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Organization Development & Change
9e
Thomas G. Cummings University of Southern California
Christopher G. Worley University of Southern California
Pepperdine University
Organization Development & Change, 9th Edition
Thomas G. Cummings & Christopher G. Worley
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Dedication
To Chailin and Debbie, the loves of our lives
iv
brief contents
Preface xv
CHAPTER 1 General Introduction to Organization Development 1
PART 1 Overview of Organization Development 22
CHAPTER 2 The Nature of Planned Change 23
CHAPTER 3 The Organization Development Practitioner 46
PART 2 The Process of Organization Development 74
CHAPTER 4 Entering and Contracting 75
CHAPTER 5 Diagnosing Organizations 87
CHAPTER 6 Diagnosing Groups and Jobs 107
CHAPTER 7 Collecting and Analyzing Diagnostic Information 121
CHAPTER 8 Feeding Back Diagnostic Information 139
CHAPTER 9 Designing Interventions 151
CHAPTER 10 Leading and Managing Change 163
CHAPTER 11 Evaluating and Institutionalizing Organization Development Interventions 189
PART 3 Human Process Interventions 252
CHAPTER 12 Interpersonal and Group Process Approaches 253
CHAPTER 13 Organization Process Approaches 276
PART 4 Technostructural Interventions 314
CHAPTER 14 Restructuring Organizations 315
CHAPTER 15 Employee Involvement 350
CHAPTER 16 Work Design 376
PART 5 Human Resource Management Interventions 419
CHAPTER 17 Performance Management 420
CHAPTER 18 Developing Talent 451
CHAPTER 19 Managing Workforce Diversity and Wellness 473
PART 6 Strategic Change Interventions 504
CHAPTER 20 Transformational Change 505
CHAPTER 21 Continuous Change 535
CHAPTER 22 Transorganizational Change 561
PART 7 Special Applications of Organization Development 613
CHAPTER 23 Organization Development in Global Settings 614
CHAPTER 24 Organization Development in Nonindustrial Settings: Health Care, School Systems, the Public Sector, and Family-Owned Businesses 651
CHAPTER 25 Future Directions in Organization Development 693
Glossary 746
Name Index 756
Subject Index 760
v
Preface xv
CHAPTER 1 General Introduction to Organization Development 1
Organization Development Defined 1
The Growth and Relevance of Organization Development 4
A Short History of Organization Development 6 Laboratory Training Background 6 Action Research and Survey Feedback Background 8 Normative Background 9 Productivity and Quality-of-Work-Life Background 11 Strategic Change Background 12
Evolution in Organization Development 12
Overview of The Book 14
Summary 17
Notes 17
PART 1 Overview of OrganizationDevelopment 22
CHAPTER 2 The Nature of Planned Change 23
Theories of Planned Change 23 Lewin’s Change Model 23 Action Research Model 24 The Positive Model 27 Comparisons of Change Models 29
General Model of Planned Change 29 Entering and Contracting 29 Diagnosing 30 Planning and Implementing Change 30 Evaluating and Institutionalizing Change 31
Different Types of Planned Change 31 Magnitude of Change 31
Application 2-1 Planned Change at the San Diego County Regional Airport Authority 32
Degree of Organization 35
Application 2-2 Planned Change in an Underorganized System 37 Domestic vs. International Settings 40
Critique of Planned Change 41 Conceptualization of Planned Change 41 Practice of Planned Change 42
Summary 43
Notes 44
contents
vi Contents
CHAPTER 3 The Organization Development Practitioner 46
Who is the Organization Development Practitioner? 46
Competencies of an Effective Organization Development Practitioner 48
The Professional Organization Development Practitioner 53 Role of Organization Development Professionals 53
Application 3-1 Personal Views of the Internal and External Consulting Positions 56
Careers of Organization Development Professionals 59
Professional Values 60
Professional Ethics 61 Ethical Guidelines 61 Ethical Dilemmas 62
Application 3-2 Kindred Todd and the Ethics of OD 65
Summary 66
Notes 67
Appendix 70
PART 2 The Process of Organization Development 74
CHAPTER 4 Entering and Contracting 75
Entering into an OD Relationship 76 Clarifying the Organizational Issue 76 Determining the Relevant Client 76 Selecting an OD Practitioner 77
Developing a Contract 79 Mutual Expectations 79
Application 4-1 Entering Alegent Health 80 Time and Resources 81 Ground Rules 81
Interpersonal Process Issues in Entering and Contracting 81
Application 4-2 Contracting with Alegent Health 82
Summary 86
Notes 86
CHAPTER 5 Diagnosing Organizations 87
What is Diagnosis? 87
The Need for Diagnostic Models 88
Open Systems Model 89 Organizations as Open Systems 89 Diagnosing Organizational Systems 92
Organization-Level Diagnosis 94 Organization Environments and Inputs 94 Design Components 96 Outputs 99 Alignment 99 Analysis 99
