MGMT628 — Final Term Summary (Lectures 23–45)

📘 Lecture 23 — Leading and Managing Change

📖 Overview: This lecture explores the critical tasks involved in leading and managing organizational change following diagnosis. It presents a framework of five key activities for effective change management and delves deeply into the first activity—motivating change—by examining how to create readiness for change and overcome the predictable resistance that arises. Understanding this process is fundamental for any OD practitioner or manager who needs to guide an organization from its current state to a desired future state.

🗂️ Topics Covered

The lecture introduces a five-activity framework for managing change: motivating change, creating a vision, developing political support, managing the transition, and sustaining momentum. It then focuses extensively on the first activity, "Motivating Change," which includes the two sub-tasks of creating readiness for change (through sensitization, revealing discrepancies, and conveying positive expectations) and overcoming resistance to change (using empathy and support, communication, and participation/involvement). Finally, it details the five-phase life cycle of resistance to change, using the environmental movement as a real-world example.

📝 Lecture Summary

Overview of Change Activities

The OD literature provides practical advice for managing change, which can be organized into five major activities. These activities are typically performed in a rough order and represent key elements in change leadership.

🔑 Definition — Change Leadership: The process of motivating change, creating a vision, developing political support, managing the transition, and sustaining momentum to ensure a change initiative is successfully implemented.

1. Motivating Change: This involves creating a readiness for change among members and helping them address resistance to change. Leadership must create an environment where people accept the need for change and commit their energy to it. This is critical because people and organizations generally seek to preserve the status quo. 📐 Formula: Motivation for Change = Creating Readiness + Overcoming Resistance
2. Creating a Vision: This activity provides a purpose and reason for change, describing the desired future state. It answers the "why" and "what" of planned change.
3. Developing Political Support: Organizations have powerful individuals and groups that can either block or promote change. Gaining their support is essential.
4. Managing the Transition: This involves creating a plan for managing the change activities and a special management structure for operating the organization during the transition from the current state to the future state.
5. Sustaining Momentum: This ensures the change is carried to completion by providing resources, building support systems for change agents, developing new competencies, and reinforcing new behaviors.

💡 Why this matters: All five activities are necessary for success. Neglecting any one of them—for example, failing to motivate people or lacking a clear vision—can cause the entire change effort to fail. The organization will struggle to unfreeze the status quo, become disorganized, be blocked by powerful interests, have difficulty functioning during the transition, or fail to carry the changes through to completion.

Motivating Change

Organizational change involves moving from the known to the unknown. Because the future is uncertain and can threaten people's competencies and coping abilities, organization members generally do not support change unless there is a compelling reason. This section details two key 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. This involves making people dissatisfied with the status quo so they are motivated to try new processes, technologies, or behaviors. The following three methods can help generate this dissatisfaction:

🔑 Definition — Felt Need for Change: A state of dissatisfaction with the current situation (status quo) that is strong enough to motivate individuals and organizations to seek and embrace new ways of operating.

1. Sensitize organizations to pressure for change. Organizations face external pressures (e.g., foreign competition, changing technology, global markets) and internal pressures (e.g., new leadership, poor quality, high costs, absenteeism). However, these pressures only trigger change if the organization is sensitive to them—the pressure must pass beyond the organization's threshold of awareness. 📌 Example: Kodak, Apple, Polaroid, and Jenny Craig set their threshold of awareness too high and neglected pressures for change until they reached disastrous levels.
   • Methods to increase sensitivity: Encourage leaders to use devil's advocates, cultivate external networks with different perspectives, visit other organizations for new ideas, and use external benchmarks (like competitors' progress) instead of past performance standards.
2. Reveal discrepancies between current and desired states. Information about current functioning is gathered and compared with desired states (goals, standards, or a vision). Significant discrepancies between actual and ideal states can motivate corrective action, especially when members are committed to achieving those ideals. This is a major goal of diagnosis—providing feedback that energizes action.
3. Convey credible positive expectations for the change. Members' expectations can act as a fulfilling prophecy, leading them to invest energy in a change they expect will succeed. The key is to communicate realistic, positive expectations and teach members about the benefits of positive expectations for the change program.

Overcoming Resistance to Change

Change can generate deep resistance. At a personal level, it causes anxiety about letting go of the known. At the organizational level, resistance comes from three sources:

• Technical resistance: Habit of following procedures and the sunk costs invested in the status quo.
• Political resistance: Threats to powerful stakeholders (e.g., top executives) or challenges to past decisions.
• Cultural resistance: Systems and procedures that reinforce the status quo and promote conformity to existing values and norms.

There are at least three major strategies for dealing with this resistance:

1. Empathy and support. The first step is to learn how people are experiencing the change. This requires a willingness to practice active listening—suspending judgment and seeing the situation from another's perspective. When people feel that change managers are genuinely interested in their feelings, they become less defensive and more willing to share their concerns, which helps establish a basis for joint problem-solving.
2. Communication. People resist when they are uncertain about consequences. Lack of information fuels rumors and anxiety. Effective communication reduces this speculation. However, communication is frustrating because members are constantly receiving data. To break through, change information can be made salient by sending it through a new, different channel or by deliberately substituting change information for normal operating information. 📌 Example: If information is usually delivered via memos and emails, send change information through meetings and presentations.
3. Participation and involvement. Involving members directly in planning and implementing change is one of the oldest and most effective strategies. Participation leads to higher-quality changes and overcomes resistance to implementation. Members provide diverse information, identify pitfalls, and ensure their interests are met. For people with strong needs for involvement, the act of participation itself is motivating. 💡 Why this matters: These three strategies should be used in combination. Empathy and support build trust, communication reduces uncertainty, and involvement creates ownership. Relying on only one is rarely enough to overcome significant resistance.

The Life Cycle of Resistance to Change

Resistance to change is not a static event but tends to move through a predictable five-phase life cycle. Understanding this cycle helps managers anticipate and navigate the inevitable conflicts that arise.

Phase 1: Only a few people see the need for change and take it seriously, forming a fringe element. They may be openly criticized, ridiculed, and forced to conform. Resistance looks massive at this point, and the change program may die. 📌 Example (IBM's business partners): Trying to get action from IBM is like swimming through "giant pools of peanut butter."

Phase 2: The movement for change begins to grow. The forces for and against it become identifiable. The change is discussed more thoroughly, and greater understanding may lessen the perceived threat, making the change seem less strange.

Phase 3: This is the showdown phase, a direct conflict between the forces for and against the change. This phase is critical for the change effort's life or death. Supporters of change often underestimate the strength of their opponents.

Phase 4: If supporters of the change are in power after the decisive battles, they will see the remaining resistance as a stubborn nuisance. There is still a risk that resisters can regroup and shift the balance of power. Wisdom is needed to deal with both overt opposition and those who are not convinced of the benefits.

Phase 5: In the last phase, the resisters are as few and alienated as the advocates were in the first phase. The change is solidified. However, if this last phase is not solidified, the process will move back to Phase 1. Leaders must create an atmosphere where people understand that change is a continuing process, not an event.

📌 Example (The Environmental Movement):

• Phase 1 (1970s): Environmentalists were portrayed as extremists and radicals. The forces for change were small.
• Phase 2 (1980s): Supporters and opponents became more identifiable. Education and scientific data helped the public understand the problem.
• Phase 3 (1990): The Clean Air Act passed, representing a showdown. Corporations began to advertise their "greening" efforts.
• Phase 4: The Greenpeace vs. Shell Oil confrontation over the Brent Spar oil rig was a high-profile battle that Shell lost, forcing them to comply with environmental requests.
• Phase 5: Environmentally responsible behavior is now seen as a necessity. Recycling and near-zero emissions are becoming a reality.

⭐ Key Takeaways

The process of leading and managing change can be effectively structured around five key activities: motivating change, creating a vision, developing political support, managing the transition, and sustaining momentum. The most critical initial task is motivating change, which requires deliberately creating a felt need for change by sensitizing the organization to pressures, revealing discrepancies, and conveying positive expectations. You must also anticipate and strategically overcome resistance using empathy and support, clear communication through diverse channels, and genuine participation and involvement. Finally, remember that resistance to major change often follows a predictable life cycle of five phases, from a small fringe element to a final showdown and eventual acceptance, and that this process is continuous, not a one-time event.

🧠 Quick Revision Questions

1. List the five key activities that contribute to effective change management as described in the lecture.
2. What are the three specific methods suggested for creating a felt need for change and motivating commitment?
3. Name the three sources of organizational resistance to change (technical, political, and cultural) and briefly define each.
4. Describe the three major strategies for overcoming resistance to change and explain how one of them works to reduce resistance.
5. What are the five phases in the life cycle of resistance to change, and what is the key risk if the final phase is not solidified?

📘 Lecture 24 — Leading and Managing Change

📖 Overview: This lecture explores the critical activities involved in successfully leading and managing organizational change. It emphasizes that effective change management requires a compelling vision, political astuteness, careful transition management, and sustained momentum. Understanding these activities is essential for any OD practitioner or leader seeking to guide an organization through transformation.

🗂️ Topics Covered

This lecture covers the key activities in leading and managing change, starting with creating a vision that includes describing the core ideology and constructing an envisioned future. It then addresses developing political support by assessing change agent power and identifying key stakeholders. The lecture explains managing the transition through activity planning, commitment planning, and change-management structures. Finally, it details how to sustain momentum by providing resources, building support systems, developing competencies, reinforcing new behaviors, and staying the course, concluding with a case study of Levi Strauss.

📝 Lecture Summary

Creating a Vision

The second activity in leading and managing change involves creating a vision of what members want the organization to look like or become. This is one of the most popular yet least understood practices in management. Generally, 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 organization changes. The vision also can energize commitment to change by providing members with a common goal and a compelling rationale for why change is necessary and worth the effort. However, if the vision is seen as impossible or promotes changes that the organization cannot implement, it actually can depress member motivation. For example, George Bush’s unfulfilled “thousand points of light” vision was emotionally appealing but too vague and contained little inherent benefit. In contrast, John Kennedy’s vision of “putting a man on the moon and returning him safely to the earth” was just beyond engineering and technical feasibility; it was bold, alluring, and vivid, providing not only a purpose but a valued direction.

Creating a vision is considered a key element in most leadership frameworks. Organization or subunit leaders must take an active role in describing a desired future and energizing commitment to it. In many cases, leaders encourage participation in developing the vision to gain wider input and support. Describing a desired future is no less important for people leading change in small departments and work groups than for senior executives. Developing a vision is heavily driven by people’s values and preferences for what the organization should look like and how it should function. The envisioned future represents people’s ideals, fantasies, or dreams. Unfortunately, dreaming about the future is discouraged in most organizations because it requires creative and intuitive thought processes that tend to conflict with the rational, analytical methods prevalent there. Research by Collins and Porras suggests that compelling visions are composed of two parts: (1) a relatively stable core ideology that describes the organization’s core values and purpose, and (2) an envisioned future with bold goals and a vivid description of the desired future state.

💡 Why this matters: A well-crafted vision is more than just a statement; it is a powerful tool that can align an entire organization, motivate change, and provide a clear benchmark for success. A poorly constructed one can demotivate and derail the entire change effort.

Describing the Core Ideology

The fundamental basis of a vision for change is the organization’s core ideology. It describes the organization’s core values and purpose and is relatively stable over time. Core values typically include three to five basic principles or beliefs that have stood the test of time and best represent what the organization stands for. Although the vision ultimately describes a desired future, it must acknowledge the organization’s historical roots. Core values are not “espoused values”; they are the “values in use” that actually inform members what is important. The retailer Nordstrom, for example, has clear values around the importance of customer service, and the Disney companies have explicit values around wholesomeness and imagination. Core values are not determined or designed; they are discovered and described through a process of inquiry. The organization’s core purpose is its reason for being—the idealistic motivation that brings people to work each day. Purpose describes why the organization exists; strategy describes how an objective will be achieved. For example, Apple’s original vision of “changing the way people do their work” described well the benefits the organization was providing to its customers and society at large. The real power of an organization’s core ideology is its stability over time and the way it can help the organization change itself. An envisioned future can be compelling and emotionally powerful to members only if it aligns with and supports the organization’s core values and purpose.

🔑 Definition — Core Ideology: The fundamental, stable basis of a vision that describes the organization’s core values and purpose.

🔑 Definition — Core Values: Three to five basic principles or beliefs that have stood the test of time and represent what the organization stands for; these are "values in use" discovered through inquiry.

🔑 Definition — Core Purpose: The organization's reason for being—the idealistic motivation that brings people to work each day.

Constructing the Envisioned Future

The core ideology provides the context for the envisioned future. Unlike core values and purpose, which are stable and must be discovered, the envisioned future is specific to the change project at hand and must be created. The envisioned future typically includes the following elements:

1. Bold and valued outcomes. Descriptions of envisioned futures often include specific performance and human outcomes that the organization or unit would like to achieve. These valued outcomes can serve as goals for the change process and standards for assessing a program. For example, BHAGs (Big, Hairy, and Audacious Goals) are clear, tangible, energizing targets that serve as rallying points for organization action. For example, in 1990 Wal-Mart Stores made a statement of intent “to become a $125 billion company by the year 2000” (Net sales in 1999 exceeded $137.6 billion).

2. Desired future state. This element specifies, in vivid detail, what the organization should look like to achieve bold and valued outcomes. It is a passionate and engaging statement intended to draw organization members into the future. The organizational features describe in the statement help define a desired future state toward which change activities should move. This aspect seeks to create a word picture that is emotionally powerful to members and motivates them to change.

🔑 Definition — BHAGs (Big, Hairy, and Audacious Goals): Clear, tangible, and energizing targets that serve as rallying points for organization action.

Developing Political Support

From a political perspective, organizations can be seen as loosely structured coalitions of individuals and groups having different preferences and interests. Given this political view, attempts to change the organization may threaten the balance of power among groups, resulting in political conflicts and struggles. Individuals and groups will be concerned with how the changes affect their own power and influence. Those whose power is threatened by the change will act defensively and seek to preserve the status quo. On the other hand, those participants who will gain power from the changes will push heavily for them. Consequently, significant organizational changes are frequently accompanied by conflicting interests, distorted information, and political turmoil.

Traditional OD has neglected political issues mainly because its humanistic roots promoted collaboration and power sharing. Today, change agents are paying increased attention to power and political activity, particularly as they engage in strategic change. A growing number of advocates suggest that OD practitioners can use power in positive ways. They can build their own power base to gain access to other power holders within the organization. OD practitioners can use power strategies that are open and aboveboard to get those in power to consider OD applications. Although OD professionals can use power constructively, they probably will continue to be ambivalent about whether such uses promote OD values and ethics or represent the destructive side of power.

Assessing Change Agent Power

The first task in developing political support is to evaluate the change agent’s own sources of power. By assessing their own power base, change agents can determine how to use it to influence others and identify areas where they need to enhance their sources of power. Greiner and Schein identified three key sources of personal power in organizations (in addition to one’s formal position): knowledge, personality, and others’ support. Knowledge bases of power include having expertise that is valued by others and controlling important information. Personality sources of power can derive from change agents’ charisma, reputation, and professional credibility. Others’ support can be a powerful resource as others may use their power on behalf of the change agent.

Identifying Key Stakeholders

Having assessed their own power bases, change agents can identify powerful individuals and groups with an interest in the changes, such as staff groups, unions, departmental managers, and top-level executives. These key stakeholders can thwart or support change, and it is important to gain broad-based support to minimize the risk that a single interest group will block the changes. Identifying key stakeholders can start with the simple question “Who stands to gain or to lose from the changes?” Once stakeholders are identified, creating a map of their influence may be useful. This map would provide change agents with information about which people and groups need to be influenced to accept and support the changes.

Managing the Transition

Implementing organizational change involves moving from the existing organizational state to the desired future state. Such movement requires a transition state during which the organization learns how to implement the conditions needed to reach the desired future. Beckhard and Harris identified three major activities and structures to facilitate organizational transition: activity planning, commitment planning, and change-management structures.

Activity Planning

This involves making a road map for change, citing specific activities and events that must occur for the transition to be successful. Activity planning should clearly identify, temporally orient, and discretely link change tasks to the organization’s change goals and priorities. An important feature of activity planning is that vision and desired future states can be quite general, making it necessary to supplement them with midpoint goals. For example, if the organization is implementing a continuous improvement process, an important midpoint goal could be the establishment of a certain number of improvement teams. Midpoint goals are clearer and more detailed than desired future states, providing more concrete and manageable steps and benchmarks for change.

Commitment Planning

This activity involves identifying key people and groups whose commitment is needed for change to occur and formulating a strategy for gaining their support. Although commitment planning is generally a part of developing political support, specific plans for identifying key stakeholders and obtaining their commitment to change need to be made early in the change process.

Change-Management Structures

Because organizational transitions tend to be ambiguous and need direction, special structures for managing the change process need to be created. These management structures should include people who have the power to mobilize resources and the skills to guide the change process. Alternative management structures include: the chief executive managing the change; a project manager temporarily assigned to coordinate the transition; representatives of major constituencies jointly managing the project; or a cross-section of people representing different organizational functions and levels managing the change.

Sustaining Momentum

Once organizational changes are underway, explicit attention must be directed to sustaining energy and commitment. The initial excitement of changing often dissipates in the face of practical problems. A strong tendency exists among organization members to return to what is learned and well known unless they receive sustained support. The following five activities can help to sustain momentum for carrying change through to completion:

1. Providing resources for change: Implementing change generally requires additional financial and human resources, particularly if the organization continues day-to-day operations. A separate “change budget” can earmark the resources needed for training, consultation, and data collection.
2. Building a support system for change agents: Organization change can be difficult for change agents as well. A support system typically consists of a network of people with whom the change agent has close personal relationships, who can give emotional support and serve as sounding boards.
3. Developing new competencies and skills: Organizational changes frequently demand new knowledge, skills, and behaviors. Change agents must ensure that learning occurs by providing multiple learning opportunities, such as training programs, on-the-job coaching, and experiential simulations.
4. Reinforcing new behaviors: One of the most effective ways to sustain momentum is to reinforce the kinds of behaviors needed to implement the changes. This can be accomplished by linking formal rewards directly to the desired behaviors. Achieving identifiable early successes can also provide intrinsic rewards that reinforce the drive to change.
5. Staying the course: Change requires time, and many of the expected benefits lag behind its implementation. Managers often fail to keep a steady focus because they don't anticipate the initial decline in performance as new behaviors are learned, or they want to implement the next big idea. Successful change requires persistent leadership that doesn’t waver unnecessarily.

💡 Why this matters: Sustaining momentum is where many change efforts fail. Without dedicated resources, support for change agents, skill development, reinforcement, and patience, even the best-planned change can collapse.

⭐ Key Takeaways

The most critical elements for exam success are the four main activities of leading and managing change: creating a vision, developing political support, managing the transition, and sustaining momentum. A compelling vision is composed of a stable core ideology (discovered values and purpose) and an envisioned future (bold outcomes and desired state). Political support requires assessing your own power (knowledge, personality, others' support) and identifying key stakeholders who can support or block the change. The transition state requires special management structures and clear activity planning with midpoint goals. Finally, sustaining change demands dedicated resources, support systems for change agents, new skill development, reinforcement of new behaviors, and the crucial ability to "stay the course" despite short-term performance dips.

🧠 Quick Revision Questions

1. What are the two main components of a compelling vision according to Collins and Porras?
2. Why is “developing political support” considered a necessary part of OD, even though traditional OD valued collaboration and power sharing?
3. What are the three key sources of personal power for a change agent, as identified by Greiner and Schein?
4. What is a “transition state,” and what are the three major activities Beckhard and Harris identified to manage it?
5. List and briefly explain the five activities that help to sustain momentum for a change initiative.

📘 Lecture 25 — Evaluating and Institutionalizing Organization Development Interventions

📖 Overview: This lecture focuses on the final stage of the organization development cycle—evaluation and institutionalization. Evaluation provides feedback to practitioners and organization members about the progress and impact of interventions, while institutionalization makes a particular change a permanent part of the organization’s normal functioning. The lecture examines measurement, research design, and the long-term persistence of intervention effects.

🗂️ Topics Covered

The lecture covers evaluation of OD interventions, including implementation and evaluation feedback cycles, measurement of variables, research design considerations, and the institutionalization of OD interventions. The framework for institutionalization examines organization characteristics, intervention dimensions, and processes that contribute to making changes permanent in organizations.

📝 Lecture Summary

Evaluating OD Interventions:

Assessing organization development interventions involves judgments about whether an intervention has been implemented as intended and whether it is having desired results. Managers investing resources in OD efforts are increasingly being held accountable for results and asked to justify expenditures in terms of hard, bottom-line outcomes. Managers are asking for rigorous assessment of OD interventions and using results to make important resource allocation decisions about whether to continue to support, modify, alter, or terminate the change program.

Traditionally, OD evaluation has been discussed as something that occurs after the intervention, but that view can be misleading. Decisions about the measurement of relevant variables and the design of the evaluation process should be made early in the OD cycle so that evaluation choices can be integrated with intervention decisions. There are two distinct types of OD evaluation—one intended to guide the implementation of interventions and another to assess their overall impact. The key issues in evaluation are measurement and research design.

Implementation and Evaluation Feedback:

Most discussions and applications of OD evaluation imply that evaluation is something done after intervention. This after-implementation view of evaluation is only partially correct because it assumes interventions have been implemented as intended. In most OD programs, however, implementing interventions cannot be taken for granted. Most OD interventions require significant changes in people’s behaviors and ways of thinking about organizations, but they typically offer only broad prescriptions for how such changes are to occur.

The view of evaluation should be expanded to include both during-implementation assessment of whether interventions are actually being implemented and after-implementation evaluation of whether they are producing expected results. Both kinds of evaluation provide organization members with feedback about interventions. Implementation feedback guides implementation, and evaluation feedback discovers intervention outcomes.

🔑 Definition — Implementation feedback: Assessment aimed at guiding the implementation process by supplying data about different features of the intervention and its immediate effects, collected repeatedly and at short intervals.

🔑 Definition — Evaluation feedback: Assessment intended to discover intervention outcomes, concerned with the overall impact of the intervention and whether resources should continue to be allocated to it.

The application of OD starts with a thorough diagnosis that identifies organizational problems or areas for improvement and likely causes. Next, an intervention is chosen based on knowledge linking interventions to diagnosis and change management. Implementation feedback informs the process of translating general guidelines into specific behaviors and procedures through repeated measurement. Once implementation feedback confirms the intervention is sufficiently in place, evaluation feedback begins.

📌 Example: A job enrichment intervention example illustrates the OD stages and feedback linkages. Initial diagnosis revealed low employee performance and satisfaction due to overly structured and routinized jobs. Employees translated general prescriptions into specific changes: job discretion through participatory supervision, task variety by allowing employees to inspect outputs, and feedback through quicker, more specific information. After three months, implementation feedback showed productivity and satisfaction changed little, discretion and feedback showed negligible change, but task variety showed significant improvement. This led to leadership training for supervisors and simpler feedback reports. After modifications, a second round showed moderate improvement in productivity and satisfaction, high task variety and feedback, but still low discretion. After more supervisory training and coaching, a third round showed significantly higher satisfaction and performance with all three features high—indicating successful implementation. Evaluation feedback then assessed overall effectiveness including absenteeism, maintenance costs, and reactions of other units.

Measurement:

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

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 major features of work: task variety, feedback, and autonomy. The theory argues high levels of these elements result in high levels of work quality and satisfaction, and this relationship varies with employee growth need—the higher the need, the more job enrichment produces positive results.

Measuring both intervention and outcome variables is necessary for implementation and evaluation feedback. Historically, there has been a tendency in OD to measure only outcome variables while neglecting intervention variables. 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. Outcome measures are ambiguous without knowledge of how well the intervention has been implemented. For example, a negligible change in performance and satisfaction could mean the wrong intervention was chosen, the correct intervention was not implemented effectively, or the wrong variables were measured. Measurement of intervention variables helps determine the correct interpretation of outcome measures.

The choice of what outcome variables to measure should be dictated by intervention theory, which specifies expected results from particular change programs. Historically, OD assessment focused on attitudinal outcomes like job satisfaction while neglecting hard measures like performance. Increasingly, managers are calling for behavioral measures of OD outcomes and assessing OD in terms of bottom-line results like joining, remaining, and producing at work.

🔑 Definition — Growth need: The need for challenge, autonomy, and development in employees, which moderates the relationship between job enrichment and positive outcomes.

Research Design:

Research design involves the arrangement of conditions for collecting and analyzing data in ways that combine relevance with purpose. The main design options for evaluating OD interventions are systematic and include pre-experimental designs, quasi-experimental designs, and true experimental designs. The more rigorous designs help rule out alternative explanations for observed changes, such as history effects, maturation, testing effects, instrumentation changes, statistical regression, selection bias, and mortality.

🔑 Definition — Research design: The arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure.

Institutionalizing OD Interventions:

Institutionalization refers to the long-term persistence of intervention effects—making a particular change a permanent part of the organization's normal functioning. The institutionalization framework examines organization characteristics, intervention dimensions, and processes that contribute to making OD interventions permanent in organizations.

🔑 Definition — Institutionalization: The process of making a particular change a permanent part of the organization's normal functioning, ensuring that results of successful change programs persist over time.

The framework identifies several factors that influence institutionalization: organizational characteristics (such as management support, stability of environment, and organizational culture), intervention dimensions (such as goal specificity, programmability, and level of change), and institutionalization processes (such as formalization, diffusion, and socialization). When these factors are managed effectively, the intervention becomes embedded in the organization's systems, policies, and daily operations.

💡 Why this matters: Understanding institutionalization ensures that the investment in OD interventions produces lasting benefits rather than temporary improvements that fade once the change agent leaves.

Framework for Institutionalization:

The framework for institutionalization includes three sets of factors that affect whether OD changes become permanent. First, organization characteristics include management support, organizational culture, stability of the environment, and the degree to which change is consistent with existing values. Second, intervention dimensions include the specificity of intervention goals, the level of change (individual, group, or organization), and the degree to which the intervention is programmable. Third, institutionalization processes include formalization of new practices into policies and procedures, diffusion to other parts of the organization, and socialization of new members into changed practices.

⭐ Key Takeaways

The most critical concepts from this lecture include the distinction between implementation feedback (guiding the implementation process with short-interval data) and evaluation feedback (assessing overall impact with broader outcome measures). Students must understand that measuring both intervention and outcome variables is essential—outcome measures are ambiguous without knowing if the intervention was actually implemented. The job enrichment example demonstrates how multiple rounds of feedback can progressively improve implementation. Research design choices determine how confidently one can attribute changes to the intervention rather than alternative explanations. Finally, institutionalization ensures long-term persistence of change through formalization, diffusion, and organizational support.

🧠 Quick Revision Questions

1. What are the two types of OD evaluation feedback and how do they differ in purpose and timing?
2. Why is it essential to measure both intervention variables and outcome variables in OD evaluation?
3. Using the job enrichment example, describe what happened when implementation feedback showed that discretion remained low after the first round.
4. What factors in the institutionalization framework help make OD changes permanent in organizations?
5. Why is the after-implementation view of evaluation described as "only partially correct" in the lecture?

📘 Lecture 26 — Evaluating and Institutionalizing Organization Development Interventions

📖 Overview: This lecture examines how to properly evaluate OD interventions by selecting appropriate measurement variables and designing valid measures. It covers operational definitions, reliability, validity, research design approaches, and presents a case study (The Farm Bank) illustrating the consequences of poor implementation and evaluation practices.

🗂️ Topics Covered

The lecture covers measurement in OD evaluation including selecting variables and designing good measures, operational definitions, reliability and validity of measures, research design for evaluating interventions with quasi-experimental designs, alpha/beta/gamma change types in perceptual measures, and a case study on The Farm Bank's MIS implementation problems.

📝 Lecture Summary

Measurement: Providing Useful Implementation and Evaluation Feedback

This involves two activities: selecting the appropriate variables and designing good measures. The variables measured in OD evaluation should derive from the theory or conceptual model underlying the intervention. The model should incorporate key features of the intervention and expected results.

Selecting Variables

The general diagnostic models described earlier meet these criteria. 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 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 job enrichment produces positive results.

The job-level diagnostic model suggests measurement variables for implementation and evaluation feedback. Implementation can be assessed by determining how many job descriptions include more responsibility or how many members received cross-training. Evaluation of immediate and long-term impact includes measures of employee performance and satisfaction over time.

Measuring both intervention variables and outcome variables is necessary. Unfortunately, OD has tended to measure only outcome variables while neglecting intervention variables. It is generally assumed the intervention has been implemented, but this must be empirically determined—it cannot simply be assumed. Implementation feedback serves this purpose, guiding the implementation process and helping interpret outcome data.

Outcome measures are ambiguous without knowledge of how well the intervention was implemented. A negligible change in performance and satisfaction could mean: (1) the wrong intervention was chosen, (2) the correct intervention was not implemented effectively, or (3) the wrong variables were measured.

The choice of outcome variables should be dictated by intervention theory, which specifies expected results. Outcome measures include job satisfaction, intrinsic motivation, organizational commitment, absenteeism, turnover, and productivity.

