur in response to or in anticipation of major changes in the organization's environment or technology.

The distinguishing features of revolutionary change efforts are:

• Change is Triggered by Environmental and Internal Disruptions
• Change is Systemic and Revolutionary
• Change Demands a New Organizing Paradigm
• Change is Driven by Senior Executives and Line Management
• Continuous Learning and Change

Characteristics of Transformational Change

Change is Triggered by Environmental and Internal Disruptions Organizations are unlikely to undertake transformational change unless significant reasons emerge. Power and expertise are vested in existing arrangements, so members typically fine-tune structures rather than alter them drastically. Organizations must experience or anticipate a severe threat to survival before they will be motivated to undertake transformational change.

Transformational change occurs in response to at least three kinds of disruption:

1. Industry discontinuities—sharp changes in legal, political, economic, and technological conditions that shift the basis for competition within industries.
2. Product life cycle shifts—changes in product life cycle that require different business strategies.
3. Internal company dynamics—changes in size, corporate portfolio strategy, executive turnover, and the like.

These disruptions severely jolt organizations and push them to alter business strategy and, in turn, their mission, values, structure, systems, and procedures.

Change is Systemic and Revolutionary Transformational change involves reshaping the organization's culture and design elements. These changes are systemic and revolutionary because the entire nature of the organization is altered fundamentally. Typically driven by senior executives, change may occur rapidly so that it does not get mired in politics, individual resistance, and other forms of organizational inertia. This is particularly pertinent to changing different features of the organization, such as structure, information systems, human resources practices, and work design. These features tend to reinforce one another, making it difficult to change them piecemeal. They need to be changed together in a coordinated fashion. Transformational change is distinguished from other types of strategic change by its attention to the people side of the organization—a majority of individuals must change their behavior.

Long-term studies of organizational evolution underscore the revolutionary nature of transformational change. Organizations typically move through relatively long periods of smooth growth (convergence or evolution) characterized by incremental changes. At times, organizations experience severe disruptions that render existing arrangements ineffective. Successful firms respond with total system and quantum changes representing abrupt shifts in structure, culture, and processes. The faster the organization can respond to disruptions, the quicker it can attain the benefits of operating in a new way, providing a competitive advantage.

💡 Why this matters: Rapid implementation of transformational change enables an organization to reach a period of smooth growth sooner, turning a survival threat into a competitive advantage.

Change Demands a New Organizing Paradigm Organizations undertaking transformational change are involved in second-order or gamma types of change. Gamma change involves discontinuous shifts in mental or organizational frameworks. Creative metaphors like "organization learning" or "continuous improvement" help members visualize the new paradigm. During the 1980s, changes in technology, quality concerns, and worker participation led to a shift from a "control-based" to a "commitment-based" organization. Features of the new paradigm included leaner, more flexible structures; information and decision making pushed down to the lowest levels; decentralized teams and business units accountable for specific products, services, or customers; and participative management and teamwork.

🔑 Definition — Gamma Change: Discontinuous shifts in mental or organizational frameworks that fundamentally alter how the organization operates.

Change is Driven by Senior Executives and Line Management Senior executives and line managers play an active role in all phases of the change process. They are responsible for the strategic direction and operation of the organization and actively lead the transformation. They decide when to initiate change, what it should be, how it should be implemented, and who should direct it. Existing executives may be replaced by outsiders recruited to lead the change. Research suggests that externally recruited executives are three times more likely to initiate transformational change than existing executive teams.

Three key roles for executive leadership of such change are:

1. Envisioning. Executives must articulate a clear and credible vision of the new strategic orientation. They must set new and difficult standards for performance, generate pride in past accomplishments, and enthusiasm for the new strategy.

2. Energizing. Executives must demonstrate personal excitement for the changes and model the behaviors expected of others. They must communicate examples of early success to mobilize energy for change.

3. Enabling. Executives must provide the resources necessary for undertaking significant change and use rewards to reinforce new behaviors. Leaders must build an effective top-management team and develop management practices to support the change process. If the system rewards the old culture, it won't make sense for people to change. This includes pay and promotion, but also other incentives.

🔑 Definition — Vision: A mental image of a possible and desirable future of the organization that articulates a view of a realistic, credible, attractive future. An effective vision should be challenging, inspiring, and aimed at empowering people at all levels.

Sharing the Vision Development of a vision is an important element in organizational and cultural change. Many management theorists feel that vision is the very essence of leadership. Organizations are driven by a vision, not by directives from the chain of command. The fast food employee flipping burgers is the one who ultimately carries out the vision, not the management team at headquarters.

Developing a shared vision involves several stages:

• Share the vision. People will buy into a clear challenging vision that has meaning for them and will improve society.
• Empower the individual. People need to feel they have a stake in the outcome and have participated in defining the vision. Individual purposes should be congruent with the organization's vision.
• Develop Trust. An effective vision must set goals for challenging performance but must allow people to "buy in" and provide feedback on performance.
• Reward performance. High performers need to be recognized. This includes support for taking risk, providing the freedom to fail, and pushing decision-making information downward.

Continuous Learning and Change Transformational change requires considerable innovation and learning. Organizational members must learn how to enact new behaviors required to implement new strategic directions. This is typically a continuous learning process of trying new behaviors, assessing consequences, and modifying them if necessary. Members must learn qualitatively different ways of perceiving, thinking, and behaving, which involves substantial unlearning. Learning occurs at all levels of the organization. Because the environment is likely to be changing during the process, transformational change rarely has a delimited timeframe but persists as long as the firm needs to adapt.

Three kinds of interventions are described:

1. Culture change
2. Self-design
3. Organization learning and knowledge management

Culture Change

What is Organizational Culture? Organization culture is the pattern of basic assumptions, values, norms, and artifacts shared by organization members. These shared meanings help members make sense of everyday life in the organization. The meanings signal how work is to be done and evaluated, and how employees relate to each other and to significant others such as customers, suppliers, and government agencies.

🔑 Definition — Organizational Culture: The pattern of basic assumptions, values, norms, and artifacts shared by organization members that helps them make sense of everyday organizational life and signals how work is to be done and evaluated.

Levels of Organizational Culture Organization culture includes four major elements existing at different levels of awareness:

1. Artifacts — The most visible level, including physical environment, architecture, dress codes, and observable behaviors.
2. Norms — Unwritten rules of behavior that guide how members should act.
3. Values — What ought to be in organizations; what is important and deserves attention.
4. Basic Assumptions — The deepest, most taken-for-granted beliefs that guide perception, thought, and feeling.