Application 5-1 Steinway’s Strategic Orientation 100
Summary 105
Notes 105
viiContents
CHAPTER 6 Diagnosing Groups and Jobs 107
Group-Level Diagnosis 107 Inputs 107 Design Components 108 Outputs 109 Fits 110 Analysis 110
Application 6-1 Top-Management Team at Ortiv Glass Corporation 111
Individual-Level Diagnosis 113 Inputs 113 Design Components 114 Fits 115 Analysis 115
Application 6-2 Job Design at Pepperdine University 116
Summary 119
Notes 120
CHAPTER 7 Collecting and Analyzing Diagnostic Information 121
The Diagnostic Relationship 121
Methods for Collecting Data 123 Questionnaires 124 Interviews 126 Observations 127 Unobtrusive Measures 128
Sampling 129
Techniques for Analyzing Data 130 Qualitative Tools 130
Application 7-1 Collecting and Analyzing Diagnostic Data at Alegent Health 132 Quantitative Tools 133
Summary 137
Notes 138
CHAPTER 8 Feeding Back Diagnostic Information 139
Determining the Content of the Feedback 139
Characteristics of the Feedback Process 141
Survey Feedback 142 What Are the Steps? 142
Application 8-1 Training OD Practitioners in Data Feedback 143 Survey Feedback and Organizational Dependencies 145
Application 8-2 Operations Review and Survey Feedback at Prudential Real Estate Affiliates 146
Limitations of Survey Feedback 147 Results of Survey Feedback 148
Summary 149
Notes 149
CHAPTER 9 Designing Interventions 151
What are Effective Interventions? 151
How to Design Effective Interventions 152 Contingencies Related to the Change Situation 152 Contingencies Related to the Target of Change 154
viii Contents
Overview of Interventions 156 Human Process Interventions 156
Summary 161
Notes 162
CHAPTER 10 Leading and Managing Change 163
Overview of Change Activities 163
Motivating Change 165 Creating Readiness for Change 165 Overcoming Resistance to Change 166
Application 10-1 Motivating Change in the Sexual Violence Prevention Unit of Minnesota’s Health Department 168
Creating a Vision 169 Describing the Core Ideology 170 Constructing the Envisioned Future 171
Developing Political Support 171
Application 10-2 Creating a Vision at Premier 172 Assessing Change Agent Power 174 Identifying Key Stakeholders 175 Influencing Stakeholders 175
Managing the Transition 176
Application 10-3 Developing Political Support for the Strategic Planning Project in the Sexual Violence Prevention Unit 177
Activity Planning 178 Commitment Planning 179 Change-Management Structures 179 Learning Processes 179
Sustaining Momentum 180
Application 10-4 Transition Management in the HP–Compaq Acquisition 181 Providing Resources for Change 182 Building a Support System for Change Agents 183 Developing New Competencies and Skills 183 Reinforcing New Behaviors 183 Staying the Course 184
Summary 184
Notes 185
Application 10-5 Sustaining Transformational Change at the Veterans Health Administration 187
CHAPTER 11 Evaluating and Institutionalizing Organization Development Interventions 189
Evaluating Organization Development Interventions 189 Implementation and Evaluation Feedback 189 Measurement 192 Research Design 197
Institutionalizing Organizational Changes 200 Institutionalization Framework 200
Application 11-1 Evaluating Change at Alegent Health 201 Organization Characteristics 203 Intervention Characteristics 204 Institutionalization Processes 205 Indicators of Institutionalization 206
Application 11-2 Institutionalizing Structural Change at Hewlett-Packard 208
Summary 210
ixContents
Notes 210
Selected Cases 212 Kenworth Motors 212 Peppercorn Dining 217 Sunflower Incorporated 239 Initiating Change in the Manufacturing and Distribution Division of PolyProd 241 Evaluating the Change Agent Program at Siemens Nixdorf (A) 247
PART 3 Human Process Interventions 252
CHAPTER 12 Interpersonal and Group Process Approaches 253
Process Consultation 253 Group Process 254 Basic Process Interventions 255 Results of Process Consultation 257
Application 12-1 Process Consultation at Action Company 258
Third-Party Interventions 259 An Episodic Model of Conflict 260 Facilitating the Conflict Resolution Process 261
Application 12-2 Conflict Management at Balt Healthcare Corporation 262
Team Building 263 Team-Building Activities 264 Activities Relevant to One or More Individuals 267 Activities Oriented to the Group’s Operation and Behavior 268 Activities Affecting the Group’s Relationship with the Rest of the Organization 268
Application 12-3 Building the Executive Team at Caesars Tahoe 269 The Manager’s Role in Team Building 270 The Results of Team Building 271
Summary 273
Notes 273
CHAPTER 13 Organization Process Approaches 276
Organization Confrontation Meeting 276 Application Stages 276 Results of Confrontation Meetings 277
Application 13-1 A Work-Out Meeting at General Electric Medical Systems Business 278