Historically, OD assessment focused on attitudinal outcomes (like job satisfaction) while neglecting hard measures like performance. Increasingly, managers call for behavioral measures of OD outcomes—specifically behaviors involving joining, remaining, and producing at work.

💡 Why this matters: Without measuring both intervention and outcome variables, it is impossible to determine whether an intervention failed because it was wrong, poorly implemented, or poorly measured.

Designing Good Measures

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

1. Operational Definition

A good measure is operationally defined—it specifies the empirical data needed, how they will be collected, and how they will be converted from data to information.

Macy and Mirvis developed operational definitions for behavioral outcomes (see Table 9). They consist of specific computational rules for constructing measures. Most behaviors are reported as rates adjusted for the number of employees and possible incidents. These adjustments allow comparison across different situations and time periods. These definitions apply to both industrial and service organizations, though modifications may be needed.

🔑 Definition — Operational Definition: Specifies the empirical data needed, how they will be collected, and most importantly, how they will be converted from data to information.

Operational definitions are important because they provide precise guidelines about what characteristics to observe and how to use them. They tell 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—how accurately the operational definition translates data into information.

For example, counting cars leaving an assembly line as a measure of plant productivity is highly reliable. However, asking people to rate job satisfaction on a scale of 1 to 5 has considerable room for variation. Events like arguments with supervisors, accidents, or rewards can sway responses. The individual's "true" satisfaction score is difficult to discern from one question—the measure lacks reliability.

🔑 Definition — Reliability: The extent to which a measure represents the "true" value of a variable; how accurately the operational definition translates data into information.

OD practitioners can improve reliability in four ways:

First, rigorously and operationally define chosen variables. Clear operational definitions contribute to reliability by explicitly describing how collected data will be converted into information.

Second, use multiple methods to measure a particular variable. Using questionnaires, interviews, observation, and unobtrusive measures can improve reliability. Because each method contains inherent biases, several methods can triangulate on dimensions of organizational problems. If independent measures converge or show consistent results, the dimensions are likely diagnosed accurately.

Third, use multiple items to measure the same variable on a questionnaire. For example, the Job Diagnostic Survey measures "autonomy" as 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."

By asking more than one question, the survey increases accuracy. Statistical analyses called psychometric tests are available for assessing reliability of perceptual measures.

Fourth, use standardized instruments. A growing number of standardized questionnaires are available for measuring OD intervention and outcome variables.

Table 9: Behavioral Outcomes for Measuring OD Interventions

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—cars may have been produced at unacceptably high cost. Because the number does not account for cost, it is not a completely valid measure.

🔑 Definition — Validity: The extent to which a measure actually reflects the variable it is intended to reflect.

OD practitioners can increase validity in several ways:

First, ask colleagues and clients if a proposed measure actually represents a particular variable. This is called face validity or content validity. If experts and clients agree the measure reflects the variable, confidence increases.

Second, use multiple measures of the same variable to make preliminary assessments of criterion validity or convergent validity. If several different measures of the same variable correlate highly (especially if validated in prior research), confidence increases.

A special case called discriminant validity exists when the proposed measure does not correlate with measures it should not correlate with. For example, there is no good reason for daily assembly-line productivity to correlate with daily air temperature—the lack of correlation indicates the measure is measuring productivity, not some other variable.

Third, predictive validity is demonstrated when the variable accurately forecasts another variable over time. For example, a measure of team cohesion is valid if it accurately predicts improvements in team performance in the future.

📌 Example: If team cohesion measured today predicts better team performance six months later, the measure has predictive validity.

It is difficult to establish validity until a measure has been used. OD practitioners should make heavy use of content validity processes and use measures that have already been validated. Presenting proposed measures to colleagues and clients prior to measurement builds ownership and commitment and improves the likelihood the client system will find the data meaningful.

Research Design

OD practitioners must make choices about how to design the evaluation to achieve valid results. The key issue is internal validity—whether the intervention produced the observed results. The secondary question of whether the intervention would work similarly in other situations is external validity.

🔑 Definition — Internal Validity: Whether the intervention did in fact produce the observed results.

External validity is irrelevant without first establishing internal validity. Unless managers have confidence that outcomes result from the intervention, they have no rational basis for decisions about accountability and resource allocation.

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

OD interventions have features making evaluation difficult: they are complex with several interrelated changes, they are long-term projects (the longer the time period, the greater the chance other factors emerge), and they are applied to existing work units rather than randomized groups.

Given these problems, practitioners use quasi-experimental research designs. These are not as rigorous as randomized experimental designs but allow evaluators to rule out many rival explanations. Designs with three features are particularly powerful:

1. Longitudinal measurement: Measuring results repeatedly over relatively long time periods. Data collection should start before change implementation and continue for a period reasonable for producing expected results.

2. Comparison unit: Comparing results in the intervention situation with those in another situation where no change occurred. Most organizations include similar work units for comparison.

3. Statistical analysis: Using statistical methods to rule out the possibility that results are caused by random error or chance.

Table 10: Quasi-Experimental Research Design

Monthly Absenteeism (%)

The intervention aims to reduce absenteeism. Measures are taken from company records for both groups—similar yet geographically separate subsidiaries. The intervention plant shows a marked decrease in absenteeism following intervention, while the control plant shows comparable levels in both periods. Statistical analyses suggest the downward shift was not attributable to chance variation.

Quasi-experimental designs with longitudinal data, comparison groups, and statistical analysis permit reasonable assessments. Repeated measures from company records are unobtrusive measures that do not interact with the intervention and affect results. More obtrusive measures (questionnaires, interviews) are reactive and can sensitize people to the intervention.

Multiple measures of intervention and outcome variables should be applied to minimize measurement-intervention interactions. Obtrusive measures could be used sparingly (once before and once after), while unobtrusive measures (like behavioral outcomes in Table 9) can be used repeatedly.

Types of Change in Perceptual Measures

Considerable research identifies three types of change that occur when using self-report, perceptual measures:

Alpha Change: A difference that occurs along some relatively stable dimension of reality. This is typically a comparative measure before and after an intervention. For example, comparative measures of perceived employee discretion showing an increase after job enrichment—if this represents alpha change, the program actually increased perceptions of discretion. Similarly, if comparative measures of trust among team members increase after teambuilding, we conclude the intervention made a difference.

🔑 Definition — Alpha Change: A difference that occurs along some relatively stable dimension of reality; a simple before-and-after change on the same measurement scale.

Beta Change: When a decrease in trust occurs—or no change at all. One study showed no measurable increase in trust after teambuilding, but change may have occurred differently. As a result of the intervention, team members may view trust very differently—their basis for judging trust changed, rather than a simple increase or decrease along a stable continuum.

🔑 Definition — Beta Change: A change in the respondent's basis for judging the variable; the measurement scale is recalibrated.

📌 Example: Before-and-after measures of perceived employee discretion can decrease after job enrichment. The first measure may reflect belief about moving around and talking to fellow workers in the immediate work area. During implementation, the employee learns ability to move around is not limited to the immediate area. At the second measurement, using this recalibrated understanding, the employee rates discretion lower than before.

Gamma Change: Fundamentally redefining the measure as a result of an OD intervention. The framework within which a phenomenon is viewed changes. For example, after teambuilding, team members might conclude trust was not relevant—they believe the gain in clarity and responsibility was the relevant factor, and improvement had nothing to do with trust.

🔑 Definition — Gamma Change: A fundamental redefinition of the measure itself; the framework for viewing the phenomenon changes.

📌 Example: The term "discretion" may originally refer to ability to move about the department and interact with others. After job enrichment, discretion might be defined as ability to make decisions about work rules, schedules, and productivity levels. The intervention changed how discretion is perceived and evaluated.

These three types apply to perceptual measures. When other than alpha changes occur, interpreting measurement changes becomes difficult. Potent OD interventions may produce beta and gamma changes, complicating interpretations. The distinctions suggest heavy reliance on questionnaires should be balanced by using other measures like interviews and unobtrusive records.

Case: The Farm Bank

The Farm Bank is one of the state's oldest banks, located in a regional marketing center, specializing in farm loans. President Frank Swain, 62, has been with the bank for many years. The bank is organized into six departments, each headed by a senior vice president—all stable and conservative.

The Management Information System

Two years ago, Swain decided to modernize operations by designing and installing a comprehensive Management Information System (MIS). The primary goal was to improve internal operations by supplying information on a more expedited basis, decreasing customer service time. The system was also to provide economic data for top management planning. Swain selected Al Hassler, 58, to head this department.

After installation, Hassler hired Valerie Wyatt, a young MBA with strong systems analysis background. She was the only woman, considerably younger than other managers, and the only MBA.

Since installation, the MIS printed thousands of pages of operating information—weekly, monthly, and quarterly summaries including cost of productions, projected labor costs, overhead costs, and projected earnings.

The MIS Survey

Swain noticed little improvement in management operations—most older vice presidents made decisions as before. Swain asked Wyatt to conduct a survey to evaluate the system's impact. Wyatt sent questionnaires to department heads and branch managers.

Survey results showed:

1. 93% did not regularly use reports because information was not in useful form
2. 76% reported printouts were hard to interpret
3. 72% stated they received more data than wanted
4. 57% reported finding errors and inaccuracies
5. 87% still kept manual records because they did not fully trust the MIS

The Meeting

Wyatt gave the report to Hassler, who said: "You've done a good job here, Val. But now that we have the system operating, I don't think we should upset the apple cart... Let's just keep this to ourselves... I'm sure Frank wouldn't want to hear this kind of stuff."

Wyatt returned to her office feeling uncomfortable, wondering what to do.

Case Solution

I. Problems A. Macro:

1. Client system unprepared for change
2. Client system unfamiliar with and unprepared for MIS

B. Micro:

1. Top-down approach (Swain's) excluded staff from decision and preparation
2. Survey should have preceded, not followed, MIS
3. Hassler not assertive enough to keep Swain informed
4. MIS particulars need changing (limit info, change format)
5. Wyatt charged by Swain to make survey but told by Hassler not to give report

II. Causes

1. Conservative nature of firm (and age of staff)
2. Lack of education regarding MIS
3. Lack of planning regarding MIS functions for managers and firm
4. Hassler more interested in personal security than fulfilling his purpose

III. Systems Affected

1. Structural – Chain of command prohibited Wyatt from improving MIS
2. Technical – MIS needs new form and limitations not being carried out
3. Behavioral – Wyatt's fulfillment restricted; other staff's expectations frustrated; Swain's hopes unfulfilled; Hassler not fulfilling role
4. Managerial – Hassler uncomfortable about upward communication; Swain may have intimidated subordinates
5. Goals and values – Excellence and improvement not valued by most managers except possibly Wyatt

IV. Alternatives

1. Wyatt could convince Hassler it's in his best interest to show Swain results
2. Wyatt could go along with Hassler's inaction
3. Wyatt could go around Hassler and tell Swain

V. Recommendations Wyatt needs to submit the report to Swain since he assigned the survey. She needs to explain tactfully to Hassler the importance of giving Swain the report. Once submitted, The Farm Bank needs an integrated strategy involving MIS users to identify specific problems and corrective steps. Hassler needs to be involved in making changes along with Wyatt.

⭐ Key Takeaways

For OD evaluation to be meaningful, both intervention and outcome variables must be measured—never assume an intervention was implemented without empirical verification. Good measures require operational definitions, reliability (consistency of measurement), and validity (measuring what is intended), which can be improved through multiple methods, multiple items, and standardized instruments. Quasi-experimental designs with longitudinal measurement, comparison groups, and statistical analysis provide the most defensible way to establish internal validity in real organizational settings. Perceptual measures are subject to alpha, beta, and gamma changes, requiring careful interpretation and the use of unobtrusive measures alongside questionnaires. The Farm Bank case demonstrates that even well-intentioned interventions fail without proper diagnosis, stakeholder involvement, and honest evaluation feedback.

🧠 Quick Revision Questions

1. What are the three criteria for a good measure, and what does each mean in practice?
2. How can OD practitioners improve the reliability of their measures? List and explain all four ways.
3. What is the difference between alpha, beta, and gamma change in perceptual measures? Give an example of each.
4. What three features make quasi-experimental research designs powerful for assessing OD interventions, and why is each important?
5. What were the five key findings from the Farm Bank MIS survey, and what do they reveal about the failure of the intervention?

📘 Lecture 27 — Evaluating and Institutionalizing Organization Development Interventions

📖 Overview: This lecture examines how OD interventions become permanent parts of an organization's normal functioning through institutionalization. It presents a comprehensive framework identifying organizational and intervention characteristics, institutionalization processes, and indicators that determine the degree to which change programs persist over time.

🗂️ Topics Covered

The lecture covers the concept of institutionalizing interventions within the context of Lewin's three-stage change model (unfreezing, moving, refreezing). It presents an institutionalization framework that includes organization characteristics (congruence, stability of environment and technology, unionization), intervention characteristics (goal specificity, programmability, level of change target, internal support, sponsorship), 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

Institutionalization refers to making changes a permanent part of the organization's normal functioning. According to Lewin's change model, change occurs in three stages: unfreezing, moving, and refreezing. Institutionalizing an OD intervention concerns the refreezing stage — it involves the long-term persistence of organizational changes. Such changes are not dependent on any one person but exist as part of the culture of an organization, meaning numerous others share norms about the appropriateness of the changes.

💡 Why this matters: Rapidly changing environments have challenged the utility of the institutionalization concept, with consultants advising to "change constantly." However, change itself has become the focus of institutionalization in interventions like total quality management, organizational learning, integrated strategic change, and self-design interventions, all aimed at enhancing the organization's capability for change.

Institutionalization Framework

Figure 37 presents a framework identifying two key antecedents — organization characteristics and intervention characteristics — that 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; for example, organizations having powerful unions may have trouble gaining internal support for OD interventions.

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, structure, current environment, and other changes taking place. When an intervention is congruent with these dimensions, the probability of institutionalization improves because it facilitates gaining member commitment and diffusion to wider organizational segments.

🔑 Definition — Congruence: 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.

📌 Example: Many OD interventions promote employee participation and growth. When applied in highly bureaucratic organizations with formalized structures and autocratic managerial styles, participative interventions are not perceived as congruent with the organization's managerial philosophy.

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 unless the changes are dealt with directly by the change program, it may be difficult to achieve long-term intervention stability.

📌 Example: Decreased demand for the firm's products or services can lead to reductions in personnel, changing the composition of groups involved in the intervention. Conversely, increased product demand can curtail institutionalization by bringing 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 the changes affect union contract issues such as salary, fringe benefits, job design, and employee flexibility. However, unions can be a powerful force for promoting change, particularly when a good relationship exists between union and management.

📌 Example: A rigid union contract can make it difficult to merge several job classifications into one, as might be required to increase task variety in a job enrichment program.

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 (e.g., training and orienting new members) to particular behaviors required to implement the intervention and helps operationalize new behaviors so rewards can be linked clearly to them.

📌 Example: An intervention aimed only at increasing product quality is likely to be more focused and readily put into operation than a change program intended to improve quality, quantity, safety, absenteeism, and employee development simultaneously.

2. Programmability: This involves the degree to which the changes can be programmed or the extent to which different intervention characteristics can be specified clearly in advance to enable socialization, commitment, and reward allocation.

📌 Example: Job enrichment specifies three targets of change: employee discretion, task variety, and feedback. The change program can be planned and designed to promote those specific features.

3. Level of change target: This concerns the extent to which the change target is the total organization, rather than a department or small work group. Each level has facilitators and inhibitors of persistence. Departmental and group changes are susceptible to countervailing forces from others in the organization, which can reduce diffusion and lower impact on organization effectiveness.

💡 Why this matters: Targeting the intervention to wider segments can help or hinder persistence. A shared belief about the intervention's value can be a powerful incentive to maintain the change, but targeting the larger system can also inhibit institutionalization if the intervention becomes mired in political resistance because of the "not invented here" syndrome or powerful constituencies opposing it.

4. Internal support: This refers to the degree to which there is an internal support system to guide the change process. Internal support, typically provided by an internal consultant, can gain commitment for the changes and help organization members implement them. External consultants can also provide support, especially on a temporary basis during early implementation stages.

📌 Example: In many interventions aimed at implementing high-involvement organizations, both external and internal consultants provide change support. The external consultant typically brings expertise on organizational design and trains members to implement the design. The internal consultant generally helps members relate to other organizational units, resolve conflicts, and legitimize change activities within the organization.

5. Sponsorship: This concerns the presence of a powerful sponsor who can initiate, allocate, and legitimize resources for the intervention. Sponsors must come from levels high enough to control appropriate resources and must have the visibility and power to nurture the intervention and see that it remains viable.

📌 Example: There are many examples of OD interventions that persisted for several years and then collapsed abruptly when the sponsor, usually a top administrator, left the organization. There are also numerous examples of middle managers withdrawing support for interventions because top management did not include them in the change program.

Institutionalization Processes

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

1. Socialization: This concerns the transmission of information about beliefs, preferences, norms, and values with respect to the intervention. Because implementation of OD interventions generally involves considerable learning and experimentation, a continual process of socialization is necessary to promote persistence of the change program.

📌 Example: Employee involvement programs often include initial transmission of information about the intervention, as well as retraining of existing participants and training of new members. Such processes are intended to promote persistence of the program as both new behaviors are learned and new members are introduced.

2. Commitment: This binds people to behaviors associated with the intervention. It includes initial commitment to the program, as well as recommitment over time. Opportunities for commitment should allow people to select the necessary behaviors freely, explicitly, and publicly. These conditions favor high commitment and can promote stability of the new behaviors.

📌 Example: In many early employee involvement programs, attention was directed at gaining workers' commitment to such programs. Unfortunately, middle managers were often ignored, and considerable management resistance to the interventions resulted.

3. Reward allocation: This involves linking rewards to the new behaviors required by an intervention. Organizational rewards can enhance the persistence of interventions in at least two ways. First, a combination of intrinsic rewards (internal rewards from opportunities for challenge, development, and accomplishment) and extrinsic rewards (such as money) can reinforce new behaviors. Second, new behaviors will persist to the extent that rewards are perceived as equitable by employees.

📌 Example: Many employee involvement programs fail to persist because employees feel that their increased contributions to organizational improvements are unfairly rewarded. This is especially true for interventions relying exclusively on intrinsic rewards. People argue that an intervention that provides opportunities for intrinsic rewards also should provide greater pay or extrinsic rewards for higher levels of contribution.

4. Diffusion: This refers to the process of transferring interventions from one system to another. Diffusion facilitates institutionalization by providing a wider organizational base to support the new behaviors. Many interventions fail to persist because they run counter to the values and norms of the larger organization.

💡 Why this matters: Diffusion of the intervention to other organizational units reduces counter-implementation force. It tends to lock in behaviors by providing normative consensus from other parts of the organization. Moreover, the act of transmitting institutionalized behaviors to other systems reinforces commitment to the changes.

5. Sensing and calibration: This involves detecting deviations from desired intervention behaviors and taking corrective action. Institutionalized behaviors invariably encounter destabilizing forces such as changes in the environment, new technologies, and pressures from other departments to nullify changes. Organizations must have some sensing mechanism to detect variation and take corrective actions.

📌 Example: If a high level of job discretion associated with a job enrichment intervention does not persist, information about this problem might initiate corrective actions such as renewed attempts to socialize people or to gain commitment to the intervention.

Indicators of Institutionalization

Institutionalization is not an all-or-nothing concept but reflects degrees of persistence of an intervention. Five indicators indicate the degree of institutionalization:

1. Knowledge: This involves the extent to which organization members have knowledge of the behaviors associated with an intervention. It concerns whether members know enough to perform the behaviors and to recognize the consequences of that performance.

📌 Example: Job enrichment includes a number of new behaviors, such as performing a greater variety of tasks, analyzing information about task performance, and making decisions about work methods and plans.

2. Performance: This is concerned with the degree to which intervention behaviors are actually performed. It may be measured by counting the proportion of relevant people performing the behaviors or the frequency with which new behaviors are performed.

📌 Example: 60 percent of the employees in a particular work unit might be performing the job enrichment behaviors described above. In assessing frequency, it is important to account for different variations of the same essential behavior.

3. Preferences: This involves the degree to which organization members privately accept the organizational changes, as opposed to acceptance based primarily on organizational sanctions or group pressures. Private acceptance usually is reflected in people's positive attitudes toward the changes.

📌 Example: A questionnaire assessing members' perceptions of a job enrichment program might show that most employees have a strong positive attitude toward making decisions, analyzing feedback, and performing a variety of tasks.

4. Normative consensus: This focuses on the extent to which people agree about the appropriateness of the organizational changes. This indicator reflects how fully changes have become part of the normative structure of the organization.

📌 Example: A job enrichment program would become institutionalized to the extent that employees support it and see it as appropriate to organizational functioning.

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 — they are abstractions from more specific norms.

📌 Example: Job enrichment is based on values promoting employee self-control and responsibility. Different behaviors associated with job enrichment, such as making decisions and performing a variety of tasks, would persist to the extent that employees widely share values of self-control and responsibility.

These five indicators follow a specific developmental order: knowledge → performance → preferences → norms → values. People must first understand new behaviors before they can perform them effectively. Such performance generates rewards and punishments, which affect people's preferences. As many individuals come to prefer the changes, normative consensus develops. Finally, if there is normative agreement reflecting a particular set of values, over time there should be value consensus. An OD intervention is fully institutionalized only when all five factors are present.

⭐ Key Takeaways

Institutionalization is the process of making OD changes permanent through refreezing, ensuring they become part of organizational culture rather than dependent on any single person. The degree of institutionalization depends on three organizational characteristics (congruence, stability of environment/technology, unionization) and five intervention characteristics (goal specificity, programmability, level of change target, internal support, sponsorship). Five institutionalization processes — socialization, commitment, reward allocation, diffusion, and sensing/calibration — directly affect persistence, with reward allocation being particularly critical as both intrinsic and extrinsic rewards must be perceived as equitable. The five indicators of institutionalization follow a developmental sequence (knowledge → performance → preferences → norms → values), and full institutionalization requires all five to be present. Students must remember that institutionalization is a matter of degree rather than an all-or-nothing state, and that modern OD practice focuses on institutionalizing the capacity for change itself rather than static changes.

🧠 Quick Revision Questions

1. What are the three stages of Lewin's change model, and where does institutionalization fit?
2. What are the five intervention characteristics that affect institutionalization processes, and how does goal specificity differ from programmability?
3. Explain the five institutionalization processes — which one involves detecting deviations from desired behaviors and taking corrective action?
4. What is the developmental order of the five indicators of institutionalization, and why does the presence of value consensus automatically imply the presence of all previous indicators?
5. How can reward allocation both help and hinder the persistence of OD interventions, particularly when relying exclusively on intrinsic rewards?

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

📖 Overview: This lecture focuses on process interventions, a core OD skill used to help work groups become more effective by increasing their awareness of how they operate and interact. It covers four key types of interventions—T-groups, Process Consultation, Third-party Intervention, and Team Building—with detailed exploration of T-groups and Process Consultation, including communication analysis and the Johari Window model.

🗂️ Topics Covered

The lecture covers the definition and purpose of process interventions, then introduces four types: T-groups (including goals and application stages), Process Consultation (covering group processes like communication, functional roles, problem-solving, norms, and leadership), the Johari Window model for understanding communication at overt and covert levels, and the concepts of disclosure and feedback for improving interpersonal effectiveness.

📝 Lecture Summary

Process Interventions: Interpersonal and Group Process Approaches

Process interventions are OD skills used by practitioners to help work groups become more effective. The purpose is to help the group become more aware of its own processes—the way it operates and how members work together—and use this knowledge to develop its own problem-solving ability. The manager practicing process intervention observes individuals and teams, helps them diagnose and solve their own problems by asking questions, focusing attention on how they work together, teaching, providing resources, and listening, rather than telling them how to solve problems.

The four types of interventions related to interpersonal relationships and group dynamics are: T-group, Process consultation, Third-party intervention, and Team building.

1. T-Groups

Sensitivity training, or the T-group, is an early forerunner of modern OD interventions, though its direct use in OD has lessened. T-groups can help OD practitioners become more aware of how others perceive them and increase their effectiveness. They also help organization members learn how their behaviors affect others.

What Are the Goals? T-groups provide members with experiential learning about group dynamics, leadership, and interpersonal relations. A basic T-group consists of ten to fifteen strangers meeting with a professional trainer. Modifications have moved in two directions:

1. Intrapersonal focus (encounter/personal-growth groups) – generally outside OD boundaries.
2. Group focus using T-group techniques to explore dynamics within intact work groups – leading to team building.

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.
2. Increased understanding and sensitivity about the behavior of others, including interpretation of verbal and nonverbal clues.
3. Better understanding of group and inter-group processes (facilitating and inhibiting factors).
4. Increased diagnostic skills in interpersonal and inter-group situations.
5. Increased ability to transform learning into action.
6. Improvement in individuals' ability to analyze their own interpersonal behavior and help achieve more effective relationships.

Application Stages In a typical unstructured strangers T-group, participants who do not know each other meet. The trainer makes a brief, ambiguous statement and lapses into silence, creating a leadership and agenda dilemma. The group must work out its own methods. Individual behaviors become the "here-and-now" basic data for learning. As appropriate, the trainer makes an "intervention" —an observation about group behavior. The primary emphasis is on the here-and-now experience, with openness and leveling in a supportive environment.

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 like communication, interpersonal relations, decision making, and task performance. Schein argues that effective consultants and managers should be good helpers.

🔑 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."

The process consultant does not offer expert solutions (doctor-patient model) but works to develop relationships, observe groups, help diagnose how tasks are carried out, and help members learn to be more effective. PC is a more general approach than team building, which focuses explicitly on helping groups perform tasks. Team building consists of process consultation plus task-oriented interventions.

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

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

Communications The process consultant analyzes communication at both overt and covert levels.

At the overt level, issues involve who talks to whom, for how long, and how often. Methods include keeping a time log, noting who talks and who interrupts. Descriptive feedback (not evaluative) is given. Body language and other nonverbal behavior are also informative—e.g., folded arms and leaning backward indicate blocking out messages, while leaning forward indicates involvement.

Techniques for analyzing communication:

• Observe: How often and how long does each member talk? Record on paper.
• Identify: Who are the most influential listeners? Notice eye contact.
• Interruptions: Who interrupts whom? Is there a pattern?

At the covert level, double messages occur—saying one thing but meaning another. This is described using the Johari Window.

🔑 Definition — Johari Window: A model describing communication and interpersonal awareness, consisting of four cells:

• Cell 1 (Open/Public): Known to self and others
• Cell 2 (Hidden/Closed): Known to self but concealed from others
• Cell 3 (Blind): Unknown to self but communicated clearly to others (e.g., saying "I'm not angry" while slamming a fist)
• Cell 4 (Unknown): Unknown to both self and others

💡 Why this matters: The goal is to enlarge Cell 1 (the public area) by reducing Cell 2 through openness and Cell 3 through feedback.

Disclosure and Feedback of Johari Window Movement along vertical and horizontal dimensions enables individuals to change interpersonal styles by increasing communication in the public/shared area.

• Disclosure (vertical movement): Reducing the closed area by behaving less defensively, becoming more open, trusting, and risk-taking. This involves open disclosure of one's feelings and candid feedback to others.
• Feedback (horizontal movement): Reducing the blind area by having others give information or feedback about our behavior. This requires willingness to invite and accept such feedback.

⭐ Key Takeaways

Process interventions help work groups become more aware of their own processes and develop problem-solving ability. T-groups provide experiential learning about group dynamics, leadership, and interpersonal relations, with the trainer intervening by making observations about here-and-now behavior. Process Consultation is a philosophy of helping relationships where the consultant helps groups diagnose and improve processes like communication without offering expert solutions. The Johari Window is a critical tool for understanding communication at overt and covert levels, where enlarging the open area through disclosure and feedback is essential for effective interpersonal relationships. Poor communication is identified as the most important problem preventing organizational effectiveness.

🧠 Quick Revision Questions

1. What are the four types of interventions related to interpersonal relationships and group dynamics in process interventions?
2. What are the six overall objectives common to most T-groups?
3. How does Process Consultation differ from the doctor-patient model of consulting?
4. What are the four cells of the Johari Window, and what does each represent?
5. How can a manager use observation, identification, and interruption analysis to improve group communication?

📘 Lecture 29 — Interpersonal and Group Process Approaches

📖 Overview: This lecture explores how process consultants can help groups function more effectively by understanding interpersonal dynamics, member roles, decision-making processes, and group norms. It emphasizes the consultant's role in facilitating group self-diagnosis rather than providing expert solutions, making it essential for organization development practitioners who work with teams.

🗂️ Topics Covered

The lecture examines functional roles of group members including task-related and group-maintenance activities, group problem solving and decision making processes with examples of how premature rejection affects participation, group norms and growth patterns, leadership and authority dynamics, basic process interventions at individual and group levels, when process consultation is appropriate, and research findings on its effectiveness.

📝 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. Both upon entering and while 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 reduce the effectiveness of a group severely, and 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, 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.

🔑 Definition — Process Consultant: An individual who helps groups understand and improve their own interpersonal and group processes, focusing on facilitating the group's self-diagnosis rather than providing expert solutions.