Case: The Action Company The "Action Company" is a rapidly growing high-technology manufacturing concern. A visitor would note open landscape architecture, high informality, frenetic activity, lack of status symbols, and high energy with emotional involvement. Norms emphasize hard work, innovation, and rapid solutions. New employees are carefully screened; when an employee fails, they are simply assigned to another task, not fired or punished.

The company operates on several critical and coordinated basic assumptions:

• (a) Individuals are assumed to be the source of all innovation and productivity.
• (b) Truth can only be determined by pitting fully involved individuals against each other to debate ideas until only one survives; ideas will not be implemented unless everyone involved has been convinced through debate.
• (c) Every individual must think for themselves and "do the right thing" even if it means disobeying one's boss or violating policy.
• (d) Company members are one big family who will take care of each other and protect each other even if some members make mistakes or have bad ideas.

An organization's culture may be described by a set of core values including:

• Individual autonomy — Degree of responsibility, independence, and opportunities for initiative.
• Sensitivity to needs of customers and employees — Degree of responsiveness to changing needs.
• Support — Degree of assistance provided by managers.
• Interest in having employees initiate new ideas — Degree to which employees are encouraged to come up with suggestions.
• Openness of available communication channels — Degree of freedom of communication between members, teams, and levels.
• Risk behavior — Degree to which members are encouraged to be aggressive, innovative, and risk-taking.

Cultural Context Applying OD in different countries requires a "context-based" approach to planned change. This involves fitting the change process to the organization's cultural context, including values held by members. Cultural values play a major role in shaping customs and practices within organizations, influencing how members react to power, conflict, ambiguity, time, and change.

Five key values describe national cultures and influence organizational customs:

1. Context Orientation — How information is conveyed and time is valued. In low-context cultures (Scandinavia, United States), information is communicated in words, and time is viewed as discrete and linear. In high-context cultures (Japan, Venezuela), the communication medium reflects the message more than words, and time is fluid and flexible. High-context cultures emphasize ceremony and ritual; structures are less formal with few written policies.

2. Power Distance — How people view authority, status differences, and influence patterns. In high power distance regions (Latin America, Eastern Europe), people favor unequal distributions of power and accept autocratic decision-making. Organizations are highly centralized with many hierarchical levels. In low power distance regions (Scandinavia), participative decision making and egalitarian methods prevail.

3. Uncertainty Avoidance — Preference for conservative practices and predictable situations. In high uncertainty avoidance regions (Asia), people prefer stable routines, resist change, and maintain the status quo. In low uncertainty avoidance regions (many European countries), ambiguity is less threatening, and organizations favor fewer rules and more risk taking.

4. Achievement Orientation — The extent to which culture favors acquisition of power and resources. In achievement-oriented cultures (Asia, Latin America), employees value career advancement, freedom, and salary growth. Organizations pursue aggressive goals with high stress and conflict. In cultures where achievement is less driving (Scandinavia), workers prize social aspects of work.

5. Individualism — Looking out for oneself versus one's group or organization. In high individualism cultures (United States, Canada), personal initiative and competitiveness are valued. Organizations have high turnover and individual decision-making. In low individualism countries (Taiwan, Japan, Peru), allegiance to one's group is paramount, favoring cooperation and loyalty.

🔑 Definition — Context-Based Approach to Change: Fitting the change process to the organization's cultural context, including the values held by members in the particular country or region.

📐 Table Summary — Five Key Cultural Values:

• Context Orientation: Low-context (words, linear time) vs. High-context (medium, fluid time)
• Power Distance: High (unequal power, autocratic) vs. Low (egalitarian, participative)
• Uncertainty Avoidance: High (stable, resist change) vs. Low (ambiguity, risk-taking)
• Achievement Orientation: High (career, growth) vs. Low (social aspects)
• Individualism: High (personal initiative) vs. Low (group allegiance)

⭐ Key Takeaways

Organization transformation is a radical, revolutionary change that fundamentally alters how an organization perceives, thinks, and behaves, going far beyond incremental improvements. It is triggered by significant environmental or internal disruptions that threaten survival, and it must be systemic—changing culture, structure, and processes together in a coordinated fashion. Senior executives and line managers play a critical leadership role in envisioning, energizing, and enabling the change, with externally recruited executives being three times more likely to initiate such change. Organizational culture, comprising artifacts, norms, values, and basic assumptions, is a key target of transformation, and its change must be supported by rewards that reinforce new behaviors. Finally, successful transformation requires a context-based approach sensitive to national cultural values including context orientation, power distance, uncertainty avoidance, achievement orientation, and individualism.

🧠 Quick Revision Questions

1. What are the five distinguishing features of revolutionary change efforts in organization transformation?
2. What are the three kinds of environmental and internal disruptions that trigger transformational change?
3. What are the three key roles of executive leadership in transformational change, and what does each role involve?
4. What are the four levels of organizational culture, and how do they relate to each other from most visible to deepest?
5. What are the five key national cultural values that influence organizational customs, and how do high and low expressions of each differ?

📘 Lecture 44 — The Behavioral Approach

📖 Overview: This lecture examines three distinct approaches to diagnosing organization culture—the Behavioral, Competing Values, and Deep Assumptions approaches. It then explores how to manage and change organizational culture, the concept of self-designing organizations for transformational change, and the learning organization model. Understanding these frameworks is critical for OD practitioners who must diagnose culture and facilitate meaningful organizational transformation.

🗂️ Topics Covered

The lecture covers the Behavioral Approach to culture diagnosis which emphasizes observable surface-level behaviors; the Competing Values Approach which assesses culture through two value pairs creating four culture types (clan, adhocracy, hierarchical, market); the Deep Assumptions Approach which examines tacit shared assumptions; application stages for cultural change with practical guidelines; the Self-Designing Organizations change strategy; and the Learning Organization model including its core values, characteristics, organization learning processes, and single-loop versus double-loop learning.