Intergroup Relations Interventions 279 Microcosm Groups 279 Application Stages 280 Resolving Intergroup Conflict 281
Large-Group Interventions 284
Application 13-2 Improving Intergroup Relationships in Johnson & Johnson’s Drug Evaluation Department 285
Application Stages 287
Application 13-3 Using the Decision Accelerator to Generate Innovative Strategies in Alegent’s Women’s and Children’s Service Line 290
Results of Large-Group Interventions 294
Summary 295
Notes 295
Selected Cases 297 Lincoln Hospital: Third-Party Intervention 297 Ben & Jerry’s (A): Team Development Intervention 304
x Contents
PART 4 Technostructural Interventions 314
CHAPTER 14 Restructuring Organizations 315
Structural Design 315 The Functional Structure 316 The Divisional Structure 318 The Matrix Structure 319 The Process Structure 322 The Customer-Centric Structure 324
Application 14-1 Healthways’ Process Structure 325 The Network Structure 328
Downsizing 331
Application 14-2 Amazon.com’s Network Structure 332 Application Stages 334 Results of Downsizing 337
Application 14-3 Strategic Downsizing at Agilent Technologies 338
Reengineering 340 Application Stages 341
Application 14-4 Honeywell IAC’s Totalplant™ Reengineering Process 344 Results from Reengineering 346
Summary 346
Notes 347
CHAPTER 15 Employee Involvement 350
Employee Involvement: What Is It? 350 A Working Definition of Employee Involvement 351 The Diffusion of Employee Involvement Practices 352 How Employee Involvement Affects Productivity 352
Employee Involvement Applications 354 Parallel Structures 354
Application 15-1 Using the AI Summit to Build Union–Management Relations at Roadway Express 356
Total Quality Management 359
Application 15-2 Six-Sigma Success Story at GE Financial 365 High-Involvement Organizations 367
Application 15-3 Building a High-Involvement Organization at Air Products and Chemicals, Inc. 370
Summary 373
Notes 373
CHAPTER 16 Work Design 376
The Engineering Approach 376
The Motivational Approach 377 The Core Dimensions of Jobs 378 Individual Differences 379 Application Stages 380 Barriers to Job Enrichment 382
Application 16-1 Enriching Jobs at the Hartford’s Employee Relations Consulting Services Group 383
Results of Job Enrichment 385
The Sociotechnical Systems Approach 386 Conceptual Background 387 Self-Managed Work Teams 388
xiContents
Application Stages 391 Results of Self-Managed Teams 393
Application 16-2 Moving to Self-Managed Teams at ABB 394
Designing Work for Technical and Personal Needs 397 Technical Factors 398 Personal-Need Factors 399 Meeting Both Technical and Personal Needs 400
Summary 401
Notes 402
Selected Cases 405 City of Carlsbad, California: Restructuring the Public Works Department (A) 405 C&S Wholesale Grocers: Self-Managed Teams 408
PART 5 Human Resource Management Interventions 419
CHAPTER 17 Performance Management 420
A Model of Performance Management 421
Goal Setting 422 Characteristics of Goal Setting 422 Establishing Challenging Goals 423 Clarifying Goal Measurement 423 Application Stages 424 Management by Objectives 424 Effects of Goal Setting and MBO 426
Performance Appraisal 426
Application 17-1 The Goal-Setting Process at Siebel Systems 427 The Performance Appraisal Process 428 Application Stages 430 Effects of Performance Appraisal 431
Reward Systems 431
Application 17-2 Adapting the Appraisal Process at Capital One Financial 432
Structural and Motivational Features of Reward Systems 434 Skill- and Knowledge-Based Pay Systems 437 Performance-Based Pay Systems 438 Gain-Sharing Systems 440 Promotion Systems 442 Reward-System Process Issues 443
Application 17-3 Revising the Reward Systemat Lands’ End 444
Summary 447
Notes 447
CHAPTER 18 Developing Talent 451
Coaching and Mentoring 451 What Are the Goals? 452 Application Stages 452 The Results of Coaching and Mentoring 453
Career Planning and Development Interventions 453 What Are the Goals? 454 Application Stages 455 The Results of Career Planning and Development 463
Management And Leadership Development Interventions 463
Application 18-1 PepsiCo’s Career Planning and Development Framework 464 What Are the Goals? 466 Application Stages 466
xii Contents
Application 18-2 Leading Your Business at Microsoft Corporation 468 The Results of Development Interventions 469
Summary 469
Notes 470
CHAPTER 19 Managing Workforce Diversityand Wellness 473
Workforce Diversity Interventions 473 What Are the Goals? 473 Application Stages 475 The Results for Diversity Interventions 478
Employee Stress and Wellness Interventions 479 What Are the Goals? 479
Application 19-1 Embracing Employee Diversity at Baxter Export 480 Applications Stages 481 The Results of Stress Management and Wellness Interventions 486
Summary 487
Notes 488
Application 19-2 Johnson & Johnson’s Health and Wellness Program 490