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 processed a three-hour taped meeting and discovered that premature rejection of a suggestion severely retarded the group's process. After one member's suggestion was quickly rejected by the manager, he repeated it several times over the next hour, each time receiving quick rejection. During the second hour, this member became quite negative, opposing most other ideas. Toward the end of the second hour, he brought up his proposal again, and it was thoroughly discussed and finally rejected for reasons he accepted. During the third hour, this person became one of the most productive members of the group. It was not until his first suggestion had been thoroughly discussed (even though finally rejected) that he became a truly constructive member.

Once the problem has been identified, a decision must be made. One way is to ignore a suggestion (someone offers another before the first is discussed). A second method is decision by authority (giving 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). Silence is frequently 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 may be most effective in a given situation.

Group Norms and Growth

When a group works together over 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, while 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.

🔑 Definition — Group Norms: Standards of behavior developed by a group over time that define what is considered good or bad, allowed or forbidden, right or wrong within that group.

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. The consultant can help the leader adjust his or her style to fit the situation. An important step 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, a variety of interventions may be used. In broad terms, these are aimed at making individuals and groups more effective.

Individual Interventions: These 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 must observe relevant events, ask questions to understand issues fully, and make certain feedback is given in a usable manner. Guidelines for effective feedback include: 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 relevant; the giver should own observations, feelings, and judgments; and feedback should be timed when both are ready.

Group Interventions: These 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 them, including comments about relationships, problem solving and decision making, and identity and purpose of the group. Content interventions help the group determine what it works on, including comments about group membership, agenda setting, interpersonal issues, and conceptual inputs. Structural interventions help the group examine stable and recurring methods it uses to accomplish tasks, including methods for dealing with external issues, goal determination, strategy development, responsibility assignment, and relationships to authority.

🔑 Definition — Johari Window: A model for understanding interpersonal awareness and feedback, where the "blind spot" represents information about oneself that others know but the individual does not.

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 when: (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 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 the consultant can accept; (5) the client ultimately knows what interventions are most applicable; and (6) the client is capable of learning how to assess and resolve their own problem.

Results of Process Consultation

Although process consultation is an important part of organization development and has been widely practiced, only modest research addresses its effect on improving group work accomplishment. The few studies have produced little hard evidence of effectiveness. Research findings on process consultation are unclear, especially regarding task performance.

Three difficulties arise in measuring performance improvements: (1) most process consultation is conducted with groups performing mental tasks (e.g., decision making), and outcomes are difficult to evaluate; (2) process consultation is often combined with other interventions in ongoing OD programs, making it difficult to isolate its impact; and (3) much research uses people's perceptions rather than hard performance measures as the index of success.

Kaplan's review examined published studies in three categories: reports where process intervention is the causal variable but performance is measured inadequately; reports where performance is measured but process consultation is not isolated as the independent variable; and 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, and group effectiveness. However, very little research clearly demonstrates that objective task effectiveness was increased.

Application 5: Process Consultation at Action Company

This application, often told by Ed Schein, involves the senior management team of a large, innovative high-technology organization (Action Company). The executive committee meetings featured long and loud discussions where members interrupted each other constantly, got into shouting matches, drifted off subject, and moved between agenda points without clear decisions. Initially, the process consultant made "expert" interventions, asking the group to consider consequences of interrupting each other. The group agreed to do better but returned to the same pattern within ten minutes.

💡 Why this matters: The consultant discovered he was imposing his own beliefs about what an ideal team should look like. This group had different shared assumptions — they were trying to arrive at the "truth," assuming that truth was revealed in ideas that could withstand argument and debate.

Once understanding this premise, the consultant worked within the group's assumptions rather than imposing his beliefs. He went to the flipchart and wrote down main ideas as they emerged. Then, instead of punishing the group for "bad" behavior, he looked for opportunities to turn conversation back to the person with the idea, saying "John, you were trying to make a point. Did we get all of that?" This combination of interventions focused the group on ideas that were about to be lost, resurrecting them for fair consideration. The lesson: until the process consultant understood what the group really was trying to do, he could not focus on the right processes or intervene helpfully.

⭐ Key Takeaways

The process consultant's primary role is to facilitate group self-diagnosis rather than serve as an expert solving problems for the group. Groups perform both task-related activities (giving information, coordinating, evaluating) and group-maintenance actions (encouraging, harmonizing, compromising), with ineffective groups typically neglecting maintenance functions. Premature rejection of ideas can severely damage group effectiveness, as demonstrated in the three-hour meeting example where a member became negative until his suggestion received thorough discussion. Effective feedback must follow specific guidelines including consensus on goals, concreteness, constructive motives, and proper timing. The Action Company case demonstrates the critical lesson that consultants must understand the group's actual operating assumptions — in this case, that truth emerges through intense debate — before they can intervene helpfully rather than imposing their own beliefs about ideal group behavior.

🧠 Quick Revision Questions

1. What are the two main functions that need to be performed for a group to be effective, and which one is typically neglected in ineffective groups?
2. In the taped meeting example, what happened to the member whose suggestion was repeatedly rejected, and what finally allowed him to become productive?
3. What are three different methods of decision making in groups, and how can a process consultant help with this process?
4. What three types of group interventions exist, and what does each focus on (process, content, or structure)?
5. What was the key lesson the process consultant learned from working with Action Company's executive committee about intervening in groups?

📘 Lecture 30 — Interpersonal and Group Process Approaches

📖 Overview: This lecture explores third-party interventions, a key OD approach for resolving conflicts between people within organizations. It explains the episodic nature of conflict, strategies for resolution, and the specific techniques and roles of third-party consultants, using the case of Balt Healthcare Corporation as a real-world example.

🗂️ Topics Covered

This lecture covers the definition and purpose of third-party intervention in OD, distinguishing between substantive and interpersonal conflict. It introduces an episodic model of conflict, detailing four control and resolution strategies. The lecture then provides specific tactical choices for facilitating conflict resolution, including data gathering, context setting, and the consultant's role, and concludes with a detailed application case study.

📝 Lecture Summary

3. Third-Party Interventions

Third-party intervention focuses on conflicts between two or more people within the same organization. Conflict is inherent in groups and organizations and can arise from differences in personality, task orientation, perceptions, and competition for resources. It is important to note that conflict is neither good nor bad per se; it can enhance motivation and innovation but also disrupt necessary task interactions. This intervention is used when conflict significantly disrupts work relationships.

Third-party intervention varies based on the issues underlying the conflict:

• Substantive issues: work methods, pay rates, conditions of employment. Interventions often involve labor-management disputes through arbitration and mediation, or "alternative dispute resolution" (ADR). These are generally not considered part of OD practice.
• Interpersonal issues: personalities and misperceptions. OD has developed approaches to help parties interact directly, facilitating diagnosis and resolution of the conflict.

🔑 Definition — Third-party intervention: A conflict resolution approach used by a neutral consultant to help disputing parties interact directly to diagnose and resolve interpersonal conflicts that disrupt work relationships.

Third-party consultation cannot resolve all conflicts, nor should it. Many conflicts are not severe or may burn out. Managers may resolve conflicts unilaterally when under time pressure or when disputants won't work together in the future.

An Episodic Model of Conflict:

Interpersonal conflict often occurs in iterative, cyclical stages known as episodes. Issues may be latent until something triggers the conflict, bringing it into the open (overt conflict). Because of negative consequences, the unresolved disagreement becomes latent again, and the cycle continues.

Figure 39: A cyclical Model of Interpersonal Conflict (depicts a cycle: Latent Issues → Trigger → Overt Conflict → Consequences → Latent Issues).

Conflict has both costs and benefits. Unresolved conflict can proliferate and expand, and overt conflict may be a symptom of a deeper problem.

The episode model identifies four strategies:

1. Prevent the ignition of conflict: Arrive at a clear understanding of triggering factors and avoid or blunt them. Example: senior management warning research and production managers that conflict will not be tolerated during new product introductions. This may drive conflict underground but can provide a temporary cooling-off period.

2. Set limits on the form of the conflict: Constrain conflict through informal gatherings, exploring options, or setting rules and procedures. Example: a rule that union officials can only resolve grievances at weekly grievance meetings.

3. Help parties cope differently with consequences: The third-party consultant helps devise coping techniques, such as reducing dependence on the relationship, ventilating feelings to friends, or developing additional emotional support. These methods reduce costs without resolving underlying issues.

4. Eliminate or resolve the basic issues: This is the most obvious and straightforward objective but often the most difficult to achieve.

Facilitating the Conflict Resolution Process:

Walton identified factors and tactical choices to help third-party consultants achieve productive dialogue:

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

Tactical choices for the third-party consultant:

1. Diagnosis (Data Gathering): Usually through preliminary interviewing and group-process observations. This provides understanding of the nature and type of conflict, personalities, conflict styles, issues, and participants' readiness.

2. Context of Intervention: Consider the neutrality of the meeting area, formality of the setting, appropriate meeting time, and careful selection of attendees.

3. Role of the Consultant: The role depends on diagnosis of the situation. Roles include:

• Initiating the agenda for the meeting
• Acting as a referee
• Reflecting and restating issues and differing perceptions
• Giving and receiving feedback
• Helping individuals diagnose issues
• Providing suggestions or recommendations
• Helping parties diagnose underlying problems

💡 Why this matters: The third-party consultant must be highly sensitive, recognize that some tension is normal but too much can be dysfunctional, and must be seen as neutral and unbiased. They must have professional expertise in third-party intervention.

Application 6: Conflict Management at Balt Healthcare Corporation

Background: Pete (general manager, traditional/formal management style) and Dan (manager of an experimental e-commerce group, open/collaborative style) were assigned to work together in the IT department of Balt Healthcare Corporation. Senior management believed Pete's operational expertise would complement Dan's design skills.

Conflict: Pete provided lukewarm support, refused to assign resources, and made it difficult for Dan to access hardware. Dan felt sabotaged and complained to senior management. There was a history of conflict between the two.

Intervention Attempt: Marilyn, the VP, asked an OD specialist to help. The OD specialist met with Pete and Dan separately and identified:

• Different management styles
• Different work processes (routine vs. unpredictable/creative)
• Lack of advance notice from Dan's team

Recommended Strategies: The OD specialist recommended direct confrontation, purchasing new equipment, and mandating cooperation. Marilyn rejected purchasing equipment due to no budget and lacked confidence in facilitating the needed leadership. She agreed to facilitate a direct process with written agreements but failed to follow through, never meeting both parties together. She sent inconsistent messages and began supporting Pete while criticizing Dan.

Outcome: Dan withdrew, productivity suffered, he became hostile and bitter. He took a leave of absence on Marilyn's advice, left the organization, and his project was left without a leader. Pete stayed, but staff were upset his behavior went unquestioned. The organization lost respect for Marilyn and suffered losses in productivity and morale.

💡 Why this matters: This case demonstrates how poor follow-through, lack of neutrality, and inconsistent messages from a leader can derail conflict resolution and cause worse outcomes than the original conflict.

⭐ Key Takeaways

Third-party intervention is a core OD skill for resolving interpersonal conflicts that disrupt work relationships, focusing on helping parties interact directly to diagnose and resolve issues. The episodic model shows that conflict often follows a cyclical pattern of latency, trigger, and overt behavior, with strategies ranging from controlling the conflict to resolving its underlying causes. Effective third-party consultants must skillfully gather data, set a neutral context, and adopt an appropriate role (truly neutral and expert) to facilitate productive dialogue. The Balt Healthcare case tragically illustrates that lack of follow-through, inconsistent behavior, and loss of neutrality by a leader can worsen conflict, destroy projects, and damage organizational morale. Ultimately, the goal is not to eliminate all conflict but to manage it constructively while recognizing that unresolved conflict can proliferate, expand, and conceal deeper problems.

🧠 Quick Revision Questions

1. What is third-party intervention and when is it primarily used in OD?
2. Distinguish between substantive and interpersonal conflict. Which type does OD typically address?
3. Describe the "episodic model of conflict" and name all four conflict resolution strategies derived from it.
4. List at least three of the seven ingredients that facilitate productive conflict resolution dialogue.
5. In the Balt Healthcare case, what were the three errors that Marilyn and the OD specialist made that led to the failed intervention?

📘 Lecture 31 — Team Building

📖 Overview: This lecture examines the concept of team building as a major OD intervention for improving organizational effectiveness. It explores different types of interdependence in teams, various team-building activities, and the processes involved in developing effective work groups. Understanding team dynamics is essential because most organizations rely on teams to coordinate complex tasks and achieve productivity goals.

🗂️ Topics Covered

The lecture begins by defining teams and teamwork, then explains three types of interdependence (pooled, sequential, and reciprocal) using sports analogies from cricket, football, and basketball. It presents a case study of Starbucks' team-based culture, discusses the need for team building in natural and temporary work teams, and categorizes team-building activities into three types: those relevant to individuals, those oriented to group operations and behavior, and those affecting the group's relationship with the rest of the organization. The lecture concludes with an overview of the team building process.

📝 Lecture Summary

4. Team Building

A team is 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, there is support and trust, a high degree of cooperation and collaboration, decisions are reached by consensus, communication channels are open and well developed, and there is a strong commitment to the team’s goals. Almost 80% of all companies have some type of team-based, employee involvement program in place.

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

The lecture uses sports analogies to illustrate types of interdependence:

• Cricket is a game of pooled interdependence where team member contributions are somewhat independent of one another. Players are separated on a large field, not all involved actively 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, and there is greater interdependence. Players are grouped functionally (offense and defense) and the two groups do not contact one another, but all players are involved in every play.
• Basketball exhibits the highest degree of interdependence. Players are closely grouped together, the team moves together on the court, every player may contact any other player, roles are less defined than in football, and all players are involved in offense, defense, and trying to score.

One major OD technique, termed team building or team development, is used for increasing the communication, cooperation, and cohesiveness of units to make them productive and effective. Team building is an intervention where the members of a work group examine such things as their goals, structure, procedures, culture, norms, and interpersonal relationships, to improve their ability to work together effectively and efficiently.

OD in Practice: A Cup of Coffee at Starbucks Howard Schultz, founder and chairperson of Starbucks Coffee Company, uses language like "collaborative," "teams," "empowerment," "empathize," and "vision." Starbucks has over 7,500 stores in 36 countries with over 25 million visitors weekly. The company's six-point mission statement lists number one as "Provide a great work environment and treat each other with respect and dignity." The overriding 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. Starbucks employees show an 82% job-satisfaction rate compared to a 50% rate for all employees, and the company has the lowest employee turnover rate of any restaurant or fast-food company.

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 organizations design.
2. Temporary task team – groups meet for limited periods to work on a specific project or problem and disband after they solve it.

Need for team building varies with situation. The 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.

Team Building

Team building refers to broad range of planned activities that help a group improve the way they accomplish tasks and help group members enhance interpersonal and problem-solving skills. Effective approach to team building involves:

• Team-Building Activities
• Team Building Process
• The Manager’s Role in Team Building
• When is Team Building Appropriate?
• Results of Team Building

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. Factors affecting outcomes of team-building activities include: the length of time allocated to the activity, the team’s willingness to look at the way in which it operates, the length of time the team has been working together, and the team’s permanence. Results can range from comparatively modest changes in operating mechanisms (e.g., meeting more frequently) to deeper changes (e.g., modifying behavior patterns, developing greater openness and trust).

Team-building activities can be classified as: (1) activities relevant to one or more individuals; (2) activities specific to the group’s operation and behavior; and (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. Almost all team-building efforts result in members gaining a better understanding of how authority, inclusion, emotions, control, and power affect problem solving. These activities provide information so people have a clearer sense of how their needs can be supported, giving members a choice about their level of involvement and commitment.

📌 Example: In one team, the leader had predetermined actions for each agenda item despite presenting them for discussion. Members felt frustrated by their inability to influence decision making. During team building, they gave specific examples of manipulation, and the boss indicated willingness to be challenged about preconceived decisions, resulting in increased trust and willingness to engage in problem-solving.

Sometimes team building generates pressures on individual members, such as requests for higher task performance. These requests could have negative results unless accompanied by agreement for further one-to-one negotiations among team members.

Activities Oriented to the Group’s Operation and Behavior

The most common focus 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 the people. Team-building activities often begin by clarifying the team’s purpose, priorities, goals, and objectives. Groups spend time finding ways to improve mechanisms that structure their approach to work—discussing meeting agenda creation, efficiency of key work processes, or strategies for lowering costs. Groups often examine their communications patterns and determine ways to improve them.

Another issue is effective use of time. The group may examine present planning mechanisms, introduce better ones, and identify ways to use skills and knowledge more effectively. As the group develops, it becomes more aware of the need for action plans and better self-diagnosis. Groups examine problem-solving techniques, and as teams mature, they broaden diagnostic efforts to include interpersonal styles and their impact. Throughout this process, group norms become clearer, and the team becomes more willing to take risks. 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 and becomes better able to diagnose and solve its own problems, it focuses on its role within the organization. The team may perceive a 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 and tries to establish working parties or project teams that cross boundaries.

💡 Why this matters: As the team becomes more cohesive, it usually exerts stronger influence on other subsystems. This is one area where team building can have negative effects—a highly cohesive team may increase isolation from other groups, leading to intergroup conflict. The process consultant must help the group understand its role, develop diagnostic skills, and examine alternative action plans so that inter-group tensions 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 the required expertise. The nature of work groups makes team development interventions probably the single most important and widely used OD activity.

⭐ Key Takeaways

Students must remember that team building is the most widely used OD intervention, defined as planned activities that help groups improve task accomplishment and enhance interpersonal skills. The three types of interdependence—pooled (cricket), sequential (football), and reciprocal (basketball)—determine how closely team members must work together. Team-building activities fall into three categories: those affecting individuals, those oriented to group operations and behavior, and those affecting the group's organizational relationships. The team building process clarifies goals, improves communication patterns, diagnoses problem-solving techniques, and fosters openness and trust, but must be managed carefully to prevent team isolation and intergroup conflict.

🧠 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 how do they differ in purpose and duration?
3. What are the three categories of team-building activities, and what does each focus on?
4. What potential negative effect can result from a team becoming too cohesive during team building?
5. According to the lecture, why is team development considered the single most important and widely used OD activity?

📘 Lecture 32 — Team Building

📖 Overview: This lecture explores the systematic process of team building as an organization development intervention, focusing on interpersonal and group process approaches. It provides a comprehensive framework for conducting team development meetings, from initiation through evaluation, while also examining the manager's role, consultant involvement, and conditions where team building is most applicable.

🗂️ Topics Covered

The lecture covers the six-step team building meeting format, including initiation, objective setting, data collection, planning, conducting, and evaluating team building sessions. It then examines the manager's role in team development, a checklist for assessing consultant needs, conditions for team building applicability, two team management styles (transactional and transformational), and research findings on team building effectiveness.

📝 Lecture Summary

Team Building Cycle

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. The 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 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.

Basically, the role of the consultant is to work 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. Assuming that the manager wants and needs a consultant, the two should work together as a team in developing the initial program, keeping in mind that (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 if 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.

🔑 Definition — Consultant's Role: The consultant works closely with the manager to a point where the manager can engage in team-development activities as a regular part of managerial responsibilities, with the goal of the consultant's presence being to help the manager learn to continue these processes with minimum ongoing help.

📐 Formula — Need for Consultant Assessment: If six or more "yes" responses → probably do not need an outside consultant; if four or more "no" responses → probably need a consultant; if mixture of "yes", "no", and "?" → invite a consultant to talk over the situation and make a joint decision.

📌 Example — Table 11: Assessing the Need for a Consultant asks nine questions including: Does the manager feel comfortable trying something new? Will group members speak up and give honest data? Are you reasonably sure the boss is not a major source of difficulty? Is there high commitment to achieving more effective team functioning? Is the boss's style consistent with a team approach? Scoring is based on counting "yes" and "no" responses.

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: The research findings highlight a critical gap between participant satisfaction and actual performance improvement, suggesting that team building must be carefully designed and integrated with ongoing organizational processes to achieve lasting results.

⭐ Key Takeaways

The six-step team building cycle provides a structured approach: initiating, setting objectives, collecting data, planning, conducting, and evaluating meetings. The manager bears ultimate responsibility for group functioning, though a consultant may be needed—especially when the manager may be part of the problem. The Dyer checklist helps assess whether an outside consultant is needed based on nine diagnostic questions. Team building is most applicable when communication patterns are inadequate, group tasks require interaction, and the leader is committed to change. Importantly, research shows that while participants view team building positively, evidence of improved performance is limited, effects are often short-lived, and isolating the impact of team building from other interventions is difficult.

🧠 Quick Revision Questions

1. What are the six steps in the team building meeting format?
2. According to the Dyer checklist, what scoring pattern indicates that a consultant is probably needed?
3. What is the difference between a transactional, task-oriented approach and a transformational, people-oriented approach to team management?
4. What are three research problems with team building identified in the lecture?
5. What are the six conditions Lewis identified as best suited for team building?

📘 Lecture 33 — Organization Process Approaches

📖 Overview: This lecture examines system-wide process interventions for organizational change, focusing on approaches that address large-scale organizational processes rather than individual or small-group dynamics. It covers the organization confrontation meeting, inter-group relations interventions, large-group interventions (including open-systems and open-space methods), and the normative Grid Organization Development approach—each offering distinct methodologies for diagnosing and addressing organization-wide issues.

🗂️ Topics Covered

This lecture covers four main system-wide process intervention approaches: the organization confrontation meeting, which mobilizes problem-solving resources by identifying pressing issues; inter-group relations interventions including microcosm groups and inter-group conflict resolution; large-group interventions that bring "whole systems into the room" using either open-systems or open-space methods; and Grid Organization Development, a normative packaged program based on Blake and Mouton's Managerial Grid that emphasizes concern for production and concern for people across six sequential phases.

📝 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 adaptation. Although the original model involved only managerial and professional people, it has since been used successfully with technicians, clerical personnel, and assembly workers.

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

The application stages involve ten steps: scheduling a group meeting where the task is to identify problems about the work environment and organization effectiveness; appointing groups representing all departments (with subordinates not in the same group as their bosses, and top management forming its own group, with group sizes from five to fifteen members); stressing openness and honesty without criticism for bringing up problems; giving groups one to two hours to identify problems while an OD practitioner encourages openness; reconvening in a central meeting place where each group reports problems and sometimes offers solutions; breaking down the master list of problems into categories to eliminate duplication; dividing participants into problem-solving groups whose composition differs from the original identification groups; having each group rank problems, develop a tactical action plan, and determine a timetable; having each group periodically report priorities and tactical plans to management; and establishing schedules for periodic follow-up meetings where team leaders report progress and plans.

💡 Why this matters: The confrontation meeting is a rapid, structured approach to surfacing organizational issues and mobilizing collective action, particularly valuable during periods of transition or stress.

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 their 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 are described: microcosm groups and inter-group conflict resolution. A microcosm group uses members from several groups to help solve organization-wide problems. Inter-group issues are explored in this context, and then solutions are implemented in the larger organization. Inter-group conflict resolution helps two groups work out dysfunctional relationships.

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. 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.

🔑 Definition — Microcosm Group: A small number of individuals who reflect the issue being addressed, allowing the group to understand and solve complex organizational problems and recommend action in the larger system.

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. Groups seem to "infect" and become "infected" by the other groups. An example: an organizational diagnosis team assigned members to five departments, interviewed each department head and several members, and observed department meetings. When preparing to observe their first meeting of department heads, they role-played the meeting they had never seen. Team members found they easily became engaged with one another; when they actually observed the department-head meeting, they were amazed at how closely the simulated meeting approximated the actual session.

The process of using a microcosm group involves five steps: (1) Identify an issue—finding a system-wide problem from diagnosis or an idea generated by a member or task force (e.g., a division manager concerned that information from direct reports differed from informal conversations); (2) Convene the group—forming the microcosm group with membership reflecting the appropriate mix of stakeholders related to the issue (if organizational communication, include people from all hierarchical levels and functions; if integrating two corporate cultures after a merger, include people from both organizations); the group itself becomes responsible for determining its membership and filling vacant positions; members need to be perceived as credible representatives to increase likelihood that suggestions will be followed; (3) Provide group training—training in group problem solving and decision making, possibly team-building interventions, focusing on establishing a group mission, working relationships, decision-making norms, and problem definitions; (4) Address the issue—solving the problem and implementing solutions, with OD practitioners helping diagnose, design, implement, and evaluate changes; gaining commitment in the wider organization requires a communication plan linking group activities to the organization, visible and accessible members, and appropriate participation by organization members; (5) Dissolve the group—disbanding following successful implementation, typically involving a final report or meeting.

Large Group Interventions

The third system-wide process intervention is called large-group intervention, referred to variously as "search conferences," "open-space meetings," "open-systems planning," and "future searches." These focus on issues that affect the whole organization or large segments, such as developing new products or services, responding to environmental change, or introducing new technology. The defining feature 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 to structuring and managing, or propose future directions.

🔑 Definition — Large-Group Intervention: A change program that brings together large numbers of organization members and stakeholders, often over one hundred, for multi-day meetings to address system-wide issues.

Large-group interventions can vary on several dimensions: purpose (from solving particular problems to envisioning future strategic directions), size (from less than fifty to more than two thousand participants), length (one to five days), structure (planned and structured vs. informal), and number (single meeting vs. succession of meetings).

Application Stages: Conducting a large-group intervention generally involves preparing for the meeting, conducting it, and following up on outcomes.

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—requiring a compelling reason or focal point for change; more powerful reasons include managing impending mergers or reorganizations, responding to environmental threats, or proposing radical organizational changes; senior leaders need to make clear the purpose; ambiguity can dissipate energy and commitment (e.g., a hospital meeting viewed as a failure by managers who thought the purpose was cost-cutting rather than future design); (2) Appropriate participants—fundamental goal is "get the whole system in the room," involving as many stakeholders as possible including senior managers, suppliers, union leaders, customers, government officials, and members from a variety of jobs, genders, races, and ages; (3) Relevant tasks to address the conference theme—typically assigned to subgroups responsible for examining the theme and drawing conclusions for action, relying on participants' own experience and expertise rather than outside resources.

Conducting the Meeting: Most large-group processes fit within two primary frameworks: open-systems methods and open-space methods.

Open-Systems Methods: These approaches (search conferences, open-systems planning, real-time strategic change) help organizations assess their environments systematically and develop strategic responses. Open-systems methods begin with diagnosis and proceed through six steps: (1) Map the current environment—identifying and prioritizing different domains or parts of the environment, listing all external groups directly interacting with the organization (customers, suppliers, government agencies), ranking them in importance, and describing each domain's expectations; (2) Assess the organization's responses to environmental expectations—describing how the organization currently addresses identified expectations; (3) Identify the core mission of the organization—identifying the underlying purpose as derived from how it responds to external demands, focusing on mission as revealed in behavior rather than official statements; (4) Create a realistic future scenario—projecting the organization and environment into the near future assuming no real changes, addressing "What will happen if the organization continues to operate as it does at present?"; (5) Create an ideal future scenario—asking members to create alternative desirable futures by going back over steps 1, 2, and 3 and fantasizing about desired futures without worrying about constraints; (6) Compare present with ideal future and prepare an action plan—identifying specific actions to move toward the desired future, planning for three timeframes (tomorrow, six months, two years), and deciding on follow-up schedule.

Variations on this basic model include search conferences beginning with "appreciating the past," examining significant events of the previous thirty years to demonstrate shared common history. Once common ground is established, members organize into subgroups of eight to ten people representing as many stakeholder viewpoints as possible, brainstorming answers, recording on flipchart paper, and sharing with the larger group. The final task is creating an agenda for change where members from the same department discuss proposals and decide on action plans, timetables, and accountabilities.

Open-Space Methods: The second approach is distinguished by its lack of formal structure. Open-space methods temporarily restructure or "self-organize" participants around interests and topics. They follow these steps: (1) Set the conditions for self-organizing—announcing the theme and norms, informing participants that the meeting will consist of small-group discussions convened by participants addressing any topic critical to the theme; two sets of norms govern application: the "Law of Two Feet" encourages people to take responsibility for their own behavior (going to discussions where they are learning or contributing), with roles of "butterflies" (attracting spontaneous conversations, never attending formal meetings) and "bumblebees" (moving from group to group sprinkling knowledge); the "Four Principles" are "whoever comes is the right people" (freeing people to begin conversations with anyone), "whatever happens is the only thing that could have" (infusing responsibility and encouraging flexibility), "whenever it starts is the right time" (encouraging creativity and following natural energy), and "when it is over, it is over" (allowing people to move on without meeting for a set time); (2) Create the agenda—asking participants to describe a topic related to the conference theme they have passion for, writing it on a large piece of paper, announcing to the group, and posting on the community bulletin board; the person announcing agrees to convene the meeting at the posted time and place; participants sign up for sessions of interest; (3) Coordinate activity through information—each morning and evening a community meeting announces new topics; conveners produce one-page summaries of what happened, who attended, subjects discussed, and recommendations or actions proposed, posted near the community bulletin board in an area labeled "newsroom."

Following up of Meeting Outcomes: Follow-up efforts are vital to implementing action plans, involving communicating results to the rest of the organization, gaining wider commitment to changes, and structuring the change process. Where all organization members were involved in the large-group meeting, implementation can proceed immediately according to the timetable in the action plans.