📝 Lecture Summary

The Behavioral Approach

This method of diagnosis emphasizes the surface level of organization culture—the pattern of behaviors that produce business results. It is among the more practical approaches to culture diagnosis because it assesses key work behaviors that can be observed. The behavioral approach provides specific descriptions about how tasks are performed and how relationships are managed in an organization. For example, Table 25 summarizes the organization culture of an international banking division as perceived by its managers. The data were obtained from a series of individual and group interviews asking managers to describe "the way the game is played," as if they were coaching a new organization member. Managers were asked to give their impressions in regard to four key relationships—companywide, boss-subordinate, peer, and interdepartmental—and in terms of six managerial tasks—innovating, decision making, communicating, organizing, monitoring, and appraising/rewarding. These perceptions revealed a number of implicit norms for how tasks are performed and relationships managed at the division.

Cultural diagnosis derived from a behavioral approach can also be used to assess the cultural risk of trying to implement organizational changes needed to support a new strategy. Significant cultural risks result when changes that are highly important to implementing a new strategy are incompatible with the existing patterns of behavior. Knowledge of such risks can help managers determine whether implementation plans should be changed to manage around the existing culture, whether the culture should be changed, or whether the strategy itself should be modified or abandoned.

The Competing Values Approach

This perspective assesses an organization's culture in terms of how it resolves a set of value dilemmas. The approach suggests that an organization's culture can be understood in terms of two important "value pairs" ; each pair consists of contradictory values placed at opposite ends of a continuum, as shown in Figure 59. The two value pairs are (1) internal focus and integration versus external focus and differentiation and (2) flexibility and discretion versus stability and control. Organizations continually struggle to satisfy the conflicting demands placed on them by these competing values. For example, when faced with the competing values of internal versus external focus, organizations must choose between attending to the integration problems of internal operations or the competitive issues in the external environment. Too much emphasis on the environment can result in neglect of internal efficiencies. Conversely, too much attention to the internal aspects of organizations can result in missing important changes in the competitive environment.

The competing values approach commonly collects diagnostic data about the competing values with a survey designed specifically for that purpose. It provides measures of where an organization's existing values fall along each of the dimensions. When taken together, these data identify an organization's culture as falling into one of the four quadrants shown in Figure 59: clan culture, adhocracy culture, hierarchical culture, and market culture. For example, if an organization's values are focused on internal integration issues and emphasize innovation and flexibility, it manifests a clan culture. On the other hand, a market culture characterizes values that are externally focused and emphasize stability and control.

💡 Why this matters: The Competing Values Framework provides a practical diagnostic tool that maps an organization's culture to one of four distinct types, helping leaders understand whether their cultural orientation supports or hinders their strategic objectives.

The Deep Assumptions Approach

This final diagnostic approach emphasizes the deepest levels of organization culture—the generally unexamined, but tacit and shared assumptions that guide member behavior and that often have a powerful impact on organization effectiveness. Diagnosing culture from this perspective typically begins with the most tangible level of awareness and then works down to the deep assumptions.

Diagnosing organization culture at the deep assumptions level poses at least three difficult problems for collecting pertinent information. First, culture reflects shared assumptions about what is important, how things are done, and how people should behave in organizations. People generally take cultural assumptions for granted and rarely speak of them directly. Rather, the company's culture is implied in concrete behavioral examples, such as daily routines, stories, rituals, and language. This means that considerable time and effort must be spent observing, sifting through, and asking people about these cultural outcroppings to understand their deeper significance for organization members. Second, some values and beliefs that people espouse have little to do with the ones they really hold and follow. People are reluctant to admit this discrepancy, yet somehow the real assumptions underlying idealized portrayals of culture must be discovered. Third, large, diverse organizations are likely to have several subcultures, including countercultures going against the grain of the wider organization culture. Assumptions may not be shared widely and may differ across groups in the organization. This means that focusing on limited parts of the organization or on a few select individuals may provide a distorted view of the organization's culture and subcultures. All relevant groups in the organization must be discovered and their cultural assumptions sampled. Only then can practitioners judge the extent to which assumptions are shared widely.

OD practitioners emphasizing the deep assumptions approach have developed a number of useful techniques for assessing organization culture. One method involves an iterative interviewing process involving both outsiders and insiders. Outsiders help members uncover cultural elements through joint exploration. The outsider enters the organization and experiences surprises and puzzles that are different from what was expected. The outsider shares these observations with insiders, and the two parties jointly explore their meaning. This process involves several iterations of experiencing surprises, checking for meaning, and formulating hypotheses about the culture. It results in a formal written description of the assumptions underlying an organizational culture.

A second method for identifying the organization's basic assumptions brings together a group of people for a culture workshop—for example, a senior management team or a cross section of managers, old and new members, labor leaders, and staff. The group first brainstorms a large number of artifacts, such as behaviors, symbols, language, and physical space arrangements. From this list, the values and norms that would produce such artifacts are deduced. In addition, the values espoused in formal planning documents are listed. Finally, the group attempts to identify the assumptions that would explain the constellation of values, norms, and artifacts. Because they generally are taken for granted, they are difficult to articulate. A great deal of process consultation skill is required to help organization members see the underlying assumptions.

Application Stages

There is considerable debate over whether changing something as deep-seated as organization culture is possible. Those advocating culture change generally focus on the more superficial elements of culture, such as norms and artifacts. These elements are more changeable than the deeper elements of values and basic assumptions. They offer OD practitioners a more manageable set of action levers for changing organizational behaviors. Some would argue, however, that unless the deeper values and assumptions are changed, organizations have not really changed the culture.

Those arguing that implementing culture change is extremely difficult, if not impossible, typically focus on the deeper elements of culture (values and basic assumptions). Because these deeper elements represent assumptions about organizational life, members do not question them and have a difficult time envisioning anything else. Moreover, members may not want to change their cultural assumptions. The culture provides a strong defense against external uncertainties and threats. It represents past solutions to difficult problems. Members also may have vested interests in maintaining the culture. They may have developed personal stakes, pride, and power in the culture and may strongly resist attempts to change it. Finally, cultures that provide firms with a competitive advantage may be difficult to imitate, thus making it hard for less successful firms to change their cultures to approximate the more successful ones.

Given the problems with cultural change, most practitioners in this area suggest that changes in corporate culture should be considered only after other, less difficult and less costly solutions have been applied or ruled out. Attempts to overcome cultural risks when strategic changes are incompatible with culture might include ways to manage around the existing culture. Consider, for example, a single-product organization with a functional focus and a history of centralized control that is considering an ambitious product-diversification strategy. The firm might manage around its existing culture by using business teams to coordinate functional specialists around each new product. Another alternative to changing culture is to modify strategy to bring it more in line with culture. The single-product organization just mentioned might decide to undertake a less ambitious strategy of product diversification.