Selected Cases 492 Employee Benefits at HealthCo 492 Sharpe BMW 497
PART 6 Strategic Change Interventions 504
CHAPTER 20 Transformational Change 505
Characteristics of Transformational Change 505 Change Is Triggered by Environmental and Internal Disruptions 506 Change Is Aimed at Competitive Advantage 506 Change Is Systemic and Revolutionary 507 Change Demands a New Organizing Paradigm 508 Change Is Driven by Senior Executives and Line Management 508 Change Involves Significant Learning 509
Integrated Strategic Change 509
Organization Design 512
Application 20-1 Managing Strategic Change at Microsoft Canada 513 Conceptual Framework 515
Culture Change 518
Application 20-2 Organization Design at Deere & Company 519 Concept of Organization Culture 520 Organization Culture and Organization Effectiveness 521 Diagnosing Organization Culture 523 The Behavioral Approach 523 The Competing Values Approach 524 The Deep Assumptions Approach 525
Summary 528
Notes 529
Application 20-3 Culture Change at IBM 533
CHAPTER 21 Continuous Change 535
Self-Designing Organizations 535 The Demands of Adaptive Change 536 Application Stages 536
Learning Organizations 538 Conceptual Framework 538
xiiiContents
Application 21-1 Self-Design at American Healthways Corporation 539 Organization Learning Interventions 542 Knowledge Management Interventions 547 Outcomes of OL and KM 550
Application 21-2 Implementing a Knowledge Management System at Motorola Penang 551
Built-To-Change Organizations 553 Design Guidelines 553 Application Stages 554
Summary 556
Notes 556
Application 21-3 Creating a Built-to-Change Organizationat Capital One Financial 559
CHAPTER 22 Transorganizational Change 561
Transorganizational Rationale 562 Mergers and Acquisitions 563 Application Stages 564
Strategic Alliance Interventions 568 Application Stages 568
Application 22-1 The Sprint and Nextel Merger: The First Two Years 569
Network Interventions 571
Application 22-2 Building Alliance Relationships 572 Creating the Network 574 Managing Network Change 577
Application 22-3 Fragile and Robust—Network Change in Toyota Motor Corporation 580
Summary 582
Notes 583
Selected Cases 586 Fourwinds Marina 586 Leading Strategic Change at DaVita: The Integration of the Gambro Acquisition 597
PART 7 Special Applications of Organization Development 613
CHAPTER 23 Organization Development in Global Settings 614
Organization Development Outside the United States 615 Cultural Context 616 Economic Development 618 How Cultural Context and Economic Development Affect OD Practice 619
Application 23-1 Modernizing China’s Human Resource Development and Training Functions 623
Worldwide Organization Development 625 Worldwide Strategic Orientations 626 The International Strategic Orientation 627 The Global Strategic Orientation 629 The Multinational Strategic Orientation 631
Application 23-2 Implementing the Global Strategy: Changing the Culture of Work in Western China 632
The Transnational Strategic Orientation 636
Global Social Change 639 Global Social Change Organizations 640 Application Stages 641 Change Agent Roles and Skills 644
xiv Contents
Application 23-3 Social and Environmental Change at Floresta 645
Summary 647
Notes 647
CHAPTER 24 Organization Developmentin Nonindustrial Settings: Health Care, School Systems, the Public Sector, and Family-Owned Businesses 651
Organization Development in Health Care 651 Trends in Health Care 652 Opportunities for Organization Development Practice 655 Success Principles for OD in Health Care 657 Conclusions 658
Organization Development in School Systems 659 Education: Industrial-Age Roots 659 Changing Conditions Cause Stress 659 Disappointing Reform Efforts 660 A New Metaphor for Schools 662 Future Opportunities for OD Practice 664 Technology’s Unique Role in School OD 665 Conclusions 667
Organization Developmentin the Public Sector 667 Comparing Public- and Private-Sector Organizations 669 Recent Research and Innovations in Public-Sector Organizational Development 674 Conclusions 675
Organization Development in Family-Owned Businesses 675 The Family Business System 676 Family Business Developmental Stages 679 A Parallel Planning Process 680 Values 680 Critical Issues in Family Business 681 OD Interventions in Family Business System 684
Summary 688
Notes 689
CHAPTER 25 Future Directions in Organization Development 693
Trends within Organization Development 693 Traditional 693 Pragmatic 694 Scholarly 695 Implications for OD’s Future 695
Trends in the Context of Organization Development 697 The Economy 697 The Workforce 700 Organizations 701 Implications for OD’s Future 702
Summary 708
Notes 709
Integrative Cases 712 B. R. Richardson Timber Products Corporation 712 Building the Cuyahoga River Valley Organization* 728 Black & Decker International: Globalization of the Architectural Hardware Line 738