Grid Organization Development: A Normative Approach

Grid OD is a change model and one of the most widely used approaches to system-wide planned change, aimed at achieving corporate excellence through systematic change of the basic culture. Grid OD starts with a focus on individual behavior, specifically on the managerial styles of executives, called the Managerial Grid. The program moves through sequential phases involving the work team, relationships between groups, and finally the overall organization culture.

According to the Managerial Grid, an individual's style can be described according to concern for production and concern for people. Concern for production covers behaviors such as accomplishing productive tasks, developing creative ideas, making quality policy decisions, establishing thorough staff services, or creating efficient workload measurements. Concern for production is not limited to things but may involve human accomplishment. Concern for people encompasses the individual's personal worth, good working conditions, involvement or commitment to completing the job, security, fair salary structure and fringe benefits, and good social relationships.

Managers with low concern for production and high concern for people view people's feelings, attitudes, and needs as valuable in their own right, striving to provide ease, security, and comfort. Managers with high concern for production and low concern for people minimize attitudes and feelings of subordinates, giving little attention to individual creativity, conflict, and commitment. The most effective managerial style overcomes the communications barrier to corporate excellence by showing high concern for both people and production, allowing employees to think and influence the organization, promoting active support for plans. Employee participation means better communication with information shared by all relevant parties, and organizational commitment arises from discussion, deliberation, and debate over major issues.

Application Stages: Grid OD has two key objectives: to improve planning by developing a strategy for organizational excellence based on clear logic, and to help managers gain necessary knowledge and skills to supervise effectively. It consists of six phases.

Phase 1: The Grid Seminar: In this one-week program, participants analyze their personal styles on the Managerial Grid and learn team methods of problem solving. Top management attends the seminar and then leads the next level through a similar experience. Participants assess themselves using questionnaires and case studies and receive feedback from other group members. Learning objectives include: learning the GRID to analyze thinking; increasing personal objectivity in self-appraisal; achieving clear and candid communication; learning and working effectively in a team; learning to manage inter-group conflict; analyzing one's corporate work culture by applying the GRID framework; and gaining understanding of the phases of GRID OD.

Phase 2: Teamwork Development: Begins with the organization's top manager and direct reports, who later attend another team meeting with their own subordinates, continuing down through the entire organization. The team deals with subjects directly relevant to their daily operations and behaviors. Before the week's conclusion, the team sets group and individual goals.

Phase 3: Inter-group Development: Improving inter-group relations involves: each person preparing a written description of actual working relationships contrasted with ideal relationships; each group isolating for several days to summarize perceptions of actual and ideal relationships; the two groups meeting and limiting interaction to comparing perceptions via a spokesperson; and the two groups working on making the relationship more productive, completing actions when both groups understand specific actions each will take and how to follow up.

Phase 4: Developing an Ideal Strategic Organization Model: Top managers work toward a model of organizational excellence incorporating six basic factors: clear definitions of minimum and optimum financial objectives; clear definitions of the character and nature of organizational activities; clear operational definitions of character and scope of markets, customers, or clients; an organizational structure integrating operations for synergistic results; basic policies for organizational decision making; and approaches to implement growth capacity and avoid stagnation or obsolescence.

Phase 5: Implementing the Ideal Strategic Model: Organizations are divided into identifiable segments (products, profit centers, or geographical areas). The top management team assigns one planning team to each segment. Because units cannot be completely autonomous, one corporate headquarters team and a coordinator must be established. The planning coordinator and corporate headquarters team ensure the implementation plan is clearly understood.

Phase 6: Systematic Critique: Determines the degree of organization excellence after Phase 5 compared with measurements taken before Phase 1. The basic instrument is a 100-question survey investigating behavior, teamwork, inter-group relations, and corporate strategy. With instruments administered at each phase, it is possible to observe the degree of change and gain insight into the total process of change. Because change never ceases, discovery sets the stage for a new beginning.

⭐ Key Takeaways

This lecture presents four distinct system-wide process intervention approaches, each with specific methodologies and application stages. The organization confrontation meeting is a rapid problem-identification and action-planning intervention best used during stress or leadership transitions, following a ten-step structured process. Inter-group relations interventions use microcosm groups (small representative groups that reflect organizational issues and work through parallel processes) and inter-group conflict resolution to address dysfunctional relationships between organizational units. Large-group interventions bring whole systems into the room using either open-systems methods (systematic environmental assessment and strategic response development through six steps) or open-space methods (self-organizing participants around interests using the Law of Two Feet and Four Principles). Grid Organization Development is a normative, packaged six-phase program based on the Managerial Grid's concern for production and concern for people, progressing from individual style analysis through teamwork development, inter-group relations, strategic modeling, implementation, and systematic critique. Understanding which intervention to apply depends on the organization's specific needs, the nature of the problem, and the level of structure required.

🧠 Quick Revision Questions

1. What are the ten steps of the organization confrontation meeting, and under what conditions is this intervention most useful?
2. How do microcosm groups work through "parallel processes," and what are the five steps for implementing a microcosm group intervention?
3. What are the differences between open-systems methods and open-space methods in large-group interventions, including the Law of Two Feet and Four Principles?
4. Describe the Managerial Grid's two dimensions and explain why the high concern for both production and people style is considered most effective according to Grid OD.
5. What are the six phases of Grid Organization Development, and how does Phase 6 (Systematic Critique) evaluate the success of the intervention?

📘 Lecture 34 — Restructuring Organizations

📖 Overview: This lecture examines techno-structural interventions, focusing on how organizations can restructure themselves from rigid bureaucracies to leaner, more flexible forms. It covers traditional structural designs—functional, self-contained-unit, and matrix—as well as newer integrative forms like process-based structures, along with downsizing and reengineering as key restructuring approaches.

🗂️ Topics Covered

The lecture begins by explaining the pressures driving organizational restructuring, including global competition and technological change. It then provides a detailed analysis of five structural designs: functional organization, self-contained-unit organization, matrix organization, and process-based structures. For each structure, the lecture discusses advantages, disadvantages, and contingency factors that determine when each form is most appropriate. The topics of downsizing (reducing personnel through layoffs, redesign, and outsourcing) and reengineering (radically redesigning core work processes) are also introduced as key techno-structural 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 (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 oriented to specific products, customers, or regions; or matrix structures that combine both functional specialization and self-containment. More recent innovations include process-based structures designed around core work processes, and network-based structures that link the organization to interdependent organizations.

💡 Why this matters: The choice of organizational structure directly impacts how efficiently work gets done, how information flows, and how adaptable the organization is to changing conditions.

The Functional Organization

Perhaps the most widely used organizational structure, the functional structure (Figure 42) subdivides the organization into units such as engineering, research, operations, human resources, finance, and marketing. It is based on early management theories regarding specialization, line and staff relations, span of control, authority, and responsibility. 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 in that discipline.

On the positive side, functional structures promote specialization of skills and resources by grouping people who perform similar work. This facilitates communication within departments and allows specialists to share expertise, enhancing career development within the specialty. 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 the organization’s total task, which can lead to conflict across departments when each group tries to maximize its own performance. Coordination and scheduling among departments can be difficult when each emphasizes its own perspective.

🔑 Definition — Functional structure: An organizational form that groups activities by specialized functions (e.g., engineering, marketing, finance), with departments staffed by specialists in those disciplines.

📐 Contingency: Functional structure works best in small-to-medium-sized firms with stable environments, routine technologies, interdependence within functions, and goals emphasizing efficiency and technical quality.

📌 Example: A manufacturing company with separate departments for engineering, production, sales, and accounting. Each department head is a specialist in that area, and engineers communicate primarily with other engineers, while salespeople communicate with other salespeople.

The Self-Contained-Unit Organization

The self-contained-unit structure (also called product or divisional structure) groups organizational activities on the basis of products, services, customers, or geography. All or most resources necessary to accomplish a specific objective are set up as a self-contained unit headed by a product or division manager. For example, General Electric has plants specializing in jet engines and others producing household appliances, each reporting to a division vice president rather than a manufacturing vice president.

These structures 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. Self-contained units provide employees with opportunities for learning new skills and are well suited for developing general managers.

Disadvantages include potentially inefficient use of specialized skills, specialists feeling isolated from professional colleagues, promotion of allegiance to department rather than organization objectives, and multiple demands on people creating stress.

🔑 Definition — Self-contained-unit structure: An organizational form that groups activities by product, service, customer, or geography, with each unit containing most resources needed to accomplish its specific objective.

📐 Contingency: Self-contained-unit structure works best in large organizations with unstable and uncertain environments, technological interdependence across functions, and goals of product specialization and innovation.

📌 Example: A large corporation like Procter & Gamble organizing into divisions such as Beauty, Grooming, Health Care, and Fabric & Home Care, each with its own research, manufacturing, and marketing resources.

The Matrix Organization

The matrix organization superimposes the lateral structure of a product or project coordinator on the vertical functional structure (Figure 44). It evolved in the aerospace industry where changing customer demands and technological conditions required managers to focus on lateral relationships between functions. Matrix organizations contain three unique roles: the top manager who heads and balances the dual chains of command, the matrix bosses (functional and product/area) who share subordinates, and the two-boss managers who report to different matrix bosses.

For example, all engineers may be in one engineering department reporting 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. Each engineer may have to work under several managers.

On the positive side, this structure allows multiple orientations, specialized functional knowledge applied to all projects, quick implementation of new projects by using people flexibly, and consistency among departments and projects through communication among managers.

On the negative side, matrix organizations can be difficult to manage, requiring heavy managerial costs and support. There may be role ambiguity and conflict, and overall performance may suffer from power conflicts between functional and project structures.

🔑 Definition — Matrix organization: An organizational form that combines functional and product/project structures by superimposing a lateral reporting structure on a vertical functional structure, creating dual reporting relationships.

📐 Contingency: Matrix structures are appropriate under three conditions: (1) outside pressures for dual focus (customer demands and technical sophistication), (2) need for high information processing capacity, and (3) pressures for shared resources.

📌 Example: An aerospace company where engineers belong to an engineering department but are assigned to specific projects (e.g., Project A, Project B). Each engineer reports to both an engineering manager and a project manager.

Process-Based Structures

Process-based structures form multidisciplinary teams around core processes such as product development, order fulfillment, sales generation, and customer support. As shown in Figure 45, these structures emphasize lateral rather than vertical relationships. All functions necessary to produce a product or service are placed in a common unit managed by a "process owner." There are few hierarchical levels, and the senior executive team is small.

Process-based structures eliminate many hierarchical and departmental boundaries that impede task coordination, reduce costs of managing across departments, and enable organizations to focus resources on serving customers.

Key features include:

• Processes drive structure: Organized around three to five key processes, each governed by a process owner with clear performance goals.
• Work adds value: Work is simplified by eliminating nonessential tasks and enriched by combining tasks so teams perform whole processes.
• Teams are fundamental: Self-managing teams manage everything from task execution to strategic planning.
• Customers define performance: Customer satisfaction is the primary goal.
• Teams are rewarded for performance: Appraisal systems focus on team performance against customer satisfaction goals.
• Teams are tightly linked to suppliers and customers
• Team members are well informed and trained

The main advantage is intense focus on meeting customer needs, resulting in dramatic improvements in speed, efficiency, and customer satisfaction. Process-based structures remove layers of management, improve information flow, and increase flexibility.

Major disadvantages include difficulty of change, need for radical shifts in mindsets and skills, potential duplication of scarce resources, slower decision making in unskilled teams, and risk of misidentifying critical processes.

🔑 Definition — Process-based structure: An organizational form that organizes work around core business processes using multidisciplinary, self-managing teams, with few hierarchical levels and a focus on customer satisfaction.

📐 Contingency: Process-based structures are appropriate for highly uncertain environments with rapidly changing customer demands and market conditions, non-routine and highly interdependent technologies, and customer-oriented goals.

📌 Example: A company like 3M or Xerox organizing around core processes such as "order fulfillment" or "product development" rather than functional departments, with teams responsible for the entire process from start to finish.

⭐ Key Takeaways

Organizational restructuring is driven by global competition and rapid environmental changes, forcing organizations to move from rigid bureaucracies to leaner, more flexible structures. Five major structural designs exist, each with specific advantages, disadvantages, and contingency factors: functional structures suit stable environments and routine technologies; self-contained-unit structures fit uncertain conditions and large organizations; matrix structures work when there is dual focus, high information processing needs, and shared resources; and process-based structures are best for rapidly changing environments with customer-oriented goals. The choice of structure must align with environmental conditions, organization size, technology, strategy, and global operations. Downsizing and reengineering are complementary interventions that reduce costs and radically redesign work processes, respectively, and must be aligned with organizational strategy for success.

🧠 Quick Revision Questions

1. What are the five contingency factors that influence structural design according to the lecture?
2. What are the three unique roles found in every matrix organization, and what is the primary challenge for the "two-boss manager"?
3. Under what three conditions is a matrix structure most appropriate, and what happens if any of these conditions is not met?
4. What are the key features that characterize process-based structures, and what is the primary risk if critical processes are misidentified?
5. Compare the disadvantages of functional structures and self-contained-unit structures—what is the fundamental trade-off between specialization and outcome orientation?

📘 Lecture 35 — Network-Based Structures: Restructuring Organizations

📖 Overview: This lecture examines three major restructuring interventions in organizations: network-based structures, downsizing, and reengineering. It explains how organizations can fundamentally redesign their structures, reduce their size, or radically transform their business processes to achieve improved performance and adaptability in dynamic environments.

🗂️ Topics Covered

The lecture covers four types of network structures (internal market, vertical market, inter-market, and opportunity networks), their characteristics including vertical desegregation and brokers, advantages and disadvantages of network forms, downsizing interventions including four major causes and five application stages, the results and effectiveness of downsizing, and reengineering as a radical redesign of business processes with its own application stages and guidelines.

📝 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. Networks can be classified into four basic types:

• Internal market network: A single organization establishes each subunit as an independent profit center allowed to buy and sell services from each other and from the external market. Example: Asea Brown Boveri's (ABB) fifty worldwide businesses with forty-five hundred profit centers.
• Vertical market network: Multiple organizations linked to a focal organization coordinating resource movement from raw materials to end consumer. Example: Nike manufacturing shoes in different plants and distributing through retail outlets.
• Inter-market network: Alliances among organizations in different markets, exemplified by Japanese keiretsu and Korean chaebol.
• Opportunity network: The most advanced form—a temporary constellation of organizations brought together to pursue a single purpose, then disbanded.

These types are distinguished by whether they are single or multiple organizations, single or multiple industry, and stable or temporary. The network structure redraws organizational boundaries and links separate business units to facilitate task interaction. Network organizations use strategic alliances, joint ventures, R&D consortia, licensing agreements, and wholly owned subsidiaries.

🔑 Definition — Network-based structure: A structure that manages diverse, complex, and dynamic relationships among multiple organizations or units, each specializing in a particular business function or task.

💡 Why this matters: Understanding the four network types helps organizations choose the right structural form for their strategic needs—whether stable internal coordination or temporary external partnerships.

Characteristics of Network Structures:

1. Vertical desegregation: Breaking up business functions (production, marketing, distribution) into separate organizations performing specialized work. Recent disintermediation—replacement of whole steps in the value chain by information technology, especially the Internet—has fueled network development.

2. Brokers: Organizations that locate and assemble member organizations. The broker may play a central role (subcontracting) or specialize in linking equal partners.

3. Coordinating mechanisms: Networks are not controlled by hierarchy but by three categories:

   • Informal relationships: Interpersonal relationships with well-developed partnerships; conflicts resolved through reciprocity; trust built over time
   • Formal contracts: Ownership control, licensing arrangements, purchase agreements
   • Market mechanisms: Spot payments, performance accountability, information systems

Advantages and Disadvantages:

Contingencies: Networks suit highly complex and uncertain environments, organizations of all sizes, goals of specialization and innovation, highly uncertain technologies, and worldwide operations.

The major problem with network organizations is managing such complex structures—they are essentially matrix organizations extending beyond single firms but lacking authority to resolve conflicts. Skills in managing lateral relations across boundaries are critical.

Downsizing

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

An important consequence has been the rise of the contingent workforce—less expensive temporary or permanent part-time workers often hired by organizations that just laid off thousands. A study by the American Management Association found nearly a third of 720 firms had rehired terminated employees as independent contractors because downsizings weren't matched by workload reduction.

🔑 Definition — Downsizing: Interventions aimed at reducing organization size through decreasing employees or organizational units/managerial levels.

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 from loss of revenues, market share, and technological/industrial change
3. Implementation of new organizational structures—network structures often involve outsourcing non-core work
4. Beliefs and social pressures that smaller is better—but Hamel and Prahalad warned about "corporate anorexia" where organizations downsize for their own sake without thinking about future growth

Application Stages of Downsizing:

1. Clarify the organization's strategy: Leaders specify corporate strategy and communicate how downsizing relates to it—downsizing is not a goal but a restructuring process for achieving strategic objectives. Provide opportunities for members to voice concerns and obtain counseling.

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

📌 Example: Case, a heavy construction equipment manufacturer, eliminated money-losing product lines, narrowed remaining product lines, shifted production to outside vendors, restructured debt, and spun off most of its 250 stores, leading to closing five plants and payroll reductions of almost 35%.

Organizations often choose layoffs because they can be implemented quickly, but this produces a climate of fear and defensiveness. Employee participation in decisions can help create urgency for alternatives and increase perceptions of fairness.

3. Implement the changes: Successful implementation is characterized by:

• Downsizing controlled from the top down
• Identifying and targeting specific areas of inefficiency and high cost
• Linking specific actions to strategy
• Communicating frequently using a variety of media

4. Address the needs of survivors and those who leave: "Survivor syndrome" involves self-absorbed and risk-averse behaviors—survivors are preoccupied with whether additional layoffs will occur, guilt over receiving pay while coworkers struggle, and uncertainty about career advancement. Organizations can address this through communication about vision and strategy, training and development, and promoting greater involvement in decision making. For those laid off, methods include outplacement counseling, personal and family counseling, severance packages, office support for job searches, relocation services, and job retraining.

5. Follow through with growth plans: Implement an organization renewal and growth process. Failure to move quickly to implement growth plans is a key determinant of ineffective downsizing. Only 44% of downsized companies shared growth plans with employees; only 34% told employees how they would fit into the new strategy.

Results of Downsizing:

The empirical research is mostly negative. The National Research Council concluded downsizing 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 terminated people
• Fewer than 33% reported profits increased as expected
• Only 21% achieved satisfactory shareholder return on investment
• Individual problems include increased stress and illness, loss of self-esteem, reduced trust and loyalty, marriage and family disruptions

Financial performance studies also show negative results. In 210 companies announcing layoffs, financial performance increases in the first year were not followed by improvements in the next year. Stock prices increased on announcement day but then began a steady decline.

However, these results must be interpreted cautiously because:

1. Survey respondents (HR specialists) may view downsizing negatively
2. Studies may include biased samples of poorly managed firms
3. Disappointing results may reflect poor implementation rather than downsizing itself

Companies that implemented effectively scored significantly higher on performance measures. Success may depend as much on how effectively the intervention is applied as on the size of layoffs.

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. Unlike incremental approaches like total quality management, reengineering radically alters the status quo to produce dramatic increases in performance.

🔑 Definition — Reengineering: The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance.

Reengineering frequently takes advantage of new information technology—teleconferencing, expert systems, shared databases, wireless communication—to break out of traditional ways of thinking about work. The most popular software system, SAP, allows firms to standardize information systems by processing data across tasks and integrating information flow.

📌 Example: At IBM Credit, an integrated information system with expert systems technology enables one employee to handle all stages of the credit-delivery process, eliminating handoffs, delays, and errors from the traditional sequential work design.

Reengineering is associated with downsizing, the shift from functional to process-based structures, and work design. It results in new jobs or teams emphasizing multifunctional tasks, results-oriented feedback, and employee empowerment. However, reengineering has failed to apply attention to individual differences in people's reactions to work.

Application Stages of Reengineering:

1. Prepare the organization: Clarify and assess the organization's context, including competitive environment, strategy, and objectives. Establish the need for reengineering and the strategic direction.

2. Specify organization strategy and objectives: Business strategy determines the focus of reengineering and guides decisions about essential business processes. Communicate clearly why reengineering is necessary and the direction it will take. Senior executives must demonstrate unwavering support.

📌 Example: GTE Telephone Operations executives determined deregulation would spread to the local network, presenting a competitive challenge. They set dramatic goals of doubling revenues while halving costs and reducing product development time by 75%.

3. Fundamentally rethink the way work gets done: This involves three activities:

a. Identify and analyze core business processes: Core processes transform inputs into valued outputs. Assess through process mapping listing different activities required to deliver products or services. Analysis can include assigning costs to major phases using process-based accounting (rather than traditional cost accounting by categories of expense).

📌 Example: At Dana Corporation, traditional accounting showed salaries and fringe benefits accounting for 82% of costs, suggesting workforce downsizing. Process-based accounting revealed 44% of costs involved expediting, resolving, and reissuing orders—reworking deficient orders.

Business processes can be assessed in terms of value-added activities—the amount of value contributed to a product or service by a particular step. Organizations often engage in processes with little or no added value.

📌 Example: At a Denver hospital, employees checked a pump that circulated oxygen every shift—eight years after a new pump with fault-protection equipment had been installed that no longer required physical inspection. The habit remained, draining resources.

b. Define performance objectives: Set challenging performance goals derived from customer requirements or benchmarks of best practices.

📌 Example: Andersen Windows had 28,000 products in 1991 growing to 86,000. Pressure for "batch of one" resulted in 20% of shipments with order discrepancies. They set targets for ease of ordering, manufacturing, and delivery, selling interactive computerized catalogues. By 1995, new 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 of paper addressing "If we were starting this company today, what processes would we need?" Follow these guidelines:

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

Implement "early wins" or "quick hits"—obvious redundancies and inefficiencies that can be changed immediately to generate momentum.

4. Restructure the organization around the new business processes: Change the organization's structure to support new business processes, resulting in process-based structures. Implement new information and measurement systems shifting from measuring behaviors (absenteeism, grievances) to assessing outcomes (productivity, customer satisfaction, cost savings). Information technology is a key driver because it can drastically reduce cost and time of integrating and coordinating business processes.

⭐ Key Takeaways

The most critical concepts from this lecture are: (1) Network-based structures come in four types—internal market, vertical market, inter-market, and opportunity networks—each with different configurations of single/multiple organizations, single/multiple industries, and stable/temporary arrangements, and they rely on vertical desegregation, brokers, and three coordinating mechanisms (informal relationships, contracts, market mechanisms). (2) Downsizing interventions have five application stages—clarify strategy, assess options (workforce reduction, organization redesign, systemic redesign), implement changes, address survivor and leaver needs, and follow through with growth plans—and the research overwhelmingly shows negative results unless implemented effectively. (3) Reengineering is a radical redesign of business processes using four application stages—prepare, specify strategy, rethink work (identify core processes, define objectives, design new processes), and restructure around new processes—and it benefits from process-based accounting, value-added analysis, and information technology like SAP. (4) All three interventions share the theme that implementation quality matters more than the intervention itself. (5) Survivor syndrome and corporate anorexia are critical negative consequences that must be managed through communication, participation, and growth planning.

🧠 Quick Revision Questions

1. What are the four types of network structures, and how do they differ in terms of single/multiple organizations, single/multiple industries, and stable/temporary characteristics?

2. Describe the three coordinating mechanisms used in network organizations and explain how they replace hierarchical control.

3. What are the five application stages of downsizing, and what specific tactics are available under workforce reduction, organization redesign, and systemic redesign approaches?

4. What is "survivor syndrome" and what specific communication and support strategies can organizations use to address it during downsizing?

5. What are the four application stages of reengineering, and what guidelines should be followed when designing new business processes?

📘 Lecture 36 — Employee Involvement

📖 Overview: This lecture examines Employee Involvement (EI) as a set of practices and philosophies that enhance participation, commitment, and productivity by moving decision-making downward in organizations. It covers the four key elements of EI, how EI affects productivity, and three major applications: parallel structures, cooperative union-management projects, and total quality management.

🗂️ Topics Covered

The lecture begins with a working definition of Employee Involvement, detailing its four key elements: power, information, knowledge and skills, and rewards. It then explores how EI affects productivity through improved communication, motivation, and capabilities. The major applications discussed include parallel structures (with application stages), cooperative union-management projects, quality circles, high-involvement organizations, and total quality management. A case study of a Work-Out session at General Electric Medical Systems and a union-management cooperation program at GTE California illustrate practical implementation.

📝 Lecture Summary

Employee Involvement: What is it?

Employee involvement is the current label for practices and philosophies that began with the quality-of-work-life movement in the late 1950s. The phrase "quality of work life" originally stressed the poor quality of life at the workplace. EI seeks to increase members' input into decisions that affect organization performance and employee well-being.

A Working Definition of Employee Involvement

Employee involvement 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 issues such as work methods, task assignments, performance outcomes, customer service, and employee selection. The amount of power can vary from simply asking for input, to joint decision-making, to employees making decisions themselves.

2. Information: Timely access to relevant information is vital to 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, and work methods.

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 for improving members' knowledge and skills.

4. Rewards: Because people generally do things for which they are recognized, rewards can have a powerful effect on getting people involved. Internal rewards include feelings of self-worth and accomplishment; external rewards include pay and promotions linked to performance outcomes.

💡 Why this matters: These four elements are interdependent and must be changed together to obtain positive results. If members are given more power but lack information or knowledge, the value of involvement is negligible. Similarly, increasing power, information, and knowledge without linking rewards to performance gives members little incentive to improve.

How Employee Involvement Affects Productivity

Research has found a consistent relationship between EI practices and productivity measures such as financial performance, customer satisfaction, labor hours, and waste rates. The traditional view that satisfaction causes productivity is too simplistic.

EI practices improve productivity in at least three ways:

1. Improved communication and coordination among employees and departments
2. Improved employee motivation, particularly when satisfying important individual needs — motivation translates to performance when people have necessary skills and the work situation allows productivity to be affected
3. Improved capabilities of employees through skill training in group problem solving and communication

Secondary effects include increased employee well-being and satisfaction, which can attract and retain good employees. Higher levels of EI produce correspondingly higher levels of performance.

Employee Involvement Applications

Three major EI applications vary in the amount of power, information, knowledge and skills, and rewards moved downward through the organization: parallel structures (least involvement), high-involvement organizations, and total quality management (most involvement).

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, providing an alternative setting to address problems free from formal constraints.

Parallel structures fall at the lower end of the EI scale — member participation is typically restricted to making proposals and suggestions, with implementation decisions reserved for management. They are most appropriate for organizations with little history of employee participation, top-down management styles, and bureaucratic cultures.

Application Stages:

1. Define the purpose and scope — involves defining purpose and initial expectations; organizational diagnosis helps clarify specific problems
2. Form a steering committee — composed of acknowledged leaders of various functions; performs tasks including refining scope, developing vision, guiding creation, establishing linkage mechanisms, creating problem-solving groups, and ensuring senior management support
3. Communicate with organization members — effectiveness depends on high member involvement; communicating purpose, procedures, and rewards promotes participation
4. Form employee problem-solving groups — primary means of accomplishing purpose; involves selecting members representing appropriate hierarchical levels, expertise, functions, and constituencies; providing training; and offering facilitation
5. Address the problems and issues — groups use an action research process: diagnose problems, plan solutions, implement and evaluate
6. Implement and evaluate the changes — involves implementing organizational changes, assessing results, and providing feedback to help the organization learn to adapt and innovate

🔑 Definition — Parallel Structure: A structure that operates alongside the formal organization, providing members with an alternative setting to address problems and propose innovative solutions free from formal constraints.

📐 Formula: Parallel Structures = Formal Organization + Collateral Structure → Alternative Problem-Solving Setting

📌 Example: A Work-Out session at General Electric Medical Systems (GEMS) involved about 50 employees and managers gathering for a five-day session. Teams engaged in "bureaucracy busting" by identifying CRAP (Critical Review Appraisals) — needless approvals, policies, meetings, and reports that stifled productivity. Senior managers were not part of these discussions. At the end, managers made instant, on-the-spot decisions about each idea (approved, rejected with reasons, or need more data). The session ended with close to 100 written contracts to implement new processes or drop unnecessary work.

Cooperative Union-Management Projects

Cooperative union-management projects are one of the oldest EI applications of parallel structures, associated with the original QWL movement. They have a long history in Scandinavian countries but are relatively new to OD in the United States.

Structural characteristics:

• Steering committee: Top-level labor-management committee serving as the basic planning center, comprising key representatives from management and unions
• Multiple-level committees: Working committees at plant, department, and shop-floor levels dealing with day-to-day activities
• Ad hoc committees: Established for specific tasks with a limited lifetime, initiated to bring about change toward a particular goal
• External consultants: Third-party facilitators offering guidance, assistance, and problem-solving and teamwork training
• External researchers: Brought in to assess overall results, keeping evaluation separate from consulting

📌 Example — GTE California (GTEC): In response to the court-ordered breakup of AT&T, GTEC and the Communications Workers of America embarked on a cooperative union-management project. A steering committee established a parallel structure with three area coordinating committees, support committees, and EI teams staffed with both union and management personnel. All 26,000 employees attended a two-hour orientation. A three-day training program was conducted for supervisors and union officials (trained separately for two days, together on the third). EI team members attended five-day training in meeting-management skills, problem-solving techniques, and group dynamics. One team worked for over two years to simplify field employee time reporting, producing savings of more than $3 million. Between 1987 and 1988, the program produced net savings of more than $1 million. By 1991, GTEC surpassed its competition in customer satisfaction measures.