Despite problems in changing corporate culture, large-scale cultural change may be necessary in certain situations: if the firm's culture does not fit a changing environment; if the industry is extremely competitive and changes rapidly; if the company is mediocre or worse; if the firm is about to become a very large company; or if the company is smaller and growing rapidly. Organizations facing these conditions need to change their cultures to adapt to the situation or to operate at higher levels of effectiveness. They may have to supplement attempts at cultural change with other approaches, such as managing around the existing culture and modifying strategy.

Although knowledge about changing corporate culture is in a formative stage, the following practical advice can serve as guidelines for cultural change:

1. Formulate a clear strategic vision. Effective cultural change should start from a clear vision of the firm's new strategy and of the shared values and behaviors needed to make it work. This vision provides the purpose and direction for cultural change. It serves as a yardstick for defining the firm's existing culture and for deciding whether proposed changes are consistent with core values of the organization. A useful approach to providing clear strategic vision is development of a statement of corporate purpose, listing in straightforward terms the firm's core values. For example, Johnson & Johnson calls its guiding principles "Our Credo." It describes several basic values that guide the firm, including, "We believe our first responsibility is to the doctors, nurses and patients, to mothers and all others who use our products and services"; "Our suppliers and distributors must have an opportunity to make a fair profit"; "We must respect [employees'] dignity and recognize their merit"; and "We must maintain in good order the property we are privileged to use, protecting the environment and natural resources."
2. Display top-management commitment. Cultural change must be managed from the top of the organization. Senior managers and administrators have to be strongly committed to the new values and need to create constant pressures for change. They must have the staying power to see the changes through. For example, Jack Welch, CEO at General Electric, has enthusiastically pushed a policy of cost cutting, improved productivity, customer focus, and bureaucracy busting for more than ten years to every plant, division, group, and sector in his organization. His efforts were rewarded with a Fortune cover story lauding his organization for creating more than $52 billion in shareholder value during his tenure.
3. Model culture change at the highest levels. Senior executives must communicate the new culture through their own actions. Their behaviors need to symbolize the kinds of values and behaviors being sought. In the few publicized cases of successful culture change, corporate leaders have shown an almost missionary zeal for the new values; their actions have symbolized the values forcefully. For example, Jim Treybig, CEO of Tandem, the computer manufacturer, decided not to fire an employee whose performance had slipped until he could investigate the reason for the employee's poor performance. It turned out that the employee was having family problems, and therefore Treybig gave him another chance. To the people at Tandem, the story symbolized the importance of consideration in leading people.
4. Modify the organization to support organizational change. Cultural change generally requires supporting modifications in organizational structure, human resources systems, information and control systems, and management styles. These organizational features can help to orient people's behaviors to the new culture. They can make people aware of the behaviors required to get things done in the new culture and can encourage performance of those behaviors. For example, Phil Condit and Harry Stonecipher of Boeing realized that more than culture change in the commercial aircraft division was necessary to turn around the organization's poor performance in 1997 and 1998. To alter the "warm and fuzzy" culture of the division radically, they initiated workforce reductions, fired key executives, made changes in the production standards, and initiated continuous improvement processes in production. These changes reinforced and symbolized the importance of financial performance, accountability, and global leadership in the industry.
5. Select and socialize newcomers and terminate deviants. One of the most effective methods for changing corporate culture is to change organizational membership. People can be selected and terminated in terms of their fit with the new culture. This is especially important in key leadership positions, where people's actions can significantly promote or hinder new values and behaviors. For example, Gould, in trying to change from an auto parts and battery company to a leader in electronics, replaced about two-thirds of its senior executives with people more in tune with the new strategy and culture. Jan Carlzon of Scandinavian Airlines (SAS) replaced thirteen out of fifteen top executives in his turnaround of the airline. Another approach is to socialize newly hired people into the new culture. People are most open to organizational influences during the entry stage, when they can be effectively indoctrinated into the culture. For example, companies with strong cultures like Samsung, Procter & Gamble, and 3M attach great importance to socializing new members into the company's values.
6. Develop ethical and legal sensitivity. Cultural change can raise significant tensions between organization and individual interests, resulting in ethical and legal problems for practitioners. This is particularly pertinent when organizations are trying to implement cultural values promoting employee integrity, control, equitable treatment, and job security—values often included in cultural change efforts. Statements about such values provide employees with certain expectations about their rights and about how they will be treated in the organization. If the organization does not follow through with behaviors and procedures supporting and protecting these implied rights, it may breach ethical principles and, in some cases, legal employment contracts. Recommendations for reducing the chances of such ethical and legal problems include setting realistic values for culture change and not promising what the organization cannot deliver; encouraging input from throughout the organization in setting cultural values; providing mechanisms for member dissent and diversity, such as internal review procedures; and educating managers about the legal and ethical pitfalls inherent in cultural change and helping them develop guidelines for resolving such issues.

Self-Designing Organizations

A growing number of researchers and practitioners have called for self-designing organizations that have the built-in capacity to transform themselves to achieve high performance in today's competitive and changing environment. Mohrman and Cummings have developed a self-design change strategy that involves an ongoing series of designing and implementing activities carried out by managers and employees at all levels of the firm. The approach helps members translate corporate values and general prescriptions for change into specific structures, processes, and behaviors suited to their situations. It enables them to tailor changes to fit the organization and helps them continually to adjust the organization to changing conditions.

The Demands of Transformational Change

Mohrman and Cummings developed the self-design strategy in response to a number of demands facing organizations engaged in transformational change. These demands strongly suggest the need for self-design, in contrast to more traditional approaches to organization change that emphasize ready-made programs and quick fixes. Although organizations prefer the control and certainty inherent in programmed change, the five requirements for organizational transformation reviewed below argue against this strategy:

1. Transformational change generally involves altering most features of the organization and achieving a fit among them and with the firm's strategy. This suggests the need for a systemic change process that accounts for these multiple features and relationships.
2. Transformational change generally occurs in situations experiencing heavy change and uncertainty. This means that changing is never totally finished, as new structures and processes will continually have to be modified to fit changing conditions. Thus, the change process needs to be dynamic and iterative, with organizations continually changing themselves.
3. Current knowledge about transforming organizations provides only general prescriptions for change. Organizations need to learn how to translate that information into specific structures, processes, and behaviors appropriate to their situations. This generally requires considerable on-site innovation and learning as members learn by doing—trying out new structures and behaviors, assessing their effectiveness, and modifying them if necessary. Transformational change needs to facilitate this organizational learning.
4. Transformational change invariably affects many organization stakeholders, including owners, managers, employees, and customers. These different stakeholders are likely to have different goals and interests related to the change process. Unless the differences are revealed and reconciled, enthusiastic support for change may be difficult to achieve. Consequently, the change process must attend to the interests of multiple stakeholders.
5. Transformational change needs to occur at multiple levels of the organization if new strategies are to result in changed behaviors throughout the firm. Top executives must formulate a corporate strategy and clarify a vision of what the organization needs to look like to support it. Middle and lower levels of the organization need to put those broad parameters into operation by creating structures, procedures, and behaviors to implement the strategy.