Glossary 746
Name Index 756
Subject Index 760
xv
In preparing this new edition, we were struck by how the cliché of “living in changing times” is becoming almost ironic. The events of each day remind us that things are mov- ing far more quickly and unpredictably than we could ever have imagined. Consider the U.S. economic turmoil brought on by the mortgage- lending crisis and the record price of crude oil, which seemingly rises independent of consumption. Or think about the run- up to the 2008 U.S. presidential election. It strikes us as just a bit surreal to see the word CHANGE plastered on the speaker’s podium and waved by supporters every time Barack Obama comes out to speak. Not to be outdone, Hillary Clinton’s key selling point is her emphasis that she has the ability to lead change. By the time the next edition of this book comes out, a new president will be well into her or his first term and we will no doubt have experienced a lot of change.
Nor is change confined to the United States. As we write this, the new prime min- ister of France is shaking up that country’s work rules, organizations, and policies. Beijing is preparing to host the Olympic Games and show the world a whole new China. Countries in Africa are dealing with drought, AIDS, military dictatorships, and the emergence of democracy. The war in Iraq remains a point of contention among many, and the Middle East remains embroiled in controversy and seemingly intrac- table problems.
Nor is change restricted to governments and organizations. Our personal lives are embedded in change and the dilemmas it poses. Individuals and families are finding that the pace of change exceeds their physical and mental capacity to cope with it. As people experience change accelerating, they tend to feel overwhelmed and alienated. They experience what sociologists call “anomie,” a state of being characterized by the lack of social norms or anchors of stable and shared values. Many Americans, for example, want more time with their families but feel compelled to work longer hours, make more money, and satisfy escalating needs; they espouse diversity but push other cultures to do it “the American way”; they argue that technology will find an answer to the global warming problem and so justify acquiring a Hummer.
Nor is change limited to social systems and their environments. Organization Development—the field of planned change itself—is changing. In a time of unprec- edented change, our views of how and when planned change occurs, who leads and controls it, and what contributes to its success are all changing. Since the last edition of this text, three OD handbooks have been published, a special issue of the Journal of Applied Behavioral Science has been devoted to “reinvigorate OD” and another special issue on international OD is on its way, and volumes on change management and organization transformation have continued to flood the bookstores. Conversations among OD practitioners and scholars about where the field is and should be headed have become more vigorous. The drive to understand and do something about change continues unabated.
In times like these, books on OD and change have never been more relevant and necessary. For our part, this is the ninth edition of the market-leading text in the field. OD is an applied field of change that uses behavioral science knowledge to increase
preface
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the capacity for change, and to improve the functioning and performance of organiza- tions. OD is more than change management, however, and the field would do well to differentiate itself from the mechanistic, programmatic assumptions that organization change can simply be scripted by various methods of “involving” people and “enroll- ing” them in the change. OD is not concerned about change for change’s sake, a way to implement the latest fad, or a pawn for doing management’s bidding. It is about learning and improving in ways that make individuals, groups, organizations, and ultimately the world better off and more capable of managing change in the future. Moreover, OD is more than a set of values. It is not a front for the promulgation of humanistic and spiritual beliefs nor a set of interventions that boil down to “holding hands and singing Kumbaya.” It is a set of testable ideas and practices about how social and technical systems can coexist to produce individual satisfaction and sustainable organizational results. Finally, OD is more than a set of tools and techniques. It is not a bunch of “interventions” looking to be applied in whatever organization that comes along. It is an integrated theory and practice aimed at increasing the effectiveness of organizations.