⭐ Key Takeaways

Employee Involvement is defined by four interdependent elements—power, information, knowledge and skills, and rewards—that must be moved downward together for positive results. EI improves productivity through three mechanisms: improved communication and coordination, enhanced motivation, and increased employee capabilities. Parallel structures are the lowest level of EI involvement, most suitable for organizations with no history of participation, and follow six implementation stages from defining purpose to evaluating changes. Cooperative union-management projects represent the oldest EI application and require steering committees, multiple-level committees, ad hoc committees, and external consultants to function effectively. The case studies of GE Medical Systems Work-Out and GTE California demonstrate that successful EI implementation requires systematic training, clear communication, management commitment to instant decision-making, and a focus on both quality-of-work-life and productivity objectives.

🧠 Quick Revision Questions

1. What are the four key elements of Employee Involvement, and why must they be changed together?
2. Explain three ways EI interventions can improve productivity, according to the lecture.
3. What are the six application stages for implementing parallel structures?
4. What structural characteristics are common to cooperative union-management projects?
5. How did GTE California's EI program demonstrate the importance of modifying focus from quality-of-work-life issues to productivity-related changes?

📘 Lecture 37 — Quality Circles: Employee Involvement

📖 Overview: This lecture explores two major employee involvement approaches: Quality Circles and High-Involvement Organizations (HIOs), culminating in Total Quality Management (TQM). It examines how these parallel structures and comprehensive design systems enhance employee participation, productivity, and organizational performance, particularly through the lens of Japanese management practices and their adaptation in the United States.

🗂️ Topics Covered

The lecture begins with Quality Circles, their Japanese origins and American adaptation, structure (members, leaders, facilitators, steering committees), and a detailed case study at H.E.B Grocery Company showing mixed results. It then covers High-Involvement Organizations (HIOs) with their comprehensive design features including structure, job design, information systems, career systems, training, rewards, personnel policies, and physical layout. Finally, it presents Total Quality Management (TQM) principles, characteristics, a case study at L.L. Bean, and a comparison of TQM and OD values.

📝 Lecture Summary

Quality Circles: Employee Involvement

Quality circles (or “employee involvement teams”) are small groups of employees who meet voluntarily to identify and solve productivity problems. Originally developed in Japan in the mid-1950s, they are a natural outgrowth of Japanese decentralized decision making and collective responsibility. By the early 1980s, some four thousand American companies had adopted quality circles, driven by the desire to emulate Japanese management practices and achieve quality improvements and cost savings.

However, implementing quality circles in the more autocratic, individualistic cultures of many American companies proves challenging compared to the Japanese philosophy of decentralized, collective decision making that nurtures this approach. 💡 Why this matters: The cultural context significantly affects the success of participative management interventions.

A typical quality circles program uses a parallel structure consisting of several circles, each with three to fifteen voluntary members sharing a common job or work area. Circles meet weekly for about one hour on company time. Members receive training in problem identification and analysis techniques, and apply these to identify, analyze, and recommend solutions to work-related problems. When possible, they implement solutions affecting only their work area without requiring higher management approval.

Each circle has a leader (typically the work area supervisor) who trains members and guides weekly meetings, setting the agenda and facilitating problem-solving. Facilitators coordinate activities of several circles, train leaders, help start circles, and keep upper management informed—this role may be full-time. A steering committee serves as the central coordinator, composed of facilitators and representatives from major functional departments. The committee determines policies, procedures, and issues outside circle attention (such as wages and union contract topics), coordinates training, and guides program expansion.

🔑 Definition — Quality Circles: Small groups of employees who meet voluntarily to identify and solve productivity problems.

Application 8: 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. The 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 of ten people each, representing a cross-section of workers. Circles met for two hours at two-week intervals. Periodic rotations occurred due to high participation—after five months, twelve workers dropped out, several left, and twenty-nine new employees joined. Each circle had a worker-leader trained in communication techniques, group process, and problem-solving skills. Leaders formed a leader circle that met regularly to exchange ideas and coordinate the four circles. Supervisors served as resources, while corporate human resources department members served as facilitators. The department head and top managers formed the steering committee.

Researchers conducted a thorough evaluation comparing the warehouse department with a control group. Measures included survey data at three points (five months before, three months after, and ten months after program start), plus measures of productivity, absenteeism, and accidents collected at four-week intervals beginning one year before the program.

Results were mixed. The warehouse showed slightly more positive trends in productivity—production quantity increased slightly, while costs, absenteeism, labor expense, overtime, and accidents decreased slightly. Survey data showed warehouse employee attitudes changed little, but unexpectedly, control group attitudes suffered regarding feeling informed, being involved in decision making, and receiving feedback from supervisors. The researchers concluded the circles program might have buffered warehouse employees during a workload disruption.

However, interview and observational data revealed more negative findings. Initial months saw activity and improvement suggestions (equipment maintenance, reduced warehouse congestion, damage prevention). After several months, attendance waned as members found it difficult to identify significant issues within their sphere of influence. Supervisors admitted circles were draining time and energy. A second flurry of activity after member rotation also subsided as members became frustrated with slow implementation, difficulty of systematic problem solving, and failure of the program to affect their jobs. As workload increased, management allowed circles to become inactive.

Participants felt they accomplished something worthwhile and enjoyed the circles. Non-participants or dropouts felt the program never dealt with significant issues and showed marked worsening of attitudes. Supervisors felt payback wasn't worth time spent. Human resources judged it a successful step toward employee involvement.

Observations suggested reasons the program died: group functioning did not improve, systematic problem-solving techniques were not followed, implementation was delayed in bureaucratic channels (creating perceptions of low management commitment), and active participants became disenchanted with jobs and sought supervisory ranks. Some members felt inadequately compensated for generating money-saving ideas.

The researchers concluded the program was successful as a pilot project—the company learned about the level of commitment and energy required to sustain such programs and continued experimenting with other approaches, holding more realistic expectations. The rigorous and contradictory assessment measures strongly suggest research on quality circles must go beyond glowing testimonials to include whether programs effect valued individual and organization outcomes.

High-Involvement Organizations

High-involvement organizations (HIOs) create organizational conditions that support high levels of employee participation. 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 involvement and performance—including structure, work design, information and control systems, physical layout, personnel policies, and reward systems.

🔑 Definition — High-Involvement Organizations (HIOs): Organizations where almost all features are designed jointly by management and workers to promote high levels of employee participation and performance.

Features of High Involvement Organizations

HIO design features are congruent and mutually reinforcing. Employees have considerable influence over decisions, supported by extensive training in problem-solving techniques, plant operation, and organizational policies. Both operational and issue-oriented information is shared widely and easily obtained. Rewards are tied closely to unit performance and knowledge/skill levels.

Key HIO design elements include:

Organization Structure: Flat, lean structures push scheduling, planning, and controlling toward the shop floor. Mini-enterprise, team-based structures oriented to common purpose help focus participation. Participative structures (work councils, union-management committees) allow workers to influence direction and policies.

Job Design: Jobs with high discretion, task variety, and meaningful feedback enhance involvement. Self-managed teams encourage responsibility through cross-training and job rotation.

Information System: Open systems tied to jobs or work teams provide necessary information for meaningful participation. Goals and standards set participatively provide commitment and motivation.

Career System: Different tracks for advancement with counseling help employees plan long-term development. Open job posting makes employees aware of development opportunities.

Selection: Realistic job previews provide information about working in HIO situations. Team involvement in selection oriented to potential and process skills facilitates a participative climate.

Training: Heavy commitment to knowledge and skills for effective participation, including economic education and interpersonal skill development. Peer training is emphasized as valuable adjunct to formal training.

Reward System: Open information about rewards, skill-based rewards, gain sharing or ownership, flexible benefits, all-salaried workforce, and egalitarian perquisites.

Personnel Policies: Participatively set policies encouraging stability of employment provide strong commitment from employees.

Physical Layout: Designs supporting team structures and reducing status differences reinforce egalitarian climate. Safe and pleasant working conditions provide environment conducive to participation.

These design features are mutually reinforcing—they send a message that people are important, respected, valued, capable of growing, and trusted. They motivate and focus organizational behavior in strategic directions, leading to superior effectiveness and competitive advantage.

Total Quality Management

Total quality management (TQM) is the most recent and comprehensive approach to employee involvement, along with HIOs. Also known as “continuous process improvement” and “continuous quality,” TQM grew from manufacturing quality control and represents a long-term effort to orient all organizational activities around quality. Quality is achieved when organizational processes reliably produce products and services that meet or exceed customer expectations.

🔑 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 needs.

Like HIO designs, TQM increases workers' knowledge and skills through extensive training, provides relevant information, pushes decision-making power downward, and ties rewards to performance. When successful, TQM is aligned closely with business strategy and attempts to change the entire organization toward continuous quality improvement.

Characteristics of TQM

TQM has several common principles:

• Organization-wide: TQM takes place in production, accounting, HR, marketing, sales, and all other areas.
• CEO and top management support: Everyone operates under TQM with reward systems ensuring continual support.
• Three or more years duration: Significant resource allocation for training is crucial. Motorola developed a University teaching in 27 languages, allocating at least 1.5% of budget to education, requiring minimum 40 hours training per year per employee, supporting “six sigma” quality (99.9997% perfection).
• Ingrained corporate value: Continuous improvement penetrates culture and values.
• Partnership with customers and suppliers: Products/services must meet or exceed customer expectations.
• Everyone has a customer: The next person on the production line, another department, or external purchaser are all customers.
• Reduced cycle time: Focus on doing jobs faster for products, services, and support functions.
• Techniques range in scope: Including statistical quality control, job design, empowerment, self-managed work teams.
• Do it right the first time: Quality is built in at every stage, not obtained by rejecting products at end of production line.
• Organization values and respects everyone: Includes customers, suppliers, employees, owners, community, and environment (stakeholders).
• No single formula works for everyone: What succeeded at one company may not work at another.

Application 9: Total Quality Management at L.L. Bean

L.L. Bean, a Maine-based mail-order company, had a reputation for superior customer service dating back to 1912 founder Leon Leonwood Bean. Chairman Leon Gorman applied for the Malcolm Baldridge National Quality Award in 1988 (first year in service category). Despite reputation, L.L. Bean won no award—no award was given in service category that year.

The Baldridge feedback prompted Bean to examine its quality culture. While customer service was “world class,” the committee thought the firm was not achieving customer satisfaction productively. Bean relied on a “no-questions asked” guarantee-based approach rather than ensuring things happened right the first time. A story illustrated this: a customer service representative drove a canoe to a customer in New York—exemplary service, but the order had been placed in time to be shipped properly.

The diagnostic information also revealed Bean needed more employee involvement. Despite implementing quality circles ten years earlier, decision making had usually taken place at a high level.

Based on feedback, the organization defined “total quality” (TQ) as “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.”

Bean spent approximately ten months training three thousand employees. All salaried employees received three days of TQ training, then hourly workers received one day. Senior executives trained first so each level could support total quality as the next level learned.

Human resources explored ways to change infrastructure for greater employee involvement. Because L.L. Bean is a service organization, decisions influencing quality occur every time a customer calls phone centers—so frontline, customer-contact employees needed to be knowledgeable and empowered, requiring new managerial roles aimed at involving employees.

Seventy members formed seven cross-functional teams. One team defined the manager's role as coach and developer. Another created a feedback instrument linking managers' compensation to improvements in behaviors like being “aspiring and focused, ethical and compassionate, customer focused and aligned, effective and efficient, challenging and empowering, open and innovating, and rewarding and developing.”

Employee involvement paid dividends. In manufacturing, a manager shut down a work line despite productivity pressures to teach workers how a shoe is costed out—employees found enough savings that day to pay for all department training for the entire year. In another case, stockers and pickers swapped jobs temporarily and realized there was no reason for packaging items—now pickers simply roll carts directly onto trucks.

Human resources reengineered from functional structure to customer-oriented organization, with service teams supporting major divisions with process improvement, health and safety, employee relations, and training.

Through all changes, customer satisfaction remained high and job satisfaction increased more than 12%. Although only halfway through its TQ intervention, L.L. Bean 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 meaningfully.

However, differences exist. Some OD practitioners argue their core values differ and caution against OD practitioners assuming the role of “quality management expert.” The OD practitioner enters as a neutral party, resisting advocacy of any particular change method, viewing problems as having varied causes with no predefined solutions. The TQM consultant, in contrast, views organization problems as having TQM solutions.

TQM can be applied as one change methodology alongside 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.

⭐ Key Takeaways

The lecture presents a progression from parallel structures (Quality Circles) to comprehensive organizational redesign (HIOs) to organization-wide philosophy (TQM). Quality circles, while popular, often fail due to lack of management commitment, bureaucratic delays, and insufficient problem-solving skills—as demonstrated by the H.E.B case. High-Involvement Organizations require mutually reinforcing design features across structure, job design, information systems, training, rewards, and physical layout. TQM represents the most comprehensive approach, requiring organization-wide commitment, customer focus, continuous improvement, and employee empowerment—as shown by L.L. Bean's transformation. TQM and OD share core values of empowerment and data-based decision making, but OD practitioners must remain neutral rather than advocating predetermined solutions.

🧠 Quick Revision Questions

1. What are the key structural components of a quality circles program, and what roles do leaders, facilitators, and steering committees play?
2. According to the H.E.B Grocery Company case study, what factors contributed to the gradual death of the quality circles program?
3. List at least six design features of High-Involvement Organizations (HIOs) and explain how they are mutually reinforcing.
4. What are the key principles or components of Total Quality Management (TQM)?
5. How did L.L. Bean use feedback from the Malcolm Baldridge National Quality Award to transform its approach to quality and employee involvement?

📘 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 focused on employee satisfaction and enrichment, and the sociotechnical systems approach focused on joint optimization of social and technical factors. It provides a comprehensive framework for understanding how jobs and work groups can be structured to enhance both productivity and employee well-being.

🗂️ Topics Covered

This lecture covers three approaches to work design: the engineering approach based on scientific management and task specialization; the motivational approach based on Herzberg's two-factor theory and Hackman and Oldham's job characteristics model; and the sociotechnical systems approach including conceptual foundations and self-managed work teams. Key topics include core job dimensions, the Motivation Potential Score formula, job enrichment application stages, barriers to enrichment, and characteristics of self-managed work teams.

📝 Lecture Summary

Work Design

Work design has been researched and applied extensively in organizations. Recently, organizations have tended to combine work design with formal structure and supporting changes in goal setting, reward systems, work environment, and other performance management practices. These organizational factors can help structure and reinforce the kinds of work behaviors associated with specific work designs.

We will examine three approaches to work design. First, the engineering approach, which focuses on efficiency and simplification, and results in traditional job and work group designs. Second, the motivational approach to work design rests on motivational theories and attempts to enrich the work experience. Third, the sociotechnical systems approach derives from socio-technical systems methods and seeks to optimize both the social and the technical aspects of work systems.

The Engineering Approach:

The oldest and most prevalent approach to designing work is based on engineering concepts and methods. It proposes that the most efficient work designs can be determined by clearly specifying the tasks to be performed, the work methods to be used, and the work flow among individuals. The engineering approach is based on the pioneering work of Frederick Taylor, the father of scientific management. He developed methods for analyzing and designing work and laid the foundation for the professional field of industrial engineering.

The engineering approach scientifically analyzes workers' tasks to discover those procedures that produce the maximum output with the minimum input of energies and resources. This generally results in work designs with high levels of specialization and specification. Such designs have several benefits: they allow workers to learn tasks rapidly; they permit short work cycles so performance can take place with little or no mental effort; and they reduce costs because lower-skilled people can be hired and trained easily and paid relatively low wages.

The engineering approach produces two kinds of work design: traditional jobs and traditional work groups. When the work can be completed by one person, such as with bank tellers and telephone operators, traditional jobs are created. These jobs tend to be simplified, with routine and repetitive tasks having clear specifications concerning time and motion. When the work requires coordination among people, such as on automobile assembly lines, traditional work groups are developed. They are composed of members performing relatively routine yet related tasks. The overall group task is typically broken into simpler, discrete parts (often called jobs). The tasks and work methods are specified for each part, and the parts are assigned to group members. Each member performs a routine and repetitive part of the group task. Members' separate task contributions are coordinated for overall task achievement through such external controls as schedules, rigid work flows, and supervisors. In the 1950s and 1960s, this method of work design was popularized by the assembly lines of American automobile manufacturers and was an important reason for the growth of American industry following World War II.

The engineering approach to job design is less an OD intervention than a benchmark in history. Critics of the approach argue that the method ignores workers' social and psychological needs. They suggest that the rising educational level of the workforce and the substitution of automation for menial labor point to the need for more enriched forms of work in which people have greater discretion and are more challenged. Moreover, the current competitive climate requires a more committed and involved workforce able to make online decisions and to develop performance innovations. Work designed with the employee in mind is more humanly fulfilling and productive than that designed in traditional ways. However, it is important to recognize the strengths of the engineering approach. It remains an important work design intervention because its immediate cost savings and efficiency can be measured readily, and because it is well understood and easily implemented and managed.

💡 Why this matters: The engineering approach remains relevant because its measurable cost savings and ease of implementation make it a practical choice for many organizations, even though it may overlook social and psychological needs.

The Motivational Approach:

The motivational approach to work design views the effectiveness of organizational activities primarily as a function of member needs and satisfaction, and seeks to improve employee performance and satisfaction by enriching jobs. The motivational method provides people with opportunities for autonomy, responsibility, closure (that is, doing a complete job), and performance feedback. Enriched jobs are popular in the United States at such companies as AT&T Universal Card, TRW, Dayton Hudson, and GTE.

The motivational approach usually is associated with the research of Herzberg and of Hackman and Oldham. Herzberg's two-factor theory of motivation proposed that certain attributes of work, such as opportunities for advancement and recognition, which he called motivators, help increase job satisfaction. Other attributes that Herzberg called hygiene factors, such as company policies, working conditions, pay, and supervision, do not produce satisfaction but rather prevent dissatisfaction—important contributors because only satisfied workers are motivated to produce. Successful job enrichment experiments at AT&T, Texas Instruments, and Imperial Chemical Industries helped to popularize job enrichment in the 1960s.

Although Herzberg's motivational factors sound appealing, increasing doubt has been cast on the underlying theory. Motivation and hygiene factors are difficult to put into operation and measure, and that makes implementation and evaluation of the theory difficult. Furthermore, important worker characteristics that can affect whether people will respond favorably to job enrichment were not included in his theory. Finally, Herzberg's failure to involve employees in the job enrichment process itself does not suit most OD practitioners today. Consequently, a second, well-researched approach to job enrichment has been favored. It focuses on the attributes of the work itself and has resulted in a more scientifically acceptable theory of job enrichment than Herzberg's model. The research of Hackman and Oldham represents this more recent trend in job enrichment.

The Core Dimensions of Jobs:

Considerable research has been devoted to defining and understanding core job dimensions. Figure 50 summarizes the Hackman and Oldham model of job design. Five core dimensions of work affect three critical psychological states, which in turn produce personal and job outcomes. These outcomes include high internal work motivation, high-quality work performance, satisfaction with the work, and low absenteeism and turnover. The five core job dimensions—skill variety, task identity, task significance, autonomy, and feedback from the work itself—are described below and associated with the critical psychological states that they create.

Figure 50: Hackman and Oldham Job Design Model

• Core Job Dimensions → Critical Psychological States → Personal and Work Outcomes
• Skill Variety → Experienced Meaningfulness of the Work → High Internal Work Motivation
• Task Identity → Experienced Meaningfulness of the Work → High-Quality Work Performance
• Task Significance → Experienced Meaningfulness of the Work → High Satisfaction with the Work
• Autonomy → Experienced Responsibility for Outcomes of the Work → Low Absenteeism and Turnover
• Feedback → Knowledge of the Actual Results of the Work Activities

Skill Variety, Task Identity, and Task Significance:

These three core job 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 particular task. Employees at Lechmere's, a retail chain in Florida, can work as warehouse stock clerks, cashiers, and salespeople. The more tasks an individual performs, the more meaningful the job becomes. When skill variety is increased by moving a person from one job to another, a form of job enrichment called job rotation is accomplished. However, simply rotating a person from one boring job to another is not likely to produce the outcomes associated with a fully enriched job.

Task identity describes the extent to which an individual performs a whole piece of work. For example, an employee who completes an entire wheel assembly for an airplane, including the tire, chassis, brakes, and electrical and hydraulic systems has more task identity and will perceive the work as more meaningful than someone who only assembles the braking subsystem. Job enlargement, another form of job enrichment that combines increases in skill variety with task identity, blends several narrow jobs into one larger, expanded job. For example, separate machine set-up, machining, and inspection jobs might be combined into one. This method can increase meaningfulness, job satisfaction, and motivation when employees comprehend and like the greater task complexity.

Task significance represents the impact that the work has on others. In jobs with high task significance, such as nursing, consulting, or manufacturing something like sensitive parts for the space shuttle, the importance of successful task completion creates meaningfulness for the worker.

Experienced meaningfulness is expressed as an average of these three dimensions. Thus, although it is advantageous to have high amounts of skill variety, task identity, and task significance, a strong emphasis on any one of the three dimensions can, at least partially, make up for deficiencies in the other two.

Autonomy:

Autonomy refers to the amount of independence, freedom, and discretion that the employee has to schedule and perform tasks. Salespeople, for example, often have considerable autonomy in how they contact, develop, and close new accounts, whereas assembly-line workers often have to adhere to work specifications clearly detailed in a policy-and-procedure manual. Employees are more likely to experience responsibility for their work outcomes when high amounts of autonomy exist.

Feedback from the Work Itself:

This core dimension represents the information that workers receive about the effectiveness of their work. It can derive from the work itself, as when determining whether an assembled part functions properly, or it can come from such external sources as reports on defects, budget variances, customer satisfaction, and the like. Because feedback from the work itself is direct and generates intrinsic satisfaction, it is considered preferable to feedback from external sources.

Skill variety, task identity, and task significance jointly determine jobs meaningfulness. These three dimensions are treated as one dimension in the Motivation Potential Score formula, or MPS:

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

The first variable in the formula, job meaningfulness, is a function of skill variety, task identity, and task significance. Thus the formula can further be refined:

📐 Formula: Motivation Potential Score (MPS) = [(Skill Variety + Task Identity + Task Significance) ÷ 3] × Autonomy × Job Feedback

A score of near zero on either the autonomy or job feedback dimension will produce an MPS of near zero. Whereas a number near zero on skill variety, task identity or task significance will reduce the total MPS, but will not completely undermine the motivational potential of a job.

We can predict an employee's psychological state from this formula:

• High scores in skill variety, task identity, and task significance result in the employee experiencing meaningfulness in the job, such as believing the work to be important, valuable, and worthwhile.
• A high score in the autonomy dimension leads to the employee feeling personally responsible and accountable for the results of the work.
• A high score in the job feedback dimension is an indication that the employee has an understanding of how he or she is performing the job.

Self-managed teams (to be discussed later) have high scores on all five core job dimensions.

Individual Differences:

Not all people react in similar ways to job enrichment interventions. Individual differences—among them, a worker's knowledge and skill levels, growth-need strength, and satisfaction with contextual factors—moderate the relationships among core dimensions, psychological states, and outcomes. "Worker knowledge and skill" refers to the education and experience levels characterizing the workforce. If employees lack the appropriate skills, for example, increasing skill variety may not improve a job's meaningfulness. Similarly, if workers lack the intrinsic motivation to grow and develop personally, attempts to provide them with increased autonomy may be resisted. Finally, contextual factors include reward systems, supervisory style, and co-worker satisfaction. When the employee is unhappy with the work context, attempts to enrich the work itself may be unsuccessful.

Application Stages:

The basic steps for job enrichment as described by Hackman and Oldham include making a thorough diagnosis of the situation, forming natural work units, combining tasks, establishing client relationships, vertical loading, and opening feedback channels.

Making a Thorough Diagnosis: The most popular method of diagnosing a job is through the use of the Job Diagnostic Survey (JDS) or one of its variations. An important output of the JDS is the motivating potential score, which is a function of the three psychological states—experienced meaningfulness, autonomy, and feedback. The survey can be used to profile one or more jobs, to determine whether motivation and satisfaction are really problems or whether the job is low in motivating potential, and to isolate specific job aspects that are causing difficulties.

Forming Natural Work Units: As much as possible, natural work units should be formed. Although there may be a number of technological constraints, interrelated task activities should be grouped together. The basic question in forming natural work units is "How can one increase 'ownership' of the task?" Forming such natural units increases two of the core dimensions—task identity and task significance—that contribute to the meaningfulness of work.

Combining Tasks: Frequently, divided jobs can be put back together to form a new and larger one. In the Medfield, Massachusetts, plant of Corning Glass Works, the task of assembling laboratory hotplates was redesigned by combining a number of previously separate tasks. After the change, each hotplate was completely assembled, inspected, and shipped by one operator, resulting in increased productivity of 84 percent. Controllable rejects dropped from 23 percent to less than 1 percent, and absenteeism dropped from 8 percent to less than 1 percent. A later analysis indicated that the change in productivity was the result of the intervention. Combining tasks increases task identity and allows a worker to use a greater variety of skills. The hotplate assembler can identify with a product finished for shipment, and self-inspection of his or her work adds greater task significance, autonomy, and feedback from the job itself.

Establishing Client Relationships: When jobs are split up, the typical worker has little or no contact with, or knowledge of, the ultimate user of the product or service. Improvements often can be realized simultaneously on three of the core dimensions by encouraging and helping workers to establish direct relationships with the clients of their work. For example, when a typist in a typing pool is assigned to a particular department, feedback increases because of the additional opportunities for praise or criticism of his or her work. Because of the need to develop interpersonal skills in maintaining the client relationship, skill variety may increase. If the worker is given personal responsibility for deciding how to manage relationships with clients, autonomy is increased. Three steps are needed to create client relationships: (1) the client must be identified; (2) the contact between the client and the worker needs to be established as directly as possible; and (3) criteria and procedures are needed by which the client can judge the quality of the product or service received and relay those judgments back to the worker. For example, even customer-service representatives and data-entry operations can be set up so that people serve particular clients. In the hotplate department, personal nametags can be attached to each instrument. The Indiana Bell Telephone Company found substantial improvements in satisfaction and performance when telephone directory compilers were given accountability for a specific geographic area.

Vertical Loading: The intent of vertical loading is to decrease the gap between doing the job and controlling the job. A vertically loaded job has responsibilities and controls that formerly were reserved for management. Vertical loading may well be the most crucial of the job-design principles. Autonomy is invariably increased. This approach should lead to greater feelings of personal accountability and responsibility for the work outcomes. For example, at an IBM plant that manufactures circuit boards for personal computers, assembly workers were trained to measure the accuracy and speed of production processes and to test the quality of finished products. Their work is more "whole," they are more autonomous, and the engineers who used to measure and test are free to design better products and more efficient ways to manufacture them. Loss of vertical loading usually occurs when someone has made a mistake. Once a supervisor steps in, the responsibility may be removed indefinitely. For example, many skilled machinists have to complete forms to have maintenance people work on a machine. The supervisor automatically signs the slip rather than allowing the machinist either to repair the machine or ask directly for maintenance support.

Opening Feedback Channels: In almost all jobs, approaches exist to open feedback channels and help people learn whether their performance is remaining at a constant level, improving, or deteriorating. The most advantageous and least threatening feedback occurs when a worker learns about performance as the job is performed. In the hotplate department at Corning Glass Works, assembling the entire instrument and inspecting it dramatically increased the quantity and quality of performance information available to the operators. Data given to a manager or supervisor often can be given directly to the employee. Computers and other automated operations can be used to provide people with data not currently accessible to them. Many organizations simply have not realized the motivating impact of direct, immediate feedback.

Barriers to Job Enrichment:

As the application of job enrichment has spread, a number of obstacles to significant job restructuring have been identified. Most of these barriers exist in the organizational context within which the job design is executed. Other organizational systems and practices, whether technical, managerial, or personnel, can affect both the implementation of job enrichment and the lifespan of whatever changes are made.

At least four organizational systems can constrain the implementation of job enrichment:

1. The technical system: The technology of an organization can limit job enrichment by constraining the number of ways jobs can be changed. For example, long-linked technology like that found on an assembly line can be highly programmed and standardized, thus limiting the amount of employee discretion that is possible. Technology also may set an "enrichment ceiling." Some types of work, such as continuous-process production systems, may be naturally enriched so there is little more that can be gained from a job enrichment intervention.
2. The personnel system: Personnel systems can constrain job enrichment by creating formalized job descriptions that are rigidly defined and limit flexibility in changing people's job duties. For example, many union agreements include such narrowly defined job descriptions that major renegotiation between management and the union must occur before jobs can be significantly enriched.
3. The control system: Control systems, such as budgets, production reports, and accounting practices, can limit the complexity and challenge of jobs within the system. For example, a company working on a government contract may have such strict quality control procedures that employee discretion is effectively curtailed.
4. The supervisory system: Supervisors determine to a large extent the amount of autonomy and feedback that subordinates can experience. To the extent that supervisors use autocratic methods and control work-related feedback, jobs will be difficult, if not impossible, to enrich.