Application Stages

The self-design strategy accounts for these demands of organization transformation. It focuses on all features of the organization (for example, structure, human resources practices, and technology) and designs them to support the business strategy mutually. It is a dynamic and an iterative process aimed at providing organizations with the built-in capacity to change and redesign themselves continually as the circumstances demand. The approach promotes organizational learning among multiple stakeholders at all levels of the firm, providing them with the knowledge and skills needed to transform the organization and continually to improve it.

Figure 60 outlines the self-design approach. Although the process is described in three stages, in practice the stages merge and interact iteratively over time. Each stage is described below:

1. Laying the foundation. This initial stage provides organization members with the basic knowledge and information needed to get started with organization transformation. It involves three kinds of activities. The first is acquiring knowledge about how organizations function, about organizing principles for achieving high performance, and about the self-design process. This information is generally gained through reading relevant material, attending in-house workshops, and visiting other organizations that successfully have transformed themselves. This learning typically starts with senior executives or with those managing the transformation process and cascades to lower organizational levels if a decision is made to proceed with self-design. The second activity in laying the foundation involves valuing—determining the corporate values that will guide the transformation process. These values represent those performance outcomes and organizational conditions that will be needed to implement the corporate strategy. They are typically written in a values statement that is discussed and negotiated among multiple stakeholders at all levels of the organization. The third activity is diagnosing the current organization to determine what needs to be changed to enact the corporate strategy and values. Organization members generally assess the different features of the organization, including its performance. They look for incongruities between its functioning and its valued performances and conditions. In the case of an entirely new organization, members diagnose constraints and contingencies in the situation that need to be taken into account in designing the organization.
2. Designing. In this second stage of self-design, organization designs and innovations are generated to support corporate strategy and values. Only the broad parameters of a new organization are specified; the details are left to be tailored to the levels and groupings within the organization. Referred to as minimum specification design, this process recognizes that designs need to be refined and modified as they are implemented throughout the firm.
3. Implementing and assessing. This last stage involves implementing the designed organization changes. It includes an ongoing cycle of action research: changing structures and behaviors, assessing progress, and making necessary modifications. Information about how well implementation is progressing and how well the new organizational design is working is collected and used to clarify design and implementation issues and to make necessary adjustments. This learning process continues not only during implementation but indefinitely as members periodically assess and improve the design and alter it to fit changing conditions. The feedback loops shown in Figure 20.3 suggest that the implementing and assessing activities may lead back to affect subsequent designing, diagnosing, valuing, and acquiring knowledge activities. This iterative sequence of activities provides organizations with the capacity to transform and improve themselves continually.

The self-design strategy is applicable to existing organizations needing to transform themselves, as well as to new organizations just starting out. It is also applicable to changing the total organization or subunits. The way self-design is managed and unfolds can also differ. In some cases, it follows the existing organization structure, starting with the senior executive team and cascading downward across organizational levels. In other cases, the process is managed by special design teams that are sanctioned to set broad parameters for valuing and designing for the rest of the organization. The outputs of these teams then are implemented across departments and work units, with considerable local refinement and modification.

The Learning Organization

Organization Learning interventions address how organizations can be designed to promote effective learning processes and how those learning processes themselves can be improved.

The learning organization builds on a number of ideas. It has its roots in OD and uses the ideas and philosophies of action research, systems approach, organizational culture, continuous problem-solving, self-managed work teams, collaboration, participative leadership, and interpersonal relations. The learning organization is a system-wide change program that emphasizes the reduction of organizational layers and the involvement of everybody in the organization in continuous self-directing learning that will lead toward positive change and growth in the individual, team, and organization. According to Peter Senge, "Leaders in learning organizations are responsible for building organizations where individuals continually expand their capabilities to shape their future. Leaders are responsible for fostering learning and are themselves learners." Learning in organizations means the continuous testing of experience and the transformation of that experience into knowledge accessible to the whole organization and relevant to its core purpose.

Learning organizations emphasize creating "knowledge for action" and not "knowledge for its own sake." They focus on acquiring knowledge, sharing it across the organization, and using it to achieve organizational goals. Participants must liberate themselves from such mental traps as blaming the competition, the economy, or other factors beyond their control. Learning organizations realize that they are part of a larger system over which they have little or no control. Instead of complaining, they seek out opportunities and "ride the wave."

Core Values

A strong set of core values is normally present in learning organizations:

• Value different kinds of knowledge and learning styles.
• Encourage communication between people with different perspectives and ideas.
• Develop creative thinking.
• Remain nonjudgmental of others and their ideas.
• Break down traditional barriers in the organization.
• Develop leadership throughout organization. Everyone is a leader.
• Reduce distinctions between organization members (management vs. non-management, line vs. staff, doers vs. thinkers, professional vs. nonprofessional, and so on).
• Believe that every member of the organization has untapped human potential.

Becoming a learning organization increases the size of the organization's "brain." The employees throughout the organization participate in all thinking activities. The boundaries between the parts of the organization are broken down.

Characteristics of a Learning Organization

Four characteristics define a learning organization:

1. Constant Readiness: The organization exists in constant readiness for change. By staying in tune with its environment, the organization is ready to take advantage of new opportunities.
2. Continuous Planning: Instead of a few top executives formulating fixed plans, the learning organization creates flexible plans that are fully known and accepted by the entire organization. The plans are constantly reexamined by those involved with their implementation – not just top management. The old adage that "the top thinks and the bottom acts" has given way to the need for "integrated thinking and acting at all levels."
3. Improvised Implementation: The learning organization improvises. Instead of rigidly implementing plans, it encourages experimentation. Coordination and collaboration of everyone involved is required in the implementation. Successes are identified and institutionalized within the organization.
4. Action Learning: Change is reevaluated continually and not just at annual planning sessions. Instead the learning organization is constantly taking action, reflecting, and making adjustments.