In today’s reality, OD is often misunderstood and its relevance questioned. As men- tioned above, OD is often used synonymously with change management; it is often defined and overly constrained by its association with a set of “touchy-feely” values; and it is often described as a hammer looking for a nail. As a result, it is open to discus- sion whether OD is up to the task of facilitating the changes that organizations need to exist and thrive in the world today. This is OD’s challenge in the decade and century ahead. Can it implement change and teach the system to change itself at the same time? Will it cling to its humanistic traditions and focus on functioning or increase its relevance by integrating more performance-related values? How will OD incorporate values related to globalization, cultural integration, the concentration of wealth, and environmental sustainability? Can it afford not to address the issues that threaten an organization’s survival? These are heady questions for a field barely 55 years old.
The original edition of this text, authored by OD pioneer Edgar Huse in 1975, became a market leader because it faced the relevance issue. It took an objective, research perspective and placed OD practice on stronger theoretical footing. Ed showed that, in some cases, OD did produce meaningful results but that additional work was still needed. Sadly, Ed passed away following the publication of the second edition. His wife, Mary Huse, asked Tom Cummings to revise the book for subsequent editions. With the fifth edition, Tom asked Chris Worley to work with him in writing the text.
The most recent editions have had an important influence on the perception of OD. While maintaining the book’s strengths of even treatment and unbiased report- ing, the newer editions made even larger strides in placing OD on a strong theoretical foundation. They broadened the scope and increased the relevance of OD by includ- ing interventions that had a content component, including work design, employee involvement, and organization structure. They took another step toward relevance and suggested that OD had begun to incorporate a strategic perspective. This strategic orientation proposed that OD could be as concerned with performance issues as it was with human potential. Effective OD, from this newer perspective, relied as much on knowledge about organization theory and econo mics as it did on the behavioral sci- ences. It is our greatest hope that the current edition continues this tradition of rigor and relevance.
REVISIONS TO THE NINTH EDITION
Our goal in the ninth edition is to update the field once again. Although we have retained several features of the prior editions, we have made some important changes.
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Strategic Emphasis In keeping with the increasingly strategic focus of OD, we have expanded the strategic interventions part of the book from two chapters to three chapters. Chapter 20 now describes transformational change and focuses on the interventions and processes associated with episodic forms of large-scale change. There is a whole new section on organization redesign interventions. Chapter 21 is devoted to describing continuous change in organizations, with a new section on built-to-change organizations. Finally, Chapter 22 now combines interventions about multiple organizations, including trans- organizational development, mergers and acquisitions, joint ventures, and networks.
Human Resources Interventions In addition, the human resources interventions part of the text has been completely reorganized and revised. The original two chapters have been expanded to three chap- ters. While we retained the performance management chapter, there is a new chapter on developing talent (Chapter 18) that includes training, leadership development, career management, and coaching. Chapter 19 has been refocused on managing work- force diversity, wellness, and stress.
Key Chapter Revisions Other chapters have received important updates and improvements. In Chapter 14— “Restructuring Organizations”—a new section on “customer-centric” organizations was added to reflect important advances in this area. In Chapter 24—“OD in Health Care, School Systems, the Public Sector, and Family-Owned Businesses”—each sec- tion has been completely re-written by new guest authors. Finally, Chapter 25—“Future Directions in Organization Development”—has received a thorough revision based on the authors’ recent research.
DISTINGUISHING PEDAGOGICAL FEATURES
The text is designed to facilitate the learning of OD theory and interventions. We maintained the chapter sequence from the previous edition. Based on feedback from reviewers, this format more closely matches the OD process. Instructors can teach the process and then link OD practice to the interventions.
Organization The ninth edition is organized into seven parts. Following an introductory chapter that describes the definition and history of OD, Part 1 provides an overview of orga- nization development. It discusses the fundamental theories that underlie planned change (Chapter 2) and describes the people who practice it (Chapter 3). Part 2 is an eight-chapter description of the OD process. It describes how OD practitioners enter and contract with client systems (Chapter 4); diagnose organizations, groups, and jobs (Chapters 5 and 6); collect, analyze, and feedback diagnostic data (Chapters 7 and 8); design interventions (Chapter 9); lead and manage change (Chapter 10); and evaluate and institutionalize change (Chapter 11). In this manner, professors can focus on the OD process without distraction. Parts 3, 4, 5, and 6 then cover the major OD interven- tions used today according to the same classification scheme used in previous editions of the text. Part 3 covers human process interventions; Part 4 describes technostruc- tural approaches; Part 5 presents interventions in human resources management; and Part 6 addresses strategic change interventions. In the final section, Part 7, we cover special applications of OD, including international OD (Chapter 23); OD in health care, family businesses, schools, and the public sector (Chapter 24); and the future of
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OD (Chapter 25). We believe this ordering provides professors with more flexibility in teaching OD.