Once these implementation constraints have been overcome, other factors determine whether the effects of job enrichment are strong and lasting. Consistent with the contingency approach to OD, the staying power of job enrichment depends largely on how well it fits and is supported by other organizational practices, such as those associated with training, compensation, and supervision. These practices need to be congruent with and to reinforce jobs having high amounts of discretion, skill variety, and meaningful feedback.

The Sociotechnical Systems Approach:

The sociotechnical systems (STS) approach currently is 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 in both public and private organizations across diverse national cultures. This section reviews the conceptual foundations of the STS approach and then describes its most popular application—self-managed work teams.

Conceptual Background:

Sociotechnical systems theory was developed originally at the Tavistock Institute of Human Relations in London and has spread to most industrialized nations in a little more than fifty years. In Europe and particularly Scandinavia, STS interventions are almost synonymous with work design and employee involvement. In Canada and the United States, STS concepts and methods underlie many of the innovative work designs and team-based structures that are so prevalent in contemporary organizations. Intel Corporation, United Technologies, General Mills, and Procter & Gamble are among the many organizations applying the STS approach to transforming how work is designed and performed.

STS theory is based on two fundamental premises: that an organization or work unit is a combined, social-plus-technical system (sociotechnical), and that this system is open in relation to its environment.

Sociotechnical System:

The first assumption suggests that whenever human beings are organized to perform tasks, a joint system is operating—a sociotechnical system. This system consists of two independent but related parts: a social part including the people performing the tasks and the relationships among them, and a technical part comprising the tools, techniques, and methods for task performance. These two parts are independent of each other because each follows a different set of behavioral laws. The social part operates according to biological and psychosocial laws, whereas the technical part functions according to mechanical and physical laws. Nevertheless, the two parts are related because they must act together to accomplish tasks. Hence, the term sociotechnical signifies the joint relationship that must occur between the social and technical parts, and the word system communicates that this connection results in a unified whole.

Because a sociotechnical system is composed of social and technical parts, it follows that it will produce two kinds of outcomes: products, such as goods and services; and social and psychological consequences, such as job satisfaction and commitment. The key issue is how to design the relationship between the two parts so that both outcomes are positive (referred to as joint optimization). Sociotechnical practitioners design work and organizations so that the social and technical parts work well together, producing high levels of product and human satisfaction. This effort contrasts with the engineering approach to designing work, which focuses on the technical component, worries about fitting people in later, and often leads to mediocre performance at high social costs. The STS approach also contrasts with the motivational approach that views work design in terms of human fulfillment and can lead to satisfied employees but inefficient work processes.

Environmental Relationship:

The second major premise underlying STS theory is that such systems are open to their environments. As discussed earlier, open systems must interact with their environments to survive and develop. The environment provides the STS with necessary inputs of energy, raw materials, and information, and the STS provides the environment with products and services. The key issue here is how to design the interface between the STS and its environment so that the system has sufficient freedom to function while exchanging effectively with the environment. In what is typically called boundary management, STS practitioners structure environmental relationships both to protect the system from external disruptions and to facilitate the exchange of necessary resources and information. This enables the STS to adapt to changing conditions and to influence the environment in favorable directions.

In summary, STS theory suggests that effective work systems jointly optimize the relationship between their social and technical parts. Moreover, such systems effectively manage the boundary separating and relating them to the environment. This allows them to exchange with the environment while protecting themselves from external disruptions.

Self-Managed Work Teams:

The most prevalent application of the STS approach is self-managed work teams. Alternatively referred to as self-directed, self-regulating, or high-performance work teams, these work designs consist of members performing interrelated tasks. Self-managed teams typically are responsible for a complete product or service, or a major part of a larger production process. They control members' task behaviors and make decisions about task assignments and work methods. In many cases, the team sets its own production goals within broader organizational limits and may be responsible for support services, such as maintenance, purchasing, and quality control. Team members generally are expected to learn many if not all of the jobs within the team's control and frequently are paid on the basis of knowledge and skills rather than seniority. When pay is based on performance, team rather than individual performance is the standard.

Figure 51 is a model explaining how self-managed work teams perform. It summarizes current STS research and shows how teams can be designed for high performance. Although the model is based mainly on experience with teams that perform the daily work of the organization (work teams), it also has relevance to other team designs, such as problem-solving teams, management teams, cross-functional integrating teams, and employee involvement teams. The model shows that team performance and member satisfaction follow directly from how well the team functions: how well members communicate and coordinate with each other, resolve conflicts and problems, and make and implement task-relevant decisions. Team functioning, in turn, is influenced by three major inputs: team task design, team process interventions, and organization support systems. Because these inputs affect how well teams function and subsequently perform, they are key intervention targets for designing and implementing self-managed work teams.

Figure 51: Model of Self-Managed Work Team Performance

• Inputs: Team Task Design (Task Differentiation, Boundary Control, Task Control) → Team Process Interventions → Organization Support Systems
• These inputs influence: Team Functioning (Communication, Coordination, Conflict Resolution, Decision Making)
• Which leads to: Team Performance & Member Satisfaction

Team Task Design:

Self-managed work teams are responsible for performing particular tasks; consequently, how the team is designed for task performance can have a powerful influence on how well it functions. Task design generally follows from the team's mission and goals that define the major purpose of the team and provide direction for task achievement. When a team's mission and goals are closely aligned with corporate strategy and business objectives, members can see how team performance contributes to organization success. This can increase member commitment to team goals.

Team task design links members' behaviors to task requirements and to each other. It structures member interactions and performances. Three task design elements are necessary for creating self-managed work teams: task differentiation, boundary control, and task control.

Task differentiation involves the extent to which the team's task is autonomous and forms a relatively self-completing whole. High levels of task differentiation provide an identifiable team boundary and a clearly defined area of team responsibility. At Johnsonville Sausage, for example, self-managed teams comprise seven to fourteen members. Each team is large enough to accomplish a set of interrelated tasks but small enough to allow face-to-face meetings for coordination and decision making. In many hospitals, self-managed nursing teams are formed around interrelated tasks that together produce a relatively whole piece of work. Thus, nursing teams may be responsible for particular groups of patients, such as those in intensive care or undergoing cancer treatments, or they may be accountable for specific work processes, such as those in the laboratory, pharmacy, or admissions office.

Boundary control involves the extent to which team members can influence transactions with their task environment—the types and rates of inputs and outputs. Adequate boundary control includes a well-defined work area; group responsibility for boundary-control decisions, such as quality assurance (which reduces dependence on external boundary regulators, such as inspectors); and members sufficiently trained to perform tasks without relying heavily on external resources. Boundary control often requires deliberate cross-training of team members to take on a variety of tasks. This makes members highly flexible and adaptable to changing conditions. It also reduces the need for costly overhead because members can perform many of the tasks typically assigned to staff experts, such as those in quality control, planning, and maintenance.

Task control involves the degree to which team members can regulate their own behavior to provide services or to produce finished products. It includes the freedom to choose work methods, to schedule activities, and to influence production goals to match both environmental and task demands. Task control relies heavily on team members having the power and authority to manage equipment, materials, and other resources needed for task performance. This "work authority" is essential if members are to take responsibility for getting the work accomplished. Task control also requires that team members have accurate and timely information about team performance to allow them to detect performance problems and make necessary adjustments.

Task control enables self-managed work teams to observe and control technical variances as quickly and as close to their source as possible. Technical variances arise from the production process and represent significant deviations from specific goals or standards. In manufacturing, for example, abnormalities in raw material, machine operation, and work flow are sources of variance that can adversely affect

📘 Lecture 39 — Performance Management

📖 Overview: This lecture examines human resources management interventions focused on managing individual and group performance. It introduces a comprehensive model of performance management that integrates goal setting, performance appraisal, and reward systems, demonstrating how these elements must align with business strategy, workplace technology, and employee involvement to drive organizational success.

🗂️ Topics Covered

This lecture covers a model of performance management that integrates goal setting, performance appraisal, and reward systems with contextual factors like business strategy, technology, and employee involvement. It details the process and characteristics of goal setting, including "stretch goals" like GE's Six Sigma, and explains Management by Objectives (MBO) as a specific goal-setting technique. The lecture then examines performance appraisal processes, contrasting traditional bureaucratic approaches with newer high-involvement methods like 360-degree feedback, and concludes with an analysis of reward systems and how they affect performance based on value expectancy theory.

📝 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 that are desired; performance appraisal assesses those outcomes; reward systems provide the reinforces to ensure that desired outcomes are repeated.

Because performance management occurs in a larger organizational context, at least 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 be aimed at individual work behaviors. Conversely, when technology is highly interdependent and work is designed for groups, performance management should be aimed at group behaviors.

Finally, the level of employee involvement in an organization should determine the nature of performance management practices. When organizations are highly bureaucratic with low levels of participation, goal setting, performance appraisal, and reward systems should be formalized and administered by management and staff personnel. In high-involvement situations, performance management should be heavily participative, with both management and employees setting goals and appraising and rewarding performance.

💡 Why this matters: This model provides the foundational framework for understanding how performance management interventions must be tailored to the specific context of the organization, rather than applying a one-size-fits-all approach.

Goal Setting

OD programs rely heavily upon the goal-setting process. OD, by definition, is planned change. Goal setting involves managers and subordinates in jointly establishing and clarifying employee goals. In some cases, such as management by objectives, it also can facilitate employee counseling and support. The process of establishing challenging goals involves managing the level of participation and goal difficulty.

Goal setting can affect performance in several ways. It influences what people think and do by focusing their behavior, motivating people to put forth the effort to reach difficult goals that are accepted, and when goals are difficult but achievable, goal setting prompts persistence over time.

OD in Practice: Big Hairy Audacious Goals Employees at the Generic Electric are aiming at “stretch goals.” At GE, stretch goals means 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, based on certainty that they will use their ingenuity to find ways to do what they are asked. At other companies they call these goals BHAG – big hairy audacious goals. These are the kind of goals that stimulate everyone in the organization to shoot for extreme achievement.

One major goal that GE is striving for is called Six Sigma. This program is the largest quality initiative ever mounted at a U.S. corporation. Six Sigma is a statistical term for 3.4 defects per million products. This translates to near-perfect manufacturing. GE began implementing Six Sigma in the mid-1990s. GE has a way to go before it attains its goals. Currently GE is running at three to four Sigma level. The gap between that and a six level is costing GE between $8 billion and $12 billion a year in lost productivity and inefficiencies.

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 their perceived challenge and enhance the amount of effort expended to achieve them.
• 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 when they receive no guidance at all.
• People may abandon goals if too hard: Although goals should be difficult, people must be able to attain or at least approach them; otherwise, they will view the goal as impossible, become discouraged, and may abandon it.
• Participation in setting goals increases commitment and attainment of goals: 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 the outcome of the performance, whether a goal was met or not, should be included. It is also important to include information about how to adjust in order to accomplish the goal better.
• Individual differences tend not to affect goal setting: Goal setting programs are successful regardless of education and position.
• 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 or even when there is no team goal at all.
• Support of management is critical: Support for goal-setting programs by all levels of management is crucial to the success. Leaders should maintain optimism by publicizing even small steps forward.

Application Stages:

1. Diagnosis: The first step is a thorough diagnosis of the job or work group; employee needs; and the three context factors, business strategy, workplace technology, and level of employee involvement.
2. Preparation for goal setting: This step prepares managers and employees to engage in goal setting, typically by increasing interaction and communication between managers and employees, and offering formal training in goal-setting methods.
3. Setting of goals: In this step challenging goals are established and methods for goal measurement are clarified.
4. Review: At this final step the goal-setting process is assessed so that modifications can be made, if necessary. The goal attributes are evaluated to see if the goals are energizing and challenging and whether they support the strategy and can be influenced by the employees.

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 the goals for subordinates.

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 of its members. The goals of this approach include improved performance, more communication and participation, higher morale and job satisfaction, and a better understanding of the organization’s objectives at all levels.

Steps in MBO Process:

1. Work group involvement: The members of the primary work group define overall group and individual goals and establish action plans for achieving them.
2. Joint manager-subordinate goal setting: Once the work group's overall goals and responsibilities have been determined, attention is given to the job duties and responsibilities of the individual role incumbents.
3. Establishment of action plans for goals: The subordinate develops action plans for goal accomplishment, either in a group meeting or in a meeting with the immediate manager.
4. Establishment of criteria, or yardsticks, of success: The manager and subordinate agree on the success criteria for the goals that have been established—criteria that are not limited to easily measurable or quantifiable data.
5. Review and recycle: Periodically, the manager reviews work progress, either in the larger group or with the subordinate. There are three stages in this review process: the subordinate takes the lead reviewing progress; the manager discusses work plans and objectives for the future; a more general discussion covers the subordinate's future ambitions.
6. Maintenance of records: In many MBO programs, the working documents of the goals, criteria, yardsticks, priorities, and due dates are forwarded to a third party.

Criticism of MBO: Implementing MBO is expensive and time-consuming, and usually entails great effort. Some MBO programs encounter difficulties because management does not recognize that proper implementation of MBO requires improved managerial skills and competence. Critics question whether joint goal-setting among un-equals is possible, and whether subordinates at lower levels are free to select their objectives. In some applications MBO may be too quantitative, and setting objectives as explicitly as possible may not be functional.

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 that is used for performance feedback, pay administration, and in some cases, counseling and developing employees. Performance appraisal represents an important link between goal-setting processes and reward systems. One survey of more than five hundred firms found that 90 percent used performance appraisal to determine merit pay increases, 87 percent used it to review performance, and 79 percent used it as the opportunity to set goals for the next period.

The Performance Appraisal Process: Table 18 summarizes several common elements of performance appraisal systems, contrasting traditional bureaucratic approaches with newer, high-involvement approaches.

Table 18: Performance Appraisal Elements

The new methods tend to expand 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. Also known as 360-degree feedback, this broader approach is used more for member development than for compensation purposes. This wider involvement provides a number of different views of the appraisee's performance and can lead to a more comprehensive assessment.

Application Stages:

1. Select the right people: For political and legal reasons, the design process needs to include human resources staff, legal representatives, senior management, and system users.
2. Diagnose the current situation: A clear picture of the current appraisal process is essential to designing a new one.
3. Establish the system's purposes and objectives: The ultimate purpose of an appraisal system is to help the organization achieve better performance.
4. Design the performance appraisal system: Given the agreed-upon purposes of the system and the contextual factors, the appropriate elements of an appraisal system can be established. Criteria for designing an effective performance appraisal system include timeliness, accuracy, acceptance, understanding, focus on critical control points, and economic feasibility.
5. Experiment with implementation: Use a pilot test of the new process to spot, gauge, and correct any flaws in the design before it is implemented system wide.
6. Evaluate and monitor the system: Ongoing evaluation of the system once it is implemented is important. User satisfaction and legal defensibility should be tracked.

Reward Systems:

Organizational rewards are powerful incentives for improving employee and work group performance. OD traditionally has relied on intrinsic rewards, such as enriched jobs and opportunities for decision making, to motivate employee performance. More recently, OD practitioners have expanded their focus to include extrinsic rewards: pay; various incentives, such as stock options, bonuses, and gain sharing; promotions; and benefits.

How Rewards Affect Performance: The most popular model describing the relationship between rewards and performance is value expectancy theory. The value expectancy model posits that employees will expend effort to achieve performance goals that they believe will lead to outcomes that they value. This effort will result in the desired performance goals if the goals are realistic, if employees fully understand what is expected of them, and if they have the necessary skills and resources.

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

1. Availability: For rewards to reinforce desired performance, they must be not only desired but also available.
2. Timeliness: Like effective performance feedback, rewards should be given in a timely manner.
3. Performance contingency: Rewards should be closely linked with particular performances. If the goal is met, the reward is given; if the target is missed, the reward is reduced or not given.
4. Durability: Some rewards last longer than others. Intrinsic rewards tend to last longer than extrinsic rewards.
5. Equity: Satisfaction and motivation can be improved when employees believe that the pay policies of the organization are equitable or fair. Internal equity concerns comparison of personal rewards to those holding similar jobs. External equity concerns comparison of rewards with those of other organizations in the same labor market.
6. Visibility: To leverage a reward system, it must be visible. Organization members must be able to see who is getting the rewards.

⭐ Key Takeaways

Performance management is an integrated system of goal setting, performance appraisal, and reward systems that must be aligned with business strategy, workplace technology, and employee involvement to be effective. Goal setting works best when goals are specific, challenging, and participative, with management support and timely feedback. Management by Objectives (MBO) is a formal technique for integrating individual and organizational goals through joint goal setting, but it can be expensive and time-consuming. Modern performance appraisal is moving toward 360-degree feedback and high-involvement approaches that expand the appraiser role and increase employee participation. Finally, reward systems based on value expectancy theory must satisfy six key criteria—availability, timeliness, performance contingency, durability, equity, and visibility—to effectively motivate desired performance.

🧠 Quick Revision Questions

1. What are the three core practices of performance management, and how do they relate to each other in the overall process?
2. Explain how workplace technology and employee involvement influence whether performance management should focus on individuals or groups.
3. What are the six characteristics of effective goal setting, and how does the concept of "stretch goals" (like Six Sigma) relate to these characteristics?
4. Compare and contrast traditional performance appraisal approaches with newer high-involvement approaches across the five elements listed in Table 18.
5. According to value expectancy theory, what are the six factors that determine a reward system's ability to motivate desired behavior?

📘 Lecture 40 — Developing and Assisting Members

📖 Overview: This lecture presents three human resources management interventions focused on developing and assisting organization members. It covers career planning and development processes adapted to modern trends, interventions for managing workforce diversity, and wellness programs addressing social trends like fitness, drug abuse, and work-life balance.

🗂️ Topics Covered

The lecture covers career planning and development interventions, including the four career stages (establishment, advancement, maintenance, and withdrawal), career planning processes and resources, career development interventions (such as realistic job preview, 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), and managing organization decline and career halt.

📝 Lecture Summary

Career Planning and Development Interventions

Career planning and development have gained increased attention as employees seek control over their work lives, especially amid downsizing and reduced job security. Organizations rely on "intellectual capital" and provide career opportunities to recruit and retain skilled workers. Companies like General Electric, Xerox, Intel, and Cisco Systems have adopted such programs to improve quality of work life, performance, retention, and respond to equal employment legislation. Special programs often target women, minorities, older managers, and those affected by layoffs or restructuring.

Career planning involves individuals choosing occupations, organizations, and positions at each career stage. Career development helps employees attain those career objectives. Both interventions generally target managerial and professional employees, but are increasingly including lower-level white-collar workers.

Career Stages

A career is a sequence of work-related positions occupied over a lifetime. Today, careers are defined holistically, including a person's attitudes and experiences—success can occur without upward promotion. Employees progress through four distinct career stages:

1. The establishment stage (ages 21-26): People are uncertain about competence and potential, dependent on others for guidance and feedback, and exploring possibilities while learning about their own capabilities.
2. The advancement stage (ages 26-40): Employees become independent contributors focused on achieving and advancing; they need less guidance and seek to clarify long-term career options.
3. The maintenance stage (ages 40-60): Involves leveling off and holding on to successes; people may help less-experienced subordinates or experience "midlife crisis" if dissatisfied with progress.
4. The withdrawal stage (ages 60+): Focuses on leaving the career, letting go of organizational attachments, and preparing for retirement; major contributions include imparting knowledge and experience.

🔑 Definition — Career: A sequence of work-related positions occupied by a person during the course of a lifetime.

Career Planning

Career planning involves setting individual career objectives by assessing interests, capabilities, values, and goals; examining alternatives; making decisions affecting the current job; and planning progress. The four career stages help make career planning effective. Resources include:

• Communication about career opportunities and resources
• Workshops for self-assessment and plan formulation
• Career counseling by managers or HR personnel
• Self-development materials
• Assessment programs (tests of vocational interests, aptitudes, abilities)

Establishment stage employees need communication and counseling about career paths, workshops for self-assessment, and continual performance feedback. Advancement stage employees need information about challenging assignments, long-term options, and help integrating career with personal life. Maintenance stage individuals need help training others, reassessing their circumstances, and developing new directions—especially during midlife crises. Withdrawal stage employees need counseling about postretirement options, financial security, and retirement planning workshops.

💡 Why this matters: Effective career planning requires a comprehensive program integrating corporate business objectives with employee career needs through human resources planning.

📌 Example — Application 9: Career Planning Centers at Pacific Bell: Pacific Bell operates ten career centers with on-site specialists and two mobile vans for outlying areas. Centers offer reference libraries, job posting systems, computerized career-life planning programs, and workshops on resume writing, interviewing, and career assessments. Employees receive confidential counseling to 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, flattening organizational structures, and shifting employee values.

Career Development

Career development helps individuals achieve career objectives through organizational practices like skill training, performance feedback and coaching, planned job rotation, mentoring, and continuing education. It is linked to different career stages, with interventions serving various purposes and contributing to outcomes like lower turnover and enhanced satisfaction.

Table 20 identifies career development interventions, their relevant stages, purposes, and outcomes:

• Realistic Job Preview: Establishment/Advancement — provides accurate work expectations; reduces turnover and training costs
• Job Pathing: Establishment/Advancement — provides sequence of work assignments; builds organizational knowledge
• Performance Feedback and Coaching: Establishment/Advancement — provides knowledge about progress; increases productivity and satisfaction
• Assessment Centers: Establishment/Advancement — selects/develops members for managerial jobs; increases person-job fit
• Mentoring: Establishment/Advancement/Maintenance — links less-experienced with more-experienced members; increases satisfaction and motivation
• Developmental Training: Establishment/Advancement/Maintenance — provides education/training for career goals; increases organizational capability
• Work-Life Balance Planning: Establishment/Advancement/Maintenance — helps balance work and personal goals; improves quality of life
• Job Rotation and Challenging Assignments: Advancement/Maintenance — provides interesting work; maintains motivation
• Dual-Career Accommodations: Advancement/Maintenance — assists members with significant others; attracts/retains quality members
• Consultative Roles: Maintenance/Withdrawal — fills productive roles later in careers; increases problem-solving capacity
• Phased Retirement: Withdrawal — assists moving into retirement; lowers stress during transition

🔑 Definition — Career Development: Helps individuals achieve their career objectives through organizational practices that help employees implement their career plans.

Realistic Job Preview

This intervention provides organization members with realistic expectations about the job during recruitment, preventing "reality shock." It is especially useful during the establishment stage and also helps during advancement-stage job changes. Organizations like Texas Instruments, Prudential Insurance, and Johnson & Johnson provide recruits with booklets, talks, and site visits showing positive and negative aspects of organizational life. This reduces unrealistic expectations, turnover, and training costs while increasing commitment and job satisfaction.

📌 Example — Application 10: Realistic Job Preview at Nissan: Nissan Motor Manufacturing's preemployment program requires job seekers to work up to 360 unpaid hours doing exercises like assembling nuts, bolts, and washers within time limits. The process makes the job plain to people and serves as both indoctrination and screening. While some candidates worry about the long unpaid period, participants gain training, experience, and a shot at high-paying jobs.

Job Pathing

This intervention provides 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. The keys are identifying skills needed for a target job and laying out interim jobs providing those experiences. For example, one bank's path to branch manager includes teller, loan officer, credit manager, and commercial loan manager. Job pathing reduces turnover, builds organizational knowledge, and helps resolve problems.

Performance Feedback and Coaching

This is one of the most effective interventions during establishment and advancement phases. Employees need continual feedback about goal achievement and support to improve performances. A manager facilitates career establishment by providing performance feedback, coaching, and on-the-job training. Companies like Intel and Monsanto separate career development aspects of performance appraisal from salary review. This increases performance, satisfaction, and provides systematic human resources monitoring.

Assessment Centers

Traditionally designed to select and develop high-potential managerial employees, assessment centers have been extended to career development and selection for new work designs like self-managing teams. Participants undergo comprehensive interviews, mental ability tests, and individual/group exercises simulating managerial work. An assessment team of experienced managers and HR specialists evaluates each candidate. For career development, emphasis is on feedback of results, helping participants understand strengths/weaknesses and identify training and job assignments. Assessment centers are particularly useful at the advancement stage.

📌 Example — Application 11: Assessment Center at Hamilton-Standard: Hamilton-Standard created an assessment center to find the right people for a team-based structure. Activities included an information session, tests measuring work skills and social competence, technical and business interviews, and a team-consensus exercise (building a model airplane). All hiring decisions were made by group consensus. The center enabled the division to hire, train, and retain a talented cross-functional workforce with certified skills covering over fifty-two areas within two years.

Mentoring

Mentoring establishes a close link between an experienced manager and a less-experienced member. It assists members in establishment, advancement, and maintenance stages. For those in the establishment stage, a mentor guides and sponsors the employee's career. For older employees in maintenance, mentoring provides opportunities to share knowledge. Mentors need not be direct supervisors. Research shows about two-thirds of top executives had mentors during early career stages, and those with mentors received slightly more compensation and were more satisfied with their careers. Some organizations train managers to become mentors; others like IBM and AT&T include mentoring as a key criterion for pay and promotion.

Developmental Training

This intervention helps employees gain skills and knowledge for training and coaching others. It may include workshops on human relations, communications, active listening, and mentoring, as well as tuition reimbursement programs for advanced degrees. Many organizations offer programs for mid-career managers with good technical skills but rudimentary coaching experience. Training typically involves preparatory reading, lectures, experiential exercises, and case studies on active listening, defensive communication, personal problem solving, and supportive relationships.

Work-Life Balance Planning

This relatively new OD intervention helps employees integrate and balance work and home life. Restructuring, downsizing, and global competition have contributed to longer work hours and more stress. Organizations like Corning Glass Works and Hewlett-Packard respond with flexible hours, job sharing, daycare, and programs helping employees identify career and family goals. A popular program is middlaning, which helps people redesign work and income-generating activities for more family and personal time. It involves education in work addiction, skill development in work contract negotiation, and exploration of options like changing careers or freelancing.

🔑 Definition — Middlaning: A legitimate, alternative career track that acknowledges choices about living life in the "fast lane"; it helps people redesign work and income-generating activities so more time and energy are available for family and personal needs.

Job Rotation and Challenging Assignments

These interventions provide employees with experience and visibility needed for career advancement, or challenge to revitalize a stagnant career at the maintenance stage. Unlike job pathing, they are less planned and may not be oriented to promotion. In the advancement stage, employees demonstrating competence may be moved into new job areas. Some firms create "fallback positions"—jobs identified before transfer that employees can return to without negative consequences if transfers don't work out. In the maintenance stage, challenging assignments can revitalize veteran employees by providing new challenges. Research suggests rotating workers to new jobs at about three-year intervals to sustain motivation.

🔑 Definition — Fallback Positions: Jobs identified before a transfer that employees are guaranteed they can return to without negative consequences if the transfer or promotion does not work out.

Dual-Career Accommodations

These practices help employees cope with problems inherent in "dual careers"—both the employee and a spouse or significant other pursuing full-time careers. They are especially relevant during the advancement stage when job transfers occur. Organizations devise policies like recognizing dual-career problems, providing help with relocation, flexible working hours, counseling, family daycare centers, and improved career planning. Some companies establish cooperative arrangements to share information about job opportunities for dual-career couples.

Consultative Roles

These provide late-career employees with opportunities to apply wisdom and knowledge to helping others develop and solve organizational problems. Unlike mentoring, they are not focused on guiding younger employees' careers but on helping others deal with complex problems. Unlike managerial positions, they do not include performance evaluation and control. They provide effective transition for moving pre-retirement managers into support-staff positions, freeing up managerial positions for younger employees while allowing older managers to apply experience in supportive ways.

📌 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. His years of forging experience helped them make more accurate estimates. The pre-retirement manager felt significant contribution he had not experienced for years.

Phased Retirement

This provides older employees an effective way of withdrawing from the organization and establishing a productive leisure life through various forms of part-time work. Employees gradually devote less time to the organization and more to leisure pursuits or developing a new career. Phased retirement lessens the "reality shock" often experienced by those who retire all at once. IBM offers tuition rebates for courses taken within three years of retirement, helping pre-retirees prepare for second careers.

Organization Decline and Career Halt

Decreasing demand, mergers, acquisitions, restructuring, and layoffs have resulted in career disruptions for many managers and employees. Career halt produces dangerous increases in personal stress, financial and family disruption, and loss of self-esteem. Methods for managing decline include:

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

⭐ Key Takeaways

Career planning and development interventions must address distinct needs across four career stages: establishment (ages 21-26), advancement (26-40), maintenance (40-60), and withdrawal (60+). Key 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. Career planning involves setting individual objectives while career development helps employees achieve those plans; both must integrate corporate objectives with employee needs. The workforce increasingly requires special attention to diversity, dual-career couples, plateaued employees, and those facing career halt due to organizational decline. Successful implementation can reduce turnover, increase satisfaction and productivity, and help organizations retain skilled talent.

🧠 Quick Revision Questions

1. What are the four career stages, and what are the primary concerns of employees at each stage?
2. What is the difference between career planning and career development?
3. List five career development interventions and identify which career stage(s) each applies to.
4. What is "reality shock" and how does a realistic job preview help prevent it?
5. What is "middlaning" and what types of organizational practices support work-life balance?