In short, learning organizations do not wait for problems to arise. They are constantly undergoing a reexamination that questions and tests assumptions.

Organization Learning Processes

These processes consist of four interrelated activities:

1. Discovery: Learning starts with discovery when errors or gaps between desired and actual conditions are detected. For example, sales managers may discover that sales are falling below projected levels and set out to solve the problem.
2. Invention is aimed at devising solutions to close the gap between desired and current conditions, and includes diagnosing the causes of the gap and creating appropriate solutions to reduce it. The sales managers may learn that poor advertising is contributing to the sales problem and may devise a new sales campaign to improve sales.
3. Production processes involve implementing solutions. For instance, the new advertising program would be implemented.
4. Generalization includes drawing conclusions about the effects of the solutions, if successful, and extending that knowledge to other relevant situations. The managers might use variations of it with other product lines. Thus, these four learning processes enable members to generate the knowledge necessary to change and improve the organization.

Levels of Learning

Inferring from the learning processes, we can identify two levels of learning.

The lowest level is called single-loop learning or adaptive learning and is focused on learning how to improve the status quo. This is the most prevalent form of learning in organizations and enables members to reduce errors or gaps between desired and existing conditions. It can produce incremental change in how organizations function. The sales managers described above engaged in single-loop learning when they looked for ways to reduce the difference between current and desired levels of sales.

Single-loop learning is like a thermostat that learns when it is too hot or too cold and turns the heat on or off. The thermostat can perform this task because it can receive information (the temperature of the room) and take corrective action.

Double-loop learning or generative learning is aimed at changing the status quo. It operates at a more abstract level than does single-loop learning because members learn how to change the existing assumptions and conditions within which single-loop learning operates. This level of learning can lead to transformational change, where the status quo itself is radically altered. For example, the sales managers may learn that sales projections are based on faulty assumptions and models about future market conditions. This knowledge may result in an entirely new conception of future markets with corresponding changes in sales projections and product development plans. It may lead the managers to drop some products that had previously appeared promising, develop new ones that were not considered before, and alter advertising and promotional campaigns to fit the new conditions.

In single-loop learning the emphasis is on "techniques and making techniques more efficient." Double-loop learning is more creative and reflexive. Reflection here is more fundamental: the basic assumptions behind ideas or policies are confronted. Hypotheses are publicly tested.

⭐ Key Takeaways

The lecture presents three distinct approaches to diagnosing organizational culture: the Behavioral Approach focuses on observable surface-level behaviors and implicit norms; the Competing Values Approach maps culture along two value pairs (internal/external focus and flexibility/stability) into four quadrants (clan, adhocracy, hierarchical, market); and the Deep Assumptions Approach examines the unexamined tacit assumptions that truly drive behavior. Culture change is difficult, especially at deeper levels, so practitioners should first try to manage around existing culture or modify strategy before attempting full cultural transformation. Six practical guidelines for cultural change include formulating a clear strategic vision, displaying top-management commitment, modeling change at the highest levels, modifying organizational systems to support change, selecting and socializing newcomers, and developing ethical and legal sensitivity. The Self-Designing Organizations strategy provides a three-stage process (laying the foundation, designing, implementing and assessing) to build an organization's capacity for continuous transformation. Finally, the Learning Organization model emphasizes single-loop learning (improving the status quo) versus double-loop learning (changing underlying assumptions), with the latter being essential for genuine transformational change.

🧠 Quick Revision Questions

1. What are the three approaches to diagnosing organization culture, and what level of culture does each emphasize?
2. In the Competing Values Approach, what are the two value pairs, and what are the four culture quadrants they produce?
3. What three problems make diagnosing culture at the deep assumptions level particularly challenging?
4. When large-scale cultural change is necessary, what are the six practical guidelines practitioners should follow?
5. What is the difference between single-loop learning and double

📘 Lecture 45 — Seven Practices of Successful Organizations

📖 Overview: This lecture identifies seven key practices that characterize successful organizations. It explains why these practices are essential for building high-performance work systems and how they contribute to long-term organizational success. The lecture provides concrete examples from companies like Southwest Airlines, Lincoln Electric, and Whole Foods to illustrate each practice in action.

🗂️ Topics Covered

The lecture covers seven dimensions of successful organizations: employment security, selective hiring, self-managed teams and decentralization, high compensation contingent on organizational performance, extensive training, reduction of status differences, and sharing information. Each practice is explained with its benefits, implementation strategies, and real-world examples from successful companies.

📝 Lecture Summary

1. Employment Security

Employment security is a critical element of high-performance management systems. Research shows that innovations in work practices or worker-management cooperation are not likely to be sustained when workers fear job loss. Lincoln Electric, a successful arc welding manufacturer, began offering guaranteed employment to workers after three years on the job and has not had a layoff since 1948. During a recession in the early 1980s when domestic sales fell 40%, the company redeployed factory workers to sales roles instead of laying them off, which increased market share and penetration.

Employment security provides numerous benefits beyond encouraging workers to contribute knowledge and effort to enhance productivity. It decreases the likelihood of firms laying off employees too quickly during downturns, which protects strategic assets from being picked up by competitors. The Vice President for People at Southwest Airlines viewed people as strategic assets rather than costs, stating, “Why would we want to put our best assets, our people, in the arms of the competition?”

Employment security policies lead to more careful and leaner hiring because firms know they cannot simply let people go if they overestimated labor demand. This makes the workforce more productive, with fewer people doing more work. Furthermore, employment security maintained over time helps build trust between people and their employer, leading to more cooperation, forbearance in pressing for wage increases, and better company spirit.

Employment security also encourages people to take a longer-term perspective on their jobs and organization performance. A study of 192 banks found that “The greater the employment security given to a loan officer, the greater the returns to banks.” With employment security, loan officers worry about repayment prospects and building customer relationships rather than just booking loans.

It is important to note that employment security does not mean retaining people who don’t perform or work effectively with others. Lincoln Electric has high turnover for employees in their first few months, as those who don’t fit the company culture leave. Southwest will fire people who don’t provide the customer service the firm is known for. Employment security means employees are not put on the streets for things over which they have no control, such as economic downturns or senior management’s strategic mistakes.