Applications Within each chapter, we describe actual situations in which different OD techniques or interventions were used. These applications provide students with a chance to see how OD is actually practiced in organizations. In the ninth edition, more than 33% of the applications are new and many others have been updated to maintain the text’s currency and relevance. In response to feedback from reviewers, almost all of the applications describe a real situation in a real organization (although sometimes we felt it necessary to use disguised names). In many cases, the organizations are large public companies that should be readily recognizable. We have endeavored to write applications based on our own OD practice or that have appeared in the popular literature. In addition, we have asked several of our students to submit descriptions of their own practice and these applications appear throughout the text. The time and effort to produce these vignettes of OD practice for others is gratefully acknowledged.
Cases At the end of each major part in the book, we have included cases to permit a more in-depth discussion of the OD process. Seven of the 16 cases are new to the ninth edi- tion. We have kept some cases that have been favorites over the years but have also replaced some of the favorites with newer ones. Also in response to feedback from users of the text, we have endeavored to provide cases that vary in levels of detail, complexity, and sophistication to allow the professor some flexibility in teaching the material to either undergraduate or graduate students.
Internet Resources Throughout the book, we have tried to provide references to the Internet, particularly to sites related to the organizations discussed. Although these sites are often updated, moved, or altogether abandoned (so we cannot guarantee that the links will be main- tained as cited), these provide students with an opportunity to explore the information available on the Internet.
Audience This book can be used in a number of different ways and by a variety of people. First, it serves as a primary textbook in organization development for students at both the undergraduate and graduate levels. Second, the book can also serve as an independent study guide for individuals wishing to learn more about how organization develop- ment can improve productivity and human satisfaction. Third, the book is intended to be of value to OD professionals, executives and administrators, specialists in such fields as personnel, training, occupational stress, and human resources management, and anyone interested in the complex process known as organization development.
EDUCATIONAL AIDS AND SUPPLEMENTS
Instructor’s Manual with Test Bank (ISBN: 0-324-58057-6) To assist instructors in the delivery of a course on organization development, an instructor’s manual is available. It has been revised in response to feedback from users. The manual contains material that can improve the student’s appreciation of OD and improve the instructor’s effectiveness in the classroom.
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Chapter Objectives and Lecture Notes For each chapter, summary learning objec- tives provide a quick orientation to the chapter’s material. The material in the chapter is then outlined and comments are made concerning important pedagogical points, such as crucial assumptions that should be noted for students, important aspects of practical application, and alternative points of view that might be used to enliven class discussion.
Exam Questions A variety of multiple choice, true/false, and essay questions are suggested for each chapter. Instructors can use these questions directly or to suggest additional questions reflecting the professor’s own style.
Case Notes For each case in the text, teaching notes have been developed to assist instructors in preparing for case discussions. The notes provide an outline of the case, suggestions about where to place the case during the course, discussion questions to focus student attention, and an analysis of the case situation. In combination with the professor’s own insights, the notes can help to enliven the case discussion or role plays.
Audiovisual Materials Finally, a list is included of films, videos, and other materials that can be used to supplement different parts of the text, along with the addresses and phone numbers of vendors that supply the materials.
Instructor’s Resource CD-ROM (0-324-58058-4) Key instructor ancillaries (Instructor’s Manual, Test Bank, ExamView, and PowerPoint slides) are provided on CD-ROM, giving instructors the ultimate tool for customizing lectures and presentations.
ExamView Available on the Instructor’s Resource CD-ROM, ExamView contains all of the ques- tions in the printed Test Bank. This program is an easy-to-use test creation software compatible with Microsoft Windows. Instructors can add or edit questions, instructions, and answers, and select questions (randomly or numerically) by previewing them on the screen. Instructors can also create and administer quizzes online, whether over the Internet, a local area network (LAN), or a wide area network (WAN).
PowerPoint TM Presentation Slides Available on the Instructor’s Resource CD-ROM and the Web site, the PowerPoint pre- sentation package consists of tables and figures used in the book. These colorful slides can greatly aid the integration of text material during lectures and discussions.