📘 Lecture 41 — Developing and Assisting Members

📖 Overview: This lecture explores workforce diversity interventions and employee wellness programs within organizations. It explains how organizations can manage a diverse workforce across dimensions like age, gender, disability, culture, and sexual orientation, and it details interventions for employee assistance and stress management. This matters because modern organizations must adapt to a radically different workforce to maintain productivity and competitive advantage.

🗂️ Topics Covered

The lecture begins with a framework for managing diversity, covering internal/external pressures and strategic responses. It then examines five workforce diversity dimensions: age, gender, disability, culture and values, and sexual orientation, detailing trends, implications, and OD interventions for each. The second half covers employee wellness interventions, including Employee Assistance Programs (EAPs) and stress management, with models, diagnosis methods, and coping techniques.

📝 Lecture Summary

Workforce Diversity Interventions

Several profound trends are shaping the labor markets of modern organizations. Researchers suggest that contemporary workforce characteristics are radically different from what they were just twenty years ago. Employees represent every ethnic background and color; range from highly educated to illiterate; vary in age from eighteen to eighty; may appear perfectly healthy or may 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 and focuses attention away from the broad range of issues that a diverse workforce poses. 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 if they are to attract and retain a productive workforce and if they want to turn diversity into a competitive advantage.

Figure 55 presents a general framework for managing diversity in organizations. First, the model suggests that 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 the workforce's diversity is embraced as an opportunity. But 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 with respect to diversity can range from resistance to active learning and from marginal to strategic. For example, organizations can resist diversity by implementing only legally mandated policies such as affirmative action, equal employment opportunity, or Americans with Disabilities Act requirements. On the other hand, a learning and strategic perspective can lead management to view diversity as a source of competitive advantage. For example, a health-care organization with a diverse customer base can improve perceptions of service quality with physician diversity.

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 a series of 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 the strategic responses and implementation style fit with management's intent and internal and external pressures.

Unfortunately, organizations have tended to address workforce diversity pressures in a piecemeal fashion; only 5 percent of more than fourteen hundred companies surveyed thought they were doing a "very good job" of managing diversity. As each trend makes itself felt, the organization influences appropriate practices and activities. For example, as the percentage of women in the workforce increased, many organizations simply added maternity leaves to their benefits packages; as the number of physically challenged workers increased and when Congress passed the Americans with Disabilities Act in 1990, organizations changed their physical settings to accommodate wheelchairs. Demographers warn, however, that these trends are not only powerful by themselves but will likely interact with each other to force organizational change. Thus, a growing number of organizations, such as MBNA Corporation, Lockheed Martin, the St. Paul Companies, Levi Strauss, Procter & Gamble, Monsanto, and Wisconsin Electric, are taking bolder steps. They are not only adopting learning perspectives with respect to diversity, but systemically weaving diversity-friendly values and practices into the cultural fabric of the organization.

Many of the OD interventions described in this book can be applied to the strategic responses and implementation of workforce diversity, as shown in Table 21. It summarizes several of the internal and external pressures facing organizations, including age, gender, disability, culture and values, and sexual orientation. The table also reports the major trends characterizing those dimensions, organizational implications and workforce needs, and specific OD interventions that can address those implications.

Age

The average age of the U.S. workforce is rising and changing the distribution of age groups. Between 1998 and 2008, the category of workers aged twenty-five to fifty-four years will grow 5.5 percent and the fifty-five and over age category is expected to increase almost 48 percent. This skewed distribution is mostly the result of the baby boom between 1946 and 1964. As a result, organizations will face a predominantly middle-aged and older workforce. Even now, many organizations are reporting that the average age of their workforce is over forty. Such a distribution will place special demands on the organization.

For example, the personal needs and work motivation of the different cohorts will require differentiated human resources practices. Older workers place heavy demands on health-care services, are less mobile, and will have fewer career advancement opportunities. This situation will require specialized work designs that account for physical capabilities of older workers, career development activities that address and use their experience, and benefit plans that accommodate their medical and psychological needs. Demand for younger workers, on the other hand, will be intense. To attract and retain this more mobile group, jobs will have to be more challenging, advancement opportunities more prevalent, and an enriched quality of work life more common.

Organization development interventions, such as work design, wellness programs (discussed below), career planning and development, and reward systems must be adapted to these different age groups. For the older employee, work designs can reduce the physical components or increase the knowledge and experience components of a job. At Builder's Emporium, a chain of home improvement centers, the store clerk job was redesigned to eliminate heavy lifting by assigning night crews to replenish shelves and emphasizing sales ability instead of strength. Younger workers will likely require more challenge and autonomy. Wellness programs can be used to address the physical and mental health of both generations. Career planning and development programs will have to recognize the different career stages of each cohort and offer resources tailored to that stage. Finally, reward system interventions may offer increased health benefits, time off, and other perks for the older worker while using promotion, ownership, and pay to attract and motivate the scarcer, younger workforce.

Gender

Another important trend is the increasing percentage of female workers in the labor force. By the year 2008, almost 48 percent of the U.S. workforce will be women, and they will represent more than half of the new entrants between 1998 and 2008. The organizational implications of these trends are sobering. Three-quarters of all working women are in their childbearing years, and more than half of all mothers work. Health-care costs will likely increase at even faster rates, and costs associated with absenteeism and turnover will rise. In addition, demands for child care, maternity and paternity leaves, and flexible working arrangements will place pressure on work systems to maintain productivity and teamwork. From a management perspective, there will be more men and women working together as peers, more women entering the executive ranks, greater diversity of management styles, and changing definitions of managerial success.

Work design, reward systems, and career development are among the more important interventions for addressing issues arising out of the gender trend. For example, jobs can be modified to accommodate the special demands of working mothers. A number of organizations, such as Digital Equipment, Steelcase, and Hewlett-Packard, have instituted job sharing, by which two people perform the tasks associated with one job. The firms have done this to allow their female employees to pursue both family and work careers. Reward system interventions, especially fringe benefits, can be tailored to offer special leaves to mothers and fathers, child-care options, flexible working hours, and health and wellness benefits. Career development interventions help maintain, develop, and retain a competent and diverse workforce. Organizations such as Polaroid, Hoechst Celanese, and Ameritech have instituted job pathing, challenging assignments, and mentoring programs to retain key female members.

Disability

A third trend is the increasing number of men and women with disabilities entering the workforce. The workforce of the twenty-first century will comprise people with a variety of physical and mental disabilities. For example, the high school dropout rate has remained above 4 percent throughout the 1990s, and approximately 21 percent of the population over age 16 have only rudimentary reading and writing skills. In a world of knowledge work, the lack of education or an inability to learn is a profoundly debilitating condition. More and more organizations will employ physically handicapped people, especially as the number of younger workers declines, creating a great demand for labor. In 1990, the federal Americans with Disabilities Act banned all forms of discrimination on the basis of physical or mental disability in the hiring and promotion process. It also required many organizations to modify physical plants and office buildings to accommodate people with disabilities.

The organizational implications of the disability trend represent both opportunity and adjustment. The productivity of physically and mentally disabled workers often surprises managers, and training is required to increase managers' awareness of this opportunity. Employing disabled workers, however, also means a need for more comprehensive health care, new physical workplace layouts, new attitudes toward working with the disabled and challenging jobs that use a variety of skills.

OD interventions, including work design, career planning and development, and performance management, can be used to integrate the disabled into the workforce. For example, traditional approaches to job design can simplify work to permit physically handicapped workers to complete an assembly task. Career planning and development programs need to focus on making disabled workers aware of career opportunities. Too often, these employees do not know that advancement is possible, and they are left feeling frustrated. Career tracks need to be developed for these workers. Performance management interventions, including goal setting, monitoring, and coaching performance, aligned with the workforce's characteristics are important. At Blue Cross and Blue Shield of Florida, for example, a supervisor learned sign language to communicate with a deaf employee whose productivity was low but whose quality of work was high. Two other deaf employees were transferred to that supervisor's department, and over a two-year period, the performance of the deaf workers improved 1,000 percent with no loss in quality.

Culture and Values

Cultural diversity has broad organizational implications. Different cultures represent a variety of values, work ethics, and norms of correct behavior. Not all cultures want the same things from work, and simple, piecemeal changes in specific organizational practices will be inadequate if the workforce is culturally diverse. Management practices will have to be aligned with cultural values and support both career and family orientations. English is a second language for many people, and jobs of all types (processing, customer contact, production, and so on) will have to be adjusted accordingly. Finally, the organization will be expected to satisfy both extrinsic and monetary needs, as well as intrinsic and personal growth needs.

Several planned change interventions, including employee involvement, reward systems, and career planning and development, can be used to adapt to cultural diversity. Employee involvement practices can be adapted to the needs for participation in decision making. People from certain cultures, such as Scandinavia, are more likely to expect and respond to high-involvement policies; other cultures, such as Latin America, view participation with reservation. Participation in an organization can take many forms, from suggestion systems and attitude surveys to high-involvement work designs and performance management systems. Organizations can maximize worker productivity by basing the amount of power and information workers have on cultural and value orientations.

Reward systems can focus on increasing flexibility. For example, flexible working hours that permit employees to arrive at and leave work within specified periods enable them to meet personal obligations without sacrificing organizational objectives. Many organizations have implemented this innovation, and most report that the positive benefits outweigh the costs. Work locations also can be varied. Many organizations (e.g., Pacific Telesis, Eddie Bauer, and Marriott) allow workers to spend part of their time telecommuting from home. Other flexible benefits, such as floating holidays, allow people from different cultures to match important religious and family occasions with work schedules. Child-care and dependent-care assistance also support different lifestyles. For example, at Stride Rite Corporation, the Stride Rite Intergenerational Day Care Center houses fifty-five children between the ages of fifteen months and six years as well as twenty-four elders over sixty years old. The center was established after an organizational survey determined that 25 percent of employees provided some sort of elder care and that an additional 13 percent anticipated doing so within five years.

Finally, career planning and development programs can help workers identify advancement opportunities that are in line with their cultural values. Some cultures value technical skills over hierarchical advancement; others see promotion as a prime indicator of self-worth and accomplishment. By matching programs with people, job satisfaction, productivity, and employee retention can be improved.

Sexual Orientation

Finally, diversity in sexual and affectional orientation, including gay, lesbian, and bisexual individuals and couples, increasingly is affecting the way that organizations think about human resources.

The primary organizational implication of sexual orientation diversity is discrimination. People can have strong emotional reactions to sexual orientation. When these feelings interact with the gender, culture, and values trends described above, the likelihood of both overt and unconscious discrimination is high.

Interventions aimed at this dimension of workforce diversity are relatively new in OD and are being developed as organizations encounter sexual orientation issues in the workplace. The most frequent response is education and training. This intervention increases members' awareness of the facts and decreases the likelihood of overt discrimination. Human resources practices having to do with Equal Employment Opportunity (EEO) and fringe benefits also can help to address sexual orientation parity issues. Some organizations have modified their EEO statements to address sexual orientation. Firms such as Advanced Micro Devices, Fujitsu, Ben & Jerry's, and Dow Chemical have communicated strongly to members and outsiders that decisions with respect to hiring, promotion, transfer, and so on cannot (and will not) be made with respect to a person's sexual orientation. Similarly, organizations are increasingly offering domestic-partner benefit plans. Companies such as Microsoft, Apple, Lotus Development Corporation, and Inprise Borland have extended health-care and other benefits to the same-sex partners of their members. A 1992 Newsweek poll found that 78 percent of the respondents favored extending employee benefits to the domestic partners of lesbians and gay men.

Workforce diversity interventions are growing rapidly in OD. A national survey revealed that 75 percent of firms either have, or plan to begin, diversity efforts. Research suggests that diversity interventions are especially prevalent in large organizations with diversity-friendly senior management and human resources policies. Although existing evidence shows that diversity interventions are growing in popularity, there is still ambiguity about the depth of organizational commitment to such practices and their personal and organizational consequences. A great deal more research is needed to understand these newer interventions and their outcomes.

Employee Wellness Interventions

In the past decade, organizations have become increasingly aware of the relationship between employee wellness and productivity. The estimated cost to industry from stress-related ailments is more than $200 billion per year and is an increasingly global phenomenon. In the United Kingdom, stress and stress-related illness cost industry and taxpayers £12 billion each year. Employee assistance programs (EAPs) and stress management interventions have grown because organizations are taking more responsibility for the welfare of their employees. Companies such as Johnson & Johnson, Weyerhaeuser, Federal Express, Quaker Oats, GTE, and Abbott Laboratories are sponsoring a wide range of fitness and wellness programs. In this section, we discuss two important wellness interventions—EAPs and stress management. EAPs are primarily reactive efforts that identify, refer, and treat employee problems (e.g., drug abuse, marital difficulties, or depression) that affect worker performance. Stress management, both proactive and reactive, is concerned with helping employees alleviate or cope with the negative consequences of stress at work.

Employee Assistance Programs

Forces affecting psychological and physical problems at the workplace are increasing. The 1992 National Household Survey on Drug Abuse reported that 66.5 percent of current illicit drug users then 18 years or older were working full- or part-time. Similarly, alcohol and other 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 that up to 30 percent of employees in British companies would experience mental health problems and that 115 million workdays were lost each year as a result of depression. Other factors, too, have contributed to increased problems: altered family structures, the growth of single-parent households, the increase in divorce, greater mobility, and changing modes of child rearing are all fairly recent phenomena that have added to the stress experienced by employees. These trends indicate that an increasing number of employees need assistance with personal problems, and the research suggests that EAP use increases during downsizing and restructuring.

EAPs help identify, refer, and treat workers whose personal problems affect their performance. Initially 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. EAPs can be either broad programs that address a full range of issues or more focused programs dealing with specific problems, such as drug or alcohol abuse.

Central to the philosophy underlying EAPs is the belief that although the organization has no right to interfere in the private lives of its employees, it does have a right to impose certain standards of work performance and to establish sanctions when these are not met. Anyone whose work performance is impaired because of a personal problem is eligible for admission into an EAP program. Successful EAPs have been implemented at General Motors, Johnson & Johnson, Motorola, Burlington Northern Railroad, and Dominion Foundries and Steel Company. Although limited, some research has demonstrated that EAPs can positively affect absenteeism, turnover, and job performance. At AT&T, for example, fifty-nine employees who were close to losing their jobs were enrolled in an EAP and successfully returned to work. Hiring and training replacements would have been much more costly than the expense of the EAP.

The Employee Assistance Program Model

Figure 56 displays the components of a typical EAP. They include the identification and referral of employees into the program, management of the EAP process, and problem diagnosis and treatment.

1. Identification and referral. The first step in an EAP is entry into the program, through formal or informal referral. In the case of formal referrals, the process involves identifying employees who are having work performance problems and getting them to consider entering the EAP. Identifying these employees is closely related to the performance management process. Performance records need to be maintained and corrective action taken whenever performance falls below an acceptable standard. During action planning to improve performance, managers can point out to appraisers the existence of support services, such as the EAP. A formal referral takes place if the performance of an employee continues to deteriorate and the manager decides that EAP services are required. An informal referral occurs when an employee initiates admission to an EAP even though performance problems may not exist or may not have been detected. As shown in Figure 56, several organizational activities support this initial step in the EAP process. First, a written policy with clear procedures regarding the EAP is necessary. Second, top management and the human resources department must publicly support the EAP, and publicity about the program should be well distributed. Third, training and development programs should equip supervisors to identify and document performance problems effectively, to carry out performance improvement action planning, and to develop appropriate methods for referring employees to the EAP. Finally, the confidentiality of employees using the program must be safeguarded to gain the support of the workforce.

2. EAP office. The second component of an EAP is the work performed in the program office, where people with problems are linked with treatment resources. The EAP office accepts an employee into the program, provides problem evaluation and initial counseling, refers the employee to treatment resources and agencies, monitors the employee's progress during treatment, and reintegrates the employee into the workforce. In some EAPs, especially in large organizations, the actual counseling and treatment resources are located in-house. In most EAPs, however, the employee is referred to outside agencies that contract with the organization to perform treatment services. In all cases, a clear procedure for helping the employee return to the workforce is crucial and must be managed to maintain confidentiality. Good management is required for an effective EAP. For example, the program's relationship to disciplinary procedures must be clear. In some organizations, corrective actions are suspended if the employee seeks EAP help; in others, the two processes are not connected. Maintaining confidential records about treatment also is essential. In-house resources have the disadvantage of appearing to compromise this important program element, but they may offer some cost savings. If external treatment resources are used, care must be taken to screen and qualify those resources.

3. Treatment. The third EAP component is the treatment of the employee's problem. Potential resources include inpatient and outpatient care, social services, and self-help groups. The resources tapped by EAPs will vary from program to program.

Implementing an Employee Assistance Program

EAPs can be flexible and customized to fit various organizational philosophies and employee problems. Practitioners have suggested the following seven steps in establishing an EAP:

1. Develop an EAP policy and procedure. Establish specific guidelines concerning the EAP and its availability to employees and their families. Policies concerning confidentiality, disciplinary procedures, communication, training, and overall program philosophy should be included. Use senior management and union involvement (where appropriate) in developing the guidelines to elicit worker commitment.
2. Select and train a program coordinator. A person should be designated by the organization as the EAP coordinator. This person is responsible for overall coordination of program activities, such as training, handling program publicity, evaluating program activities, troubleshooting to ensure the quick resolution of problems, and providing ongoing program support.
3. Obtain employee/union support for the EAP. Program effectiveness demands employee or union support for EAP implementation. Obtaining that support may require meeting with key employee or union representatives to get their input in defining significant features of the EAP, including office location, staffing, participation on an EAP advisory committee, and employee/union attendance at EAP training; to review significant policy and/or procedural components to ensure support; and to share endorsements from other organizations where EAPs have been implemented.
4. Publicize the program. Communicating about the EAP's availability and increasing employee awareness of its procedures, resources, and benefits should be a high priority. Both formal and informal referrals to the program assume that managers and employees are aware of its existence. If it is not well publicized or if people do not know how to contact the program office, then participation may be below expected levels.
5. Establish relationships with health-care providers and insurers. All applicable health insurance policies should be reviewed to determine coverage for mental health and chemical dependency treatment. Although most policies include this coverage, reimbursement procedures often vary. This information needs to be summarized for EAP users so that all parties are aware of potential costs and responsibilities. EAP staff should be prepared to advise employees seeking treatment about expected insurance coverage and any personal expenses related to treatment. Potential providers of EAP treatment services should be interviewed, screened, and selected, and appropriate procedures should be developed for making referrals and maintaining confidentiality.
6. Schedule EAP training. The legal climate surrounding EAPs, referrals, and employee discipline requires that EAP training methods and materials be up-to-date and accurate. Training should include role plays about handling difficult employees as well as methods for referring workers to the program.
7. Continually administer and manage the plan. A plan should be developed for reviewing program effectiveness. This typically involves auditing procedures, measuring system-user satisfaction, and determining whether treatment options should be added or deleted. Ongoing training of EAP staff also should occur, emphasizing the changing legal requirements of EAPs, new counseling or treatment options, organizational changes that may affect program use, and behaviors that focus on service quality.

Stress Management Programs

Concern has been growing in organizations about managing the dysfunction caused by stress. Stress is linked to the following illnesses: hypertension, heart attacks, diabetes, asthma, chronic pain, allergies, headache, backache, various skin disorders, cancer, immune system weakness, and decreases in the number of white blood cells and changes in their function. It can also lead to alcoholism and drug abuse, two problems that are reaching epidemic proportions in organizations and society. For organizations, these personal effects can result in costly health benefits, absenteeism, turnover, and low performance. One study reported that one in three workers said they have thought about quitting because of stress; one in two workers said job stress reduced their productivity; and one in five workers said they took sick leave in the month preceding the survey because of stress. Another study estimates that each employee who suffers from a stress-related illness loses an average of sixteen days of work per year. Finally, the Research Triangle Institute estimated the annual cost to the U.S. economy from stress-related disorders at $187 billion. Other estimates are more conservative, but they invariably run into the billions of dollars.

Like other human resources management interventions, stress management is often facilitated by practitioners with special skills and knowledge—typically psychologists, physicians, and other health professionals specializing in work stress. Recently, some OD practitioners have gained competence in this area, and there has been a growing tendency to include stress management as part of larger OD efforts. The concept of stress is best understood in terms of a model that describes the organizational and personal conditions contributing to the dysfunctional consequences of stress. Two key types of stress management interventions may be used: those aimed at the diagnosis or awareness of stress and its causes, and those directed at changing the causes and helping people cope with stress.

Definition and Model

Stress refers to the reaction of people to their environments. It involves both physiological and psychological responses to environmental conditions, causing people to change or adjust their behaviors. Stress is generally viewed in terms of 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 the negative consequences already described. Stress is generally positive (eustress) when it occurs at moderate levels and contributes to effective motivation, innovation, and learning. For example, a promotion is a stressful event that is experienced positively by most employees. On the other hand, stress can be dysfunctional (distress) when it is excessively high (or low) or persists over a long period of time. It can overpower a person's coping abilities and cause physical and emotional exhaustion. For example, a boss who is excessively demanding and unsupportive can cause subordinates undue tension, anxiety, and dissatisfaction. Those factors, in turn, can lead to withdrawal behaviors, such as absenteeism and turnover; to ailments, such as headaches and high blood pressure; and to lowered performance. Situations in which there is a poor fit between employees and the organization produce negative stress consequences.

A tremendous amount of research has been conducted on the causes and consequences of work stress. Figure 57, a model summarizing stress relationships, identifies specific occupational stressors that may result in dysfunctional consequences. People's individual differences determine the extent to which the stressors are perceived negatively. For example, people with strong social support experience the stressors as less stressful than those who do not have such support. This greater perceived stress can lead to such negative consequences as anxiety, poor decision making, increased blood pressure, and low productivity.

The stress model shows that almost any dimension of the organization (e.g., working conditions, structure, role, or relationships) can cause negative stress. This suggests that much of the material covered so far in this book provides knowledge about work-related stressors, and implies that virtually all of the OD interventions included in the book can play a role in stress management. Process consultation, third-party intervention, survey feedback, inter-group relations, structural design, employee involvement, work design, goal setting, reward systems, and career planning and development all can help alleviate stressful working conditions. Thus, to some degree stress management has been under discussion throughout this book. Here, the focus is on those occupational stressors and stress-management techniques that are unique to the stress field and that have received the most systematic attention from stress researchers.

Occupational Stressors. Figure 57 identifies several organizational sources of stress, including structure, role on the job, physical environment, and relationships.

📘 Lecture 42 — Organization and Environment Relationships

📖 Overview: This lecture explores the critical relationship between organizations and their external environments. It provides a framework for understanding how environments affect organizations and how organizations can, in turn, influence their environments. The material sets the foundation for discussing key OD interventions like integrated strategic change, trans-organizational development, and mergers and acquisitions.

🗂️ Topics Covered

The lecture begins by establishing the organization and environment framework, describing different environmental types (general, task, and enacted environments) and environmental dimensions (information uncertainty and resource dependence). It then examines three classes of organizational responses: administrative, competitive, and collective responses. Finally, it introduces three key OD interventions derived from this framework: Integrated Strategic Change (ISC), Transorganizational Development (TD), and Mergers and Acquisitions (M&A), explaining their application stages and the specific roles of change agents.

📝 Lecture Summary

Organization and Environment Framework

This section provides the foundational concept that organizations and their subunits are open systems existing in environmental contexts. Environments can be described in two ways. First, there are different types of environments consisting of specific components or forces. Organizations must understand these environments, select appropriate parts to respond to, and develop effective relationships with them. For example, a manufacturing firm must understand raw materials markets, labor markets, customer segments, and production technology alternatives and then select from a range of options to achieve desired outcomes. Organizations are thus dependent on their environments and need to manage external constraints and contingencies while also influencing the environment through political lobbying, advertising, and public relations.

Second, several useful dimensions capture the nature of organizational environments. Some environments are rapidly changing and complex, requiring different organizational responses than stable and simple environments. For example, chewing gum manufacturers face a stable market with well-understood production technologies, while software developers face product life cycles measured in months, scarce labor skills, and drastically changing demand. This section sets the context for describing interventions that concern organization and environment relationships: integrated strategic change, trans-organizational development, and mergers and acquisitions.

Environmental Types

Organizational environments are everything beyond the boundaries of organizations that can directly or indirectly affect performance and outcomes. This includes external agents that directly affect the organization (suppliers, customers, regulators, competitors) as well as indirect influences in the wider cultural, political, and economic context.

🔑 Definition — Task Environment: The 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. 🔑 Definition — General Environment: All external forces that can influence an organization, categorized into technological, legal and regulatory, political, economic, social, and ecological components. These forces can affect the organization both directly (e.g., economic recessions impacting demand) and indirectly through linkages between external agents (e.g., trouble obtaining raw materials because a supplier has a labor dispute). 🔑 Definition — Enacted Environment: The organization's perception and representation of its general and task environments. Environments must be perceived before they can influence decisions. Only the enacted environment can affect which organizational responses are chosen, but the general and task environments influence whether those responses are successful. An organization's enacted environment should accurately reflect its general and task environments for members' decisions to be effective. 💡 Why this matters: Members may perceive customers as satisfied and make only token product development efforts. If those perceptions are wrong, the meager efforts can have disastrous consequences.

Environmental Dimensions

Environments can be characterized along dimensions that describe the organization's context and influence its responses. One perspective views environments as information flows, with the key dimension being information uncertainty — the degree to which environmental information is ambiguous. Organizations seek to remove uncertainty to know how to transact with their environment. The greater the uncertainty, the more information processing is required. This is particularly evident when environments are complex and rapidly changing.

Another perspective views environments as consisting of resources for which organizations compete. The key environmental dimension is resource dependence — the degree to which an organization relies on other organizations for resources. Organizations seek to manage critical sources of resource dependence while remaining as autonomous as possible. Resource dependence is extremely high when other organizations control critical resources that cannot be obtained easily elsewhere.

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. Organizations are more constrained as these dimensions increase, requiring them to perceive the environment accurately and respond appropriately.

📐 Framework: Low Information Uncertainty + Low Resource Dependence = Minimal environmental constraint (e.g., U.S. automotive manufacturers in the 1950s). High Information Uncertainty + High Resource Dependence = Maximal constraint and need for responsiveness (e.g., financial institutions, high-technology firms, health-care facilities today).

Organizational Responses

Organizations must have the capacity to monitor and make sense of their environments and the internal capacity to develop effective responses. They employ methods to influence environments, buffer their technology, and link themselves to sources of information and resources. Three classes of responses are described:

• Administrative Responses: Including the formation of mission, development of objectives, policies, and budgets, or creation of scanning units. These define the organization's purpose and key tasks in relation to particular environments. An effective mission differentiates the organization from others (e.g., 3M's core purpose is to solve unsolved problems innovatively). Objectives, policies, and budgets signal which environmental parts are important. Scanning units (market research, regulatory relations departments) scan, interpret, and communicate information to decision makers.
• Competitive Responses: Actions that seek to enhance performance by establishing competitive advantage over rivals through three criteria: uniqueness (identifying distinctive resources and processes), value (delivering outputs that warrant higher price or are exceptionally low cost), and imitability (making unique and valuable resources difficult to mimic). Processes and capabilities that are unique are called distinctive competencies.
• Collective Responses: Increased coordination with other organizations through bargaining, contracting, coopting, and creating joint ventures, federations, strategic alliances, and consortia. These help control interdependencies and share resources for large-scale R&D, spread risks, apply diverse expertise, and overcome trade barriers. Major barriers in the U.S. include organizations' drive to act autonomously and government policies discouraging coordination, unlike Japanese policies that promote cooperation.

Integrated Strategic Change

Integrated Strategic Change (ISC) is a recent intervention that brings an OD perspective to traditional strategic planning. It was developed in response to managers' complaints that good business strategies often are not implemented. Traditional processes artificially separate strategic thinking from operational actions and ignore planned change contributions to implementation.

🔑 Definition — Integrated Strategic Change (ISC): A highly participative process that integrates strategic planning, gaining commitment, planning implementation, and execution into one integrated process.

Key Features:

1. The relevant unit of analysis is the organization's strategic orientation comprising its strategy and organization design as an integrated whole
2. Creating the strategic plan, gaining commitment, planning implementation, and executing are one integrated process
3. Individuals and groups throughout the organization are integrated into analysis, planning, and implementation

Application Stages (4 phases):

1. Performing Strategic Analysis: Diagnoses the organization's readiness for change and current strategy/organization (S1/O1). The most important indicator is senior management's willingness to carry out strategic change. Involves understanding current strategy, organization design, and actively involving members through search conferences, focus groups, and interviews.
2. Exercising Strategic Choice: A new strategic orientation (S2/O2) is designed. Strategic analysis may reveal misfits between environment, strategic orientation, and performance. Senior management formulates visions and alternative objectives and strategies, but choosing the appropriate orientation ultimately rests with top management.
3. Designing the Strategic Change Plan: A comprehensive agenda for moving from current to desired future orientation. Describes types, magnitude, schedule of change activities, costs, and how changes will be implemented given power issues, culture, and current change ability.
4. Implementing the Strategic Change Plan: Draws on motivation, group dynamics, and change processes. Requires senior managers to champion change elements, initiate action, allocate resources, set goals, provide feedback, hold people accountable, institutionalize changes, and adjust the plan for unforeseen events.