🔑 Definition — Employment Security: A policy where organizations commit to maintaining total employment levels, protecting workers from layoffs due to economic downturns or management mistakes, while still holding individuals accountable for their own performance and behavior. 📐 Formula: Employment Security = Long-term Job Commitment + Performance Accountability 📌 Example: Lincoln Electric guaranteed employment after three years, and during the 1980s recession with 40% sales decline, they redeployed factory workers to sales roles instead of laying them off. This maintained market share and productivity gains.

2. Selective Hiring

Successful organizations ensure they recruit the right people in the first place. This requires several things:

First, the organization needs to have a large applicant pool from which to select. In 1993, Southwest Airlines received about 98,000 applications, interviewed 16,000, and hired 2,700. Singapore Airlines is extremely careful and selective; from an initial pool of candidates, about 10% are short-listed and only 2% (one out of 50) are selected.

Second, the organization needs to be clear about what are the most critical skills and attributes needed in its applicant pool. The notion of trying to find “good employees” is not helpful; organizations need to be as specific as possible about the precise attributes they are seeking. At Southwest Airlines, applicants for flight attendants are evaluated on initiative, judgment, adaptability, and their ability to learn.

Third, the skills and abilities hired need to be carefully considered and consistent with the particular job requirements and the organization’s approach to its market. Simply hiring “the best and the brightest” may not make sense in all circumstances. Enterprise Rent-A-Car hires college graduates primarily for their sales skills and personality, not their academic performance.

Fourth, organizations should screen primarily on important attributes that are difficult to change through training and should emphasize qualities that actually differentiate among those in the applicant pool. Japanese organizations have long hired more on the basis of basic ability and attitudes than on specific technical skills, which are much more easily acquired. At Southwest Airlines, a top pilot from another airline was rejected because he was rude to a receptionist, as Southwest believes technical skills are easier to acquire than a teamwork and service attitude.

Firms serious about selection put applicants through several rounds of interviews and a rigorous selection procedure. A manufacturing company in the US could take as long as six months or more. This ensures careful scrutiny, develops commitment in those hired, and promotes a feeling of being part of an elite group, causing them to enter the organization with high motivation and spirit.

Rigorous selection requires a method refined and developed over time through feedback and learning. At Southwest Airlines, the company tracks who has interviewed job applicants and assesses what interviewers saw or missed. Sources of applicants, scores on tests, and interview ratings must be validated against subsequent performance to improve the effectiveness of the process over time.

🔑 Definition — Selective Hiring: A recruitment approach that emphasizes finding applicants with the right attitudes, values, and cultural fit rather than just specific technical skills, using rigorous multiple-round selection processes from a large applicant pool. 📐 Formula: Selective Hiring = Large Applicant Pool + Clear Attribute Requirements + Rigorous Screening + Feedback Validation 📌 Example: Southwest Airlines received 98,000 applications, interviewed 16,000, and hired only 2,700. They rejected a top pilot who was rude to a receptionist because they value teamwork and service attitude over technical skills.

3. Self-Managed Teams and Decentralization as Basic Elements of Organizational Design

Organizing people into self-managed teams is a critical component of virtually all high-performance management systems. Workers in self-managed teams enjoy greater autonomy and discretion, which translates into intrinsic rewards and job satisfaction.

Teams offer several advantages:

First, teams substitute peer-based for hierarchical control of work. Instead of management devoting time and energy to controlling the workforce directly, workers control themselves. Peer control is frequently more effective than hierarchical supervision. Someone may disappoint their supervisor, but they are much less likely to let down their mates. This creates enormous peer pressure against absenteeism.

World Food Markets has a team-oriented philosophy where each store is a profit center with about ten self-managed teams. Team leaders in each store are a team, store leaders in each region are a team, and the company’s six regional presidents are a team. Teams must approve hires for full-time jobs by a two-thirds vote, normally after a thirty-day trial period. Pressure for performance comes from peers rather than from headquarters.

Second, teams permit employees to pool their ideas to come up with better and more creative solutions to problems. This involves pooling ideas and expertise to increase the likelihood that at least one member will come up with a way of addressing the problem. In the group setting, each participant can build on others’ ideas.

Third, by substituting peer for hierarchical control, teams permit removal of layers of hierarchy and absorption of administrative tasks previously performed by specialists. This avoids the enormous costs of having people whose sole job is to watch people who watch other people do the work. The AES Corporation has never formed corporate departments or assigned officers to oversee project finance, operations, purchasing, human resources, or public relations. These functions are handled at the plant level where plant managers assign them to volunteer teams. The organization has only five levels, and the company developed a $400 million plant with a team of just ten people.

🔑 Definition — Self-Managed Teams: Work groups that operate with autonomy and discretion, using peer-based control instead of hierarchical supervision to manage work, solve problems, and make decisions. 📐 Formula: Self-Managed Teams = Autonomy + Peer Control + Hierarchy Reduction + Creative Problem-Solving 📌 Example: AES Corporation developed a $400 million plant with just ten people, using self-managed teams that handle finance, operations, and other functions typically managed by corporate departments.

4. High Compensation Contingent on Organizational Performance

While labor markets are not perfectly efficient, some relationship exists between what a firm pays and the quality of the workforce it attracts. The level of salaries sends a message to the firm’s workforce – they are truly valued or they are not.

When John Whitney assumed leadership of Pathmark, a large grocery store chain in the US, the company was in desperate financial shape. He found that 120 store managers were paid terribly, so he gave them a substantial raise of about 40 to 50%. The subsequent success of the chain was because store managers could now focus on improving performance instead of worrying about their pay.

Contingent compensation figures importantly in most high-performance work systems. Such compensation can take several forms: gainsharing, stock ownership, pay for skill, or various forms of individual or team incentives. Many successful companies encourage share ownership because when employees are owners, they act and think like owners.

Pay for skill acquisition encourages people to learn different jobs and become more flexible. Gainsharing differs from profit sharing in that it is based on incremental improvements in the performance of a specific unit. If a plant becomes more efficient, the people share in the economic gains even if profits in the firm as a whole are down.

Contingent compensation helps motivate effort because people know they will share in the results of their work. At Whole Foods, a gainsharing program ties bonuses directly to team performance, specifically sales per hour.

💡 Why this matters: Coupling employment security with group-based incentives like profit or gainsharing prevents employment security from becoming like civil service where people just mark time. The organization unleashes the power of the team whose economic interests align with higher levels of economic performance.