Transorganizational Development

Transorganizational Development (TD) is planned change aimed at helping organizations develop collective and collaborative strategies with other organizations. Many tasks are too complex for single organizations. Transorganizational Systems (TSs) are groups of organizations joined for a common purpose, including licensing agreements, strategic alliances, joint ventures, and public-private partnerships. TSs are distinct from mergers because members maintain separate organizational identities.

TSs tend to be under organized: relationships are loosely coupled, leadership and power are dispersed, and commitment is tenuous. This makes creating and managing them difficult, as potential members may not perceive the need, be concerned about autonomy, or have trouble managing lateral relations.

Application Stages (4 stages with feedback loops):

1. Identification Stage: Identifying potential member organizations. Change agents help initiating organizations clarify goals, explore alternatives to collaboration, understand the tradeoff between autonomy loss and collaboration value, and specify membership criteria based on contributions and political realities.
2. Convention Stage: Bringing potential members together to explore whether creating a TS is desirable and feasible. Change agents serve as conveners if perceived as legitimate and neutral, helping work through differences and reconcile self-interests.
3. Organization Stage: Establishing structures and mechanisms for communication and task performance. Members create coordinating councils, develop rules and policies, and negotiate contributions and returns. Change agents help define competitive advantage and structural requirements.
4. Evaluation Stage: Assessing TS performance through feedback on outcomes, member satisfactions, and interaction quality. Feedback may signal need to return to previous stages.

Roles and Skills of the Change Agent: Because TSs are under organized, change agents need activist roles — bringing structure, providing leadership and direction, and educating potential members. Because TSs are multi-organization, change agents need neutral roles — treating all members alike, mediating conflicts, and forging agreements. Skills needed include political competence (to understand and resolve conflicts of interest) and networking skills (to manage lateral relations and link diverse organizations).

Mergers and Acquisitions

Mergers and Acquisitions (M&As) involve combining two organizations. A merger is the integration of two previously independent organizations into a completely new one; an acquisition involves purchasing one organization by another. M&As are distinct from TSs because at least one organization ceases to exist.

M&A Rationale: Reasons include diversification, vertical integration, gaining access to global markets/technology/resources, achieving operational efficiencies, improved innovation, or resource sharing. M&As are preferred when internal development is too slow or alliances don't offer sufficient control.

Application Stages (3 major phases):

Pre-combination Phase (5 steps):

1. Search for and select candidate: Develop screening criteria including managerial, organizational, and cultural components alongside technical/financial aspects
2. Create an M&A team: Senior leaders appoint a team with experts in business valuation, technology, organization, marketing. OD practitioners facilitate team building and help define clear leadership structure
3. Establish the business case: Develop a prima facie case that combining organizations will create competitive advantage exceeding separate advantages. Includes strategic vision, competitive strategy, and systems integration
4. Perform due diligence assessment: Evaluate whether organizations actually have the assumed resources. Increasingly includes cultural features assessment to prevent culture clashes from ruining financial gains
5. Develop merger integration plans: Specify combination details including integration objectives, scope, timing, organization design criteria, and Day 1 requirements

Legal Combination Phase: Involves legal and financial aspects — settling deal terms, gaining regulatory approval, communicating with shareholders, filing legal documents. Generally requires expertise beyond typical OD practice.

Operational Combination Phase (4 key activities):

1. Day 1 activities: Communications and actions officially starting implementation, including announcements about key executives, headquarters location, and layoffs
2. Operational and technical integration activities: Physical moves, structural changes, work designs, and procedures
3. Cultural integration activities: Building new values and norms, encouraging members from both organizations to solve problems together

Implementation Guidelines:

• Implement sooner rather than later — make as many changes as possible in the first 100 days
• Communicate clearly and in a timely fashion to all stakeholders to reduce uncertainty and anxiety
• Members from both organizations need to work together to solve problems and address customer needs
• Continually assess the implementation process to identify problems and needs

⭐ Key Takeaways

Organizations are open systems that must understand and respond to their environments, which can be categorized into general, task, and enacted environments. Environmental uncertainty and resource dependence determine how constrained organizations are and how responsive they must be. Organizations can respond through administrative (mission, scanning units), competitive (uniqueness, value, imitability), and collective (alliances, joint ventures) responses. Three key OD interventions are ISC (integrating strategy and design), TD (creating multi-organization systems), and M&A (combining organizations through mergers or acquisitions). The success of these interventions depends heavily on managing cultural issues, ensuring participation, and recognizing that traditional strategic approaches often fail without attention to human and change management processes.

🧠 Quick Revision Questions

1. What are the three types of organizational environments, and how do they differ from one another?
2. How do information uncertainty and resource dependence combine to determine an organization's need to respond to its environment?
3. What are the three criteria for achieving sustainable competitive advantage through competitive responses?
4. What are the four stages of Integrated Strategic Change, and how does it differ from traditional strategic planning?
5. What are the four stages of Transorganizational Development, and what unique roles and skills do change agents need for TD compared to traditional OD?

📘 Lecture 43 — Organization Transformation

📖 Overview: This lecture introduces organization transformation, a radical form of organizational change that fundamentally alters how members perceive, think, and behave. It explains the distinguishing features of revolutionary change, the critical role of executive leadership, and the importance of culture change as a key intervention for achieving lasting transformation.

🗂️ Topics Covered

The lecture covers the characteristics of transformational change, including triggers from environmental and internal disruptions, systemic and revolutionary change, the demand for a new organizing paradigm, the driving role of senior executives and line management, and the necessity of continuous learning. It then details three kinds of interventions, with a deep focus on culture change, its levels (artifacts, norms, values, basic assumptions), and the influence of cultural context through five key values.

📝 Lecture Summary

Organization Transformation

Organization transformation is a recent advance in organization development characterized by revolutionary change efforts. These efforts are triggered by environmental and internal disruptions, are systemic and revolutionary in nature, demand a new organizing paradigm, are driven by senior executives and line management, and require continuous learning and change.

🔑 Definition — Organization Transformation: Fundamental changes in how members perceive, think, and behave at work, involving a new paradigm for organizing and managing that goes beyond making the existing organization better.

Characteristics of Transformational Change

Organization transformation implies radical changes that fundamentally alter organizational assumptions about functioning and relations with the environment. This entails significant shifts in corporate philosophy, values, and the numerous structures and arrangements that shape members' behaviors. The distinguishing features of these revolutionary change efforts are described below.

Change is Triggered by Environmental and Internal Disruptions

Organizations are unlikely to undertake transformational change unless significant reasons emerge. Most organizations must experience or anticipate a severe threat to survival before they will be motivated to 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
2. Product life cycle shifts — changes requiring different business strategies
3. Internal company dynamics — changes in size, corporate portfolio strategy, executive turnover

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 to avoid getting mired in politics and inertia. For a change to be labeled transformational, a majority of individuals must change their behavior.

Long-term studies suggest organizations move through long periods of evolution (incremental changes) punctuated by periods of revolution (total system and quantum changes). Studies point to the benefits of implementing transformational change as rapidly as possible to gain competitive advantage.

Change Demands a New Organizing Paradigm

Transformational change involves gamma change — discontinuous shifts in mental or organizational frameworks. Creative metaphors like "organization learning" or "continuous improvement" help members visualize the new paradigm. The transition from a "control-based" to a "commitment-based" organization is a key paradigm shift, featuring leaner structures, decentralized teams, and participative management.

Change is Driven by Senior Executives and Line Management

Executives decide when to initiate change, what the change should be, how to implement it, and who should direct it. Research suggests externally recruited executives are three times more likely to initiate transformational change than existing executive teams. Three key roles for executive leadership are:

1. Envisioning — Articulate a clear and credible vision, set new performance standards, generate pride and enthusiasm.
2. Energizing — Demonstrate personal excitement, model expected behaviors, and communicate early success.
3. Enabling — Provide resources, use rewards to reinforce new behaviors, and build an effective top-management team.

🔑 Definition — Vision: A mental image of a possible and desirable future of the organization that articulates a view of a realistic, credible, attractive future.

The development of a shared vision involves sharing the vision, empowering the individual, developing trust, and rewarding performance. An effective vision must be challenging, inspiring, and aimed at empowering people at all levels.

Continuous Learning and Change

Transformational change requires considerable innovation and learning. Members must learn qualitatively different ways of perceiving, thinking, and behaving, which involves much unlearning. Learning occurs at all levels and is directed by a vision of the future organization. Because the environment itself changes, transformational change rarely has a delimited timeframe but persists as long as the firm needs to adapt.

Three kinds of interventions for organization transformation are:

1. Culture change
2. Self-design
3. Organization learning and knowledge management

Culture Change

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 and signal how work is to be done and evaluated.

🔑 Definition — Organization Culture: The pattern of basic assumptions, values, norms, and artifacts shared by organization members that helps them make sense of everyday life in the organization.

Levels of Organizational Culture

Organization culture includes four major elements at different levels of awareness:

1. Artifacts — Visible, tangible aspects (e.g., open landscape architecture, informality, lack of status symbols)
2. Norms — Unwritten rules of behavior (e.g., hard work, innovation, rapid solutions)
3. Values — What ought to be; what is important (e.g., individual autonomy, sensitivity, support, openness)
4. Basic Assumptions — Deepest, taken-for-granted beliefs (e.g., individuals are the source of innovation; truth is discovered through debate)

💡 Why this matters: Understanding these levels helps change agents know which aspects of culture need to be addressed first and which are most resistant to change. Basic assumptions are the most difficult to change but are fundamental to transformation.

Cultural Context

Applying OD in different countries requires a "context-based" approach to planned change, fitting the change process to the organization's cultural context. Five key values describe national cultures and influence organizational customs:

⭐ Key Takeaways

Organization transformation is a radical, revolutionary change that fundamentally alters how members perceive, think, and behave, going far beyond incremental improvements. It is typically triggered by severe environmental or internal disruptions that threaten organizational survival and requires a new organizing paradigm, such as the shift from control-based to commitment-based structures. Senior executives and line managers must actively lead the transformation through envisioning, energizing, and enabling roles, with externally recruited leaders being more likely to initiate such change. Culture change is a critical intervention that operates at multiple levels—artifacts, norms, values, and basic assumptions—and must be understood within the broader cultural context shaped by values like power distance, uncertainty avoidance, and individualism. Finally, successful transformation requires continuous learning and unlearning at all levels, as members adapt to new ways of operating in a dynamic environment.

🧠 Quick Revision Questions

1. What are the five distinguishing features of revolutionary change efforts in organization transformation?
2. What three kinds of disruptions typically trigger transformational change?
3. What is gamma change, and how does it relate to the shift from a "control-based" to a "commitment-based" organization?
4. What are the four levels of organizational culture, and which level is the deepest and most resistant to change?
5. How do the five cultural values (context orientation, power distance, uncertainty avoidance, achievement orientation, individualism) influence the application of OD in different countries?

📘 Lecture 44 — The Behavioral Approach

📖 Overview: This lecture explores multiple approaches to diagnosing and changing organizational culture, including behavioral, competing values, and deep assumptions approaches. It critically examines whether culture change is possible and provides practical guidelines for those seeking to transform organizational culture, culminating in the concepts of self-designing organizations and learning organizations.

🗂️ Topics Covered

The lecture covers three main diagnostic approaches to organizational culture: the behavioral approach focusing on observable patterns of behavior, the competing values approach examining how organizations resolve value dilemmas across four culture types (clan, adhocracy, hierarchical, market), and the deep assumptions approach exploring tacit shared assumptions. It then addresses application stages for culture change with six practical guidelines, introduces the self-designing organization strategy as a response to transformational change demands, and concludes with the learning organization concept including its core values, characteristics, learning processes, and two levels of learning.

📝 Lecture Summary

The Behavioral Approach

This method emphasizes the surface level of organization culture—the pattern of behaviors that produce business results. It is practical because it assesses key work behaviors that can be observed, providing specific descriptions about how tasks are performed and relationships are managed. For example, Table 25 summarizes the organization culture of an international banking division as perceived by its managers, obtained from interviews asking managers to describe "the way the game is played" regarding four key relationships—companywide, boss-subordinate, peer, and interdepartmental—and six managerial tasks—innovating, decision making, communicating, organizing, monitoring, and appraising/rewarding.

Cultural diagnosis from a behavioral approach can also assess the cultural risk of implementing changes needed to support a new strategy. Significant cultural risks result when highly important changes are incompatible with existing patterns of behavior. Knowledge of such risks helps managers determine whether implementation plans should 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 culture can be understood in terms of two important "value pairs": (1) internal focus and integration versus external focus and differentiation and (2) flexibility and discretion versus stability and control, as shown in Figure 59. Organizations continually struggle to satisfy conflicting demands from these competing values. For example, when faced with internal versus external focus, organizations must choose between attending to internal operations or external competitive issues.

The competing values approach collects diagnostic data using a survey designed specifically for this purpose. It identifies an organization's culture as falling into one of four quadrants: clan culture (internal focus + flexibility), adhocracy culture (external focus + flexibility), hierarchical culture (internal focus + control), and market culture (external focus + control). For example, if values focus on internal integration and emphasize innovation and flexibility, it manifests a clan culture. A market culture characterizes values that are externally focused and emphasize stability and control.

💡 Why this matters: The competing values framework provides a practical tool for mapping an organization's culture and understanding where tensions exist, which is essential for strategic decision-making.

The Deep Assumptions Approach

This final diagnostic approach emphasizes the deepest levels of organization culture—the generally unexamined, tacit, and shared assumptions that guide member behavior. Diagnosing culture from this perspective begins with the most tangible level of awareness and then works down to the deep assumptions.

Diagnosing culture at the deep assumptions level poses three difficult problems. First, culture reflects shared assumptions that people generally take for granted and rarely speak of directly—rather, culture is implied in concrete behavioral examples like daily routines, stories, rituals, and language. Second, some values and beliefs that people espouse have little to do with the ones they really hold and follow. Third, large, diverse organizations are likely to have several subcultures, including countercultures going against the grain of the wider organization culture.

OD practitioners using this approach have developed useful techniques. One method involves an iterative interviewing process involving both outsiders and insiders, where the outsider experiences surprises, shares observations with insiders, and together they explore meaning—resulting in a formal written description of underlying assumptions. A second method is a culture workshop where a group brainstorms artifacts (behaviors, symbols, language, physical space), deduces values and norms, and identifies assumptions that explain the constellation of values, norms, and artifacts.

Application Stages

There is considerable debate over whether changing something as deep-seated as organization culture is possible. Those advocating culture change focus on more superficial elements like norms and artifacts, which are more changeable than deeper values and basic assumptions. Those arguing that culture change is extremely difficult focus on deeper elements, noting that members do not question them, may not want to change cultural assumptions because they provide defense against uncertainties, and may have vested interests in maintaining the culture.

Given these problems, most practitioners suggest that changes in corporate culture should be considered only after other, less difficult and less costly solutions have been applied or ruled out. Alternatives include managing around the existing culture (e.g., using business teams to coordinate functional specialists) or modifying strategy to bring it more in line with culture.

Large-scale cultural change may be necessary when: the firm's culture does not fit a changing environment; the industry is extremely competitive and changes rapidly; the company is mediocre or worse; the firm is about to become a very large company; or the company is smaller and growing rapidly.

Six practical guidelines for cultural change are provided:

1. Formulate a clear strategic vision — Effective cultural change should start from a clear vision of the firm's new strategy and shared values. This serves as a yardstick for defining existing culture and deciding whether proposed changes are consistent with core values.

2. Display top-management commitment — Cultural change must be managed from the top. Senior managers must be strongly committed to new values and create constant pressures for change.

3. Model culture change at the highest levels — Senior executives must communicate the new culture through their own actions, symbolizing the kinds of values and behaviors being sought.

4. Modify the organization to support organizational change — Cultural change requires supporting modifications in organizational structure, human resources systems, information and control systems, and management styles.

5. Select and socialize newcomers and terminate deviants — People can be selected and terminated in terms of their fit with the new culture. Socializing newly hired people into the new culture is also effective, as people are most open to organizational influences during the entry stage.

6. Develop ethical and legal sensitivity — Cultural change can raise significant tensions between organization and individual interests. Recommendations include setting realistic values, encouraging input from throughout the organization, providing mechanisms for member dissent and diversity, and educating managers about legal and ethical pitfalls.

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. Mohrman and Cummings developed a self-design change strategy involving an ongoing series of designing and implementing activities carried out by managers and employees at all levels.

The Demands of Transformational Change:

1. Transformational change generally involves altering most features of the organization and achieving fit among them and with strategy.
2. Transformational change occurs in situations experiencing heavy change and uncertainty—change is never totally finished.
3. Current knowledge provides only general prescriptions—organizations need to learn how to translate that information into specific structures, processes, and behaviors.
4. Transformational change affects many stakeholders with different goals and interests.
5. Transformational change needs to occur at multiple levels of the organization.

Application Stages (Figure 60):

1. Laying the foundation — Provides organization members with basic knowledge needed to get started. Activities include: acquiring knowledge about how organizations function and about self-design; valuing—determining corporate values that will guide transformation; and diagnosing the current organization to determine what needs to be changed.

2. Designing — Organization designs and innovations are generated to support corporate strategy and values. This uses minimum specification design, where only broad parameters are specified and details are left to be tailored to levels and groupings.

3. Implementing and assessing — Involves implementing changes with an ongoing cycle of action research: changing structures and behaviors, assessing progress, and making necessary modifications. Feedback loops suggest that implementing and assessing may lead back to affect subsequent designing, diagnosing, valuing, and acquiring knowledge activities.

The Learning Organization

Organization Learning interventions address how organizations can be designed to promote effective learning processes. The learning organization builds on ideas from OD, action research, systems approach, organizational culture, continuous problem-solving, self-managed work teams, collaboration, participative leadership, and interpersonal relations.

According to Peter Senge, "Leaders in learning organizations are responsible for building organizations where individuals continually expand their capabilities to shape their future." Learning in organizations means the continuous testing of experience and transformation of that experience into knowledge accessible to the whole organization.

Learning organizations emphasize creating "knowledge for action" and not "knowledge for its own sake."

Core Values of learning organizations include: valuing different kinds of knowledge and learning styles; encouraging communication between people with different perspectives; developing creative thinking; remaining nonjudgmental; breaking down traditional barriers; developing leadership throughout organization; reducing distinctions between organization members; and believing that every member has untapped human potential.

Characteristics of a Learning Organization:

1. Constant Readiness — The organization exists in constant readiness for change.
2. Continuous Planning — Flexible plans are created that are fully known and accepted by the entire organization.
3. Improvised Implementation — The organization encourages experimentation rather than rigidly implementing plans.
4. Action Learning — Change is reevaluated continually, not just at annual planning sessions.

Organization Learning Processes consist of four interrelated activities:

1. Discovery — Learning starts with discovery when errors or gaps between desired and actual conditions are detected.
2. Invention — Devising solutions to close the gap, including diagnosing causes and creating appropriate solutions.
3. Production — Implementing solutions.
4. Generalization — Drawing conclusions about the effects of solutions and extending that knowledge to other relevant situations.

Levels of Learning (Figure 61):

• Single-loop learning (or adaptive learning) — Focused on learning how to improve the status quo. It reduces errors or gaps between desired and existing conditions, producing incremental change. The emphasis is on "techniques and making techniques more efficient." It is like a thermostat that learns when it is too hot or too cold and turns the heat on or off.
• Double-loop learning (or generative learning) — Aimed at changing the status quo. It operates at a more abstract level because members learn how to change the existing assumptions and conditions within which single-loop learning operates. This level can lead to transformational change. Reflection here is more fundamental: the basic assumptions behind ideas or policies are confronted and hypotheses are publicly tested.

⭐ Key Takeaways

Students must remember that organizational culture can be diagnosed at three levels: behavioral (observable patterns), competing values (how organizations resolve value dilemmas across four culture types—clan, adhocracy, hierarchical, market), and deep assumptions (tacit, shared assumptions). Culture change is difficult but possible through six guidelines: clear strategic vision, top-management commitment, modeling at highest levels, modifying organizational support systems, selecting socializing newcomers and terminating deviants, and developing ethical sensitivity. The self-designing organization approach provides a dynamic, iterative three-stage process (laying foundation, designing, implementing and assessing) that enables continuous transformation. Finally, learning organizations operate through four processes (discovery, invention, production, generalization) and two levels of learning—single-loop (improving status quo) and double-loop (changing underlying assumptions)—which is essential for understanding how organizations can develop the capacity for continuous adaptation and growth.

🧠 Quick Revision Questions

1. What are the three main diagnostic approaches to organizational culture discussed in this lecture, and at what level does each operate?
2. Name the four quadrants of the competing values framework and describe which value pairs define each quadrant.
3. What are the six practical guidelines for cultural change, and which one involves changing organizational membership?
4. Describe the three stages of the self-design strategy and explain what "minimum specification design" means in the designing stage.
5. What is the difference between single-loop learning and double-loop learning, and provide an example of each from the lecture text?

📘 Lecture 45 — Seven Practices of Successful Organizations

📖 Overview: This lecture explores the seven key practices that characterize successful organizations, providing a comprehensive framework for building high-performance management systems. Understanding these practices is essential for organization development professionals because they represent proven approaches that create competitive advantage through people. The lecture emphasizes that these practices work as an integrated system rather than isolated initiatives.

🗂️ Topics Covered

The lecture covers seven essential practices of successful organizations: employment security, selective hiring, self-managed teams and decentralization, high compensation contingent on performance, extensive training, reduction of status differences, and sharing information. Each practice is examined through real-world examples from companies like Southwest Airlines, Lincoln Electric, Whole Foods Markets, and AES Corporation, with detailed explanations of how these practices create organizational effectiveness.

📝 Lecture Summary

1. Employment Security

Employment security is a critical element of high-performance management systems, as innovations in work practices are unlikely to be sustained when workers fear job loss. This principle has been demonstrated by Lincoln Electric, which has offered 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 percent, the company redeployed factory workers to sell products in the field rather than resorting to layoffs.

🔑 Definition — Employment security: A policy ensuring that employees are not laid off due to economic downturns or strategic mistakes of senior management, while still allowing termination for poor performance or lack of cultural fit.

💡 Why this matters: Employment security creates multiple organizational benefits. It prevents firms from laying off trained workers too quickly during downturns, which would put strategic assets into competitors' hands. It leads to leaner, more careful hiring. It builds trust between people and their employer, encouraging cooperation and better spirit. The Vice President for People at Southwest Airlines explained, "Why would we want to put our best assets, our people, in the arms of the competition?"

However, employment security does not mean retaining poor performers. Lincoln Electric has high turnover in the first few months for those who don't fit the culture. The policy focuses on maintaining total employment, not protecting individuals from consequences of their individual behavior.

Employment security is fundamental to implementing other high-performance practices like selective hiring, extensive training, information sharing, and delegation, as companies will not invest in these if people are not expected to stay long enough to recoup investments.

2. Selective Hiring

Successful organizations ensure they recruit the right people through several key approaches:

First, the organization needs a large applicant pool. In 1993, Southwest Airlines received about 98,000 applications, interviewed 16,000, and hired only 2,700. Singapore Airlines is extremely selective: from an initial pool, about 10% are shortlisted and only 2% (one out of 50) are selected for flight attendant positions.

Second, the organization must be clear about the most critical skills and attributes needed. Southwest evaluates flight attendant applicants on initiative, judgment, adaptability, and ability to learn using behavioral interview questions like "Give an example of working with a difficult coworker."

Third, skills hired should be consistent with job requirements and market approach. Enterprise Rent-A-Car, now the largest car rental company in the US, hires college graduates primarily for sales skills and personality rather than academic performance.

Fourth, organizations should screen primarily on attributes difficult to change through training. Japanese organizations have long practiced hiring based on "proper character" and social background rather than specific technical skills. Southwest rejected a top pilot who was rude to a receptionist because technical skills are easier to acquire than teamwork and service attitude.

Evidence shows cultural fit and value congruence between applicants and organizations significantly predicts subsequent turnover and job performance. Rigorous selection processes, sometimes taking six months, ensure careful scrutiny, develop commitment, and create a feeling among selected individuals that they are part of an elite group.

🔑 Definition — Selective hiring: A recruiting approach emphasizing a large applicant pool, clear identification of critical attributes, screening for qualities difficult to change through training, and rigorous multi-stage selection processes.

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, giving workers greater autonomy and discretion.

Teams offer several advantages: First, teams substitute peer-based for hierarchical control of work. Peer control is frequently more effective than hierarchical supervision because individuals are less likely to let down their teammates. Team-based organizations succeed in making all people feel accountable for the enterprise's success.

Whole Foods Market operates with a team-oriented philosophy: each store has about ten self-managed teams with team leaders and clear performance targets. Teams must approve new full-time hires by two-thirds vote after a thirty-day trial period.

Second, teams permit employees to pool ideas for more creative solutions to problems, similar to brainstorming where each participant builds on others' ideas.

Third, by substituting peer for hierarchical control, teams permit removal of layers of hierarchy, avoiding enormous costs of management overhead. AES Corporation, a global power plant developer, has never formed corporate departments for finance, operations, or human resources. Front-line people develop expertise in these areas and receive responsibility for carrying them out. The company developed a $400 million plant with a team of just ten people.

4. High Compensation Contingent on Organizational Performance

The level of salaries sends a message about whether employees are truly valued. When John Whitney assumed leadership of Pathmark grocery chain with 90 days to live, he found 120 store managers were paid terribly. He gave them a substantial raise of 40-50%, enabling them to focus on improving performance instead of worrying about pay.

Contingent compensation can take various forms including gainsharing, stock ownership, pay for skill, and team incentives. When employees are owners, they act and think like owners. Paying for skill acquisition encourages people to learn different jobs and become more flexible.

Gainsharing differs from profit sharing as it is based on incremental improvements in a specific unit's performance, even if overall firm profits are down. At Whole Foods, gainsharing ties bonuses directly to team performance measured by sales per hour.

💡 Why this matters: Coupling employment security with group-based incentives like profit sharing or gainsharing prevents civil service mentality by aligning team economic interests with higher performance levels.

5. Training

Training is an essential component of high-performance work systems because these systems rely on front-line employee skill and initiative. The amount of training reflects different views of people held by firms. Japanese companies train extensively because they rely on flexible production and intend to keep people longer, making investment in development worthwhile.

Training can be a source of competitive advantage. Taco Inc., a pump and valve manufacturer, offers over six dozen courses in an on-site learning center costing $250,000 to build with annual expenses of $300,000. When asked about monetary return, the CEO said, "It comes back in the form of attitude."

6. Reduction of Status Differences

High-performance systems require tapping ideas from all people, which requires reducing status distinctions. This is accomplished symbolically through language, physical space, and dress, and substantively through reducing wage inequality across levels.

At Subaru-Isuzu, everyone from the president down was called an Associate. At Kingston Technology, the two co-founders sit in open cubicles with no private secretaries. The CEO of Southwest Airlines, who earned about $500,000 per year, agreed to fix his salary at $395,000 for four years when the company negotiated a wage freeze with pilots.

Reducing status differences encourages open communication and develops a sense of common fate. Contingent rewards applied at group or organizational level are at least as effective as individual incentives and avoid many problems inherent in individual merit pay.

7. Sharing Information

Information sharing is essential for two reasons: First, sharing financial, strategic, and operational information conveys trust. The CEO of Whole Foods Markets stated, "If you are trying to create a high trust organization... you can't have secrets."

Second, even motivated and trained people cannot contribute without information on performance dimensions and training on how to interpret that information.

The concept of open book management emerged from a CEO who purchased a harvester plant with $100,000 and $8.9 million debt. 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." Implementation involved: generating daily numbers reflecting work performance and production costs, sharing this information with all employees, and providing extensive training on understanding balance sheets, cash flow, and income statements.

⭐ Key Takeaways

The seven practices of successful organizations form an integrated system where employment security provides the foundation for other practices. Selective hiring ensures the right people enter the organization with attitudes and values that are difficult to train. Self-managed teams and decentralization substitute peer control for hierarchical supervision, creating accountability and reducing overhead. High compensation contingent on organizational performance, through gainsharing or stock ownership, aligns employee interests with organizational success. Extensive training develops the skills needed for front-line initiative and problem-solving. Reducing status differences through symbolic and substantive means encourages open communication and a sense of common fate. Finally, sharing information transparently through open book management builds trust and enables trained employees to make informed decisions that enhance performance. These practices work together — implementing one without the others diminishes overall effectiveness.

🧠 Quick Revision Questions

1. What are the seven practices of successful organizations, and how does employment security serve as the foundation for implementing the other practices?

2. How did Lincoln Electric avoid layoffs during the 1980s recession when domestic sales fell 40 percent, and what benefits resulted from this policy?

3. What four key approaches do successful organizations use for selective hiring, and why does Southwest Airlines reject applicants with excellent technical skills but poor attitudes?

4. What three advantages do self-managed teams offer over traditional hierarchical structures, and how does Whole Foods Market implement team-based decision-making?

5. What is the difference between gainsharing and profit sharing, and why does open book management require both information transparency and financial training for all employees?