🔑 Definition — Contingent Compensation: A pay system that ties employee rewards to organizational or team performance through mechanisms such as gainsharing, stock ownership, and pay for skill. 📐 Formula: Contingent Compensation = Performance-Based Pay + Group Incentives + Employee Ownership 📌 Example: Pathmark gave store managers a 40-50% raise when the company was in financial trouble, allowing them to focus on improving performance instead of worrying about pay.

5. Training

Virtually all descriptions of high-performance management practices emphasize training, and the amount of training provided by commitment-oriented management systems is substantial. Training is essential because these systems rely on front-line employee skill and initiative to identify and resolve problems, initiate changes in work methods, and take responsibility for quality.

The difference in training reflects different views of people held by different firms. Japanese firms train a lot because they rely heavily on flexible production and intend to keep their people longer, making it sensible to invest more in developing them. US-owned plants train very little because they follow traditional mass production practices.

Studies of firms in the US and the UK consistently provide evidence of inadequate levels of training focused on the wrong things: special skills rather than generalist competence and organizational culture.

Successful firms that emphasize training do so almost as a matter of faith and because of their belief in the connection between people and profits. Taco Inc. , a privately owned manufacturer of pumps and valves with annual sales under $100 million, offers employees more than six dozen courses in an on-site learning center. It cost $250,000 to build the center and annual direct expenses and lost production cost about $300,000. When asked to put a monetary value on the return, the CEO said, “It comes back in the form of attitude.”

🔑 Definition — Training: Investment in employee skill development that focuses on generalist competence and organizational culture rather than just specific technical skills, essential for high-performance work systems. 📐 Formula: Training Investment = Employee Skill Development + Long-term Commitment + Competitive Advantage 📌 Example: Taco Inc. spent $250,000 to build a learning center and $300,000 annually for courses, with returns coming in the form of improved employee attitude and organizational performance.

6. Reduction of Status Differences

High-performance management systems can perform only when they tap the ideas, skills, and efforts of all their people. One way to do this is to organize people in teams. But neither individuals nor teams will feel comfortable or encouraged to contribute if they feel undervalued.

Reduction of status differences is accomplished in two principal ways: symbolically, through language, labels, physical space, and dress; and substantively, through reduction of wage inequality across levels.

At Subaru-Isuzu, everyone from the company president down was called an Associate. At Kingston Technology, with 1994 sales of $2.7 million per employee (higher than Exxon, Intel, or Microsoft), the two co-founders sit in open cubicles and have no private secretaries.

The reduction of status differences encourages open communication, which is necessary in an organization where learning and adaptation are encouraged. Status differences are reduced and a sense of common fate is developed by limiting the difference between senior management and other employees.

The CEO of Southwest Airlines, who had been on the cover of Fortune, earned about $500,000 per year. When the company negotiated a five-year wage freeze with its pilots, he agreed to fix his basic salary at $395,000 a year for four years.

Practices that reduce status differences are consistent with rewards contingent on performance, as long as these contingent rewards are applied on a group or organizational level so that the benefits of performance are not awarded to the few. Reducing wage inequality does limit the organization’s ability to use individual incentives, but this is not necessarily a bad thing. Contingent rewards provided at the group or organizational level are at least as effective as individual incentives and avoid many problems inherent in individual merit or incentive pay.

🔑 Definition — Reduction of Status Differences: Practices that minimize hierarchical distinctions through symbolic measures (language, dress, physical space) and substantive measures (reduced wage inequality) to encourage open communication and a sense of common purpose. 📐 Formula: Status Reduction = Symbolic Equality + Wage Compression + Open Communication + Common Fate 📌 Example: Kingston Technology co-founders sit in open cubicles with no private secretaries, despite the company having higher revenue per employee than Exxon, Intel, or Microsoft.

7. Sharing Information

Information sharing is an essential component of high-performance work systems for two reasons:

First, sharing information on financial performance, strategy, and operational measures conveys to the organization’s people that they are trusted. The CEO of Whole Foods Markets stated, “If you are trying to create a high trust organization ... an organization where people are all-for-one and one-for-all, you can’t have secrets.” The company shares detailed financial and performance information with every employee.

Second, even motivated and trained people cannot contribute to enhancing organizational performance if they don’t have information on important dimensions of performance and training on how to use and interpret that information.

The famous case of a CEO who purchased an old harvester plant worth $100,000 with a debt of $8.9 million led to a system called “open book management.” The philosophy states: “Don’t use information to control or manipulate people. Use it to teach people how to work together to achieve common goals and thereby gain control over their lives. Cost control happens at the individual level.”

Implementing this system involved:

• First, making sure all people generated daily numbers reflecting their work performance and production costs.
• Second, sharing this information with all people of the company.
• Third, extensive training on how to use and interpret the numbers – how to understand balance sheets, cash flow, and income statements.

🔑 Definition — Information Sharing: The practice of openly communicating financial, strategic, and operational information to all employees, combined with training on how to interpret this data, to build trust and enable performance improvement. 📐 Formula: Open Book Management = Information Transparency + Employee Training + Trust Building + Empowered Decision-Making 📌 Example: A CEO purchased a plant for $100,000 with $8.9 million debt and implemented open book management, sharing daily performance numbers and training all employees to understand financial statements.

⭐ Key Takeaways

The seven practices of successful organizations form an integrated system where each practice reinforces the others. Employment security provides the foundation for trust and long-term perspective, while selective hiring ensures the right people enter the organization. Self-managed teams replace hierarchical control with peer-based accountability, and high contingent compensation aligns employee interests with organizational performance. Extensive training develops the skills needed for autonomous work, reduction of status differences enables open communication, and information sharing empowers all employees to contribute to organizational success. These practices are not isolated policies but an interconnected system that creates a high-performance work environment where people are treated as strategic assets rather than costs.

🧠 Quick Revision Questions

1. How does employment security benefit organizations beyond encouraging worker productivity, and what example from Lincoln Electric illustrates this?
2. What four key elements are required for effective selective hiring, and why did Southwest Airlines reject a top pilot from another airline?
3. What are the three main advantages of self-managed teams, and how did AES Corporation demonstrate the cost savings from this approach?
4. Why should employment security be coupled with contingent compensation like gainsharing or profit sharing?
5. What are the two methods for reducing status differences in organizations, and how did the CEO of Southwest Airlines demonstrate this principle during wage negotiations?