Web Site A rich Web site at http://academic.cengage.com/management/cummings complements the text, providing many extras for the student and instructor.
ACKNOWLEDGMENTS
Our friends and colleagues are always asking about “the text.” “Why did you include that?” “Why didn’t you include this?” “When are you going to revise it again?” “I have some suggestions that might improve this section.” And so on. It is gratifying, after eight (and now nine) editions, that people find the book provocative, refer to it, use it to guide their practice, and assign it as required reading in their courses. Even though the text is revised every three years or so, it seems to be a common subject of con- versation whenever we get together with our OD colleagues and students. When it does come time for revision, it provides us a chance to refresh, renew, and reestablish
Preface
xx
our relationship with them. “What have you heard about what’s new in OD?” “How’s your family?” “Do you think we should reorganize the book?” “What’s next in your career?” “Did you see that article in (pick a journal or magazine)?” “What have you been reading lately?”
And then the research, reading, writing, editing, and proofing begins. Writing, debates, and editing occupy most of our time. “Can we say that better, more efficiently, and more clearly?” “Should we create a new section or revise the existing one?” “Do you really think people want to read that?” The permission requests go out and come in quickly . . . at least most of them. Follow up faxes, reminder e-mails, and urgent phone calls are made. The search for new cases and applications is an ongoing activity. “Where can we find good descriptions of change?” “Would you be willing to write up that case?” Deadlines come . . . and go. The copy editing process is banter between two strangers. “No, no, no, I meant to say that.” “Yes, that’s a good idea, I hadn’t thought of that.” Six months into it, our wives start to ask, “When will it be done?” Then, the result of having done this before, they ask, “no, I meant when will it be done, done?” When the final proofs arrive, things start to look finished. We get to see the art work and the cover design, and a new set of problems emerge. “Where did that come from?” “No, this goes there, that goes here.” Doesn’t this sound fun?
So, yes, we continue to hope that our readers, colleagues, and friends ask us about “the text.” We like talking about it, discussing it, and hearing about what we did right or wrong. But please don’t ask us about writing “the text.” We’re very happy to be done (yes, done, done).
Finally, we’d like to thank those who supported us in this effort. We are grateful to our families: Chailin Cummings and the Worley clan, Debbie, Sarah, Hannah, and Samuel. We would also like to thank our students for their comments on the previous edition, for contributing many of the applications, and for helping us to try out new ideas and perspectives. A particular word of thanks goes to Gordon Brooks, Brigette Worthen, and the Pepperdine MSOD faculty (Ann Feyerherm, Miriam Lacey, Terri Egan, and Gary Mangiofico). Our colleagues at USC’s Center for Effective Organizations—Ed Lawler, Sue Mohrman, John Boudreau, Alec Levenson, Jim O’Toole, Jay Conger, and Jay Galbraith—have been consistent sources of support and intellectual inquiry. As well, the following individuals reviewed the text and influenced our thinking with their hon- est and constructive feedback:
Ben Dattner, New York University Diana Wong, Eastern Michigan University Merwyn L. Strate, Purdue University Bruce Brewer, University of West Georgia Susan A. Lynham, Texas A&M University
We would also like to express our appreciation to members of the staff at Cengage Learning, South-Western, for their aid and encouragement. Special thanks go to Joe Sabatino, Denise Simon, and Jean Buttrom for their help and guidance throughout the development of this revision. Menaka Gupta patiently made sure that the editing and producing of our book went smoothly.
Thomas G. Cummings Christopher G. Worley Palos Verdes Estates, California San Juan Capistrano, California March, 2008
Preface
1 General Introduction to Organization Development This is a book about organization development (OD)—a process that applies a broad range of behavioral science knowledge and practices to help organizations build their capacity to change and to achieve greater effectiveness, includ- ing increased financial performance, customer satisfaction, and organization member engage- ment. Organization development differs from other planned change efforts, such as project management or innovation, because the focus is on building the organization’s ability to assess its current functioning and to achieve its goals. Moreover, OD is oriented to improving the total system—the organization and its parts in the con- text of the larger environment that affects them.
This book reviews the broad background of OD and examines assumptions, strategies and models, intervention techniques, and other aspects of OD. This chapter provides an intro- duction to OD, describing first the concept of OD itself. Second, it explains why OD has expanded rapidly in the past 50 years, both in terms of people’s need to work with and through others in organizations and in terms of organizations’ need to adapt in a complex and changing world. Third, it reviews briefly the history of OD, and fourth, it describes the evolution of OD into its current state. This intro- duction to OD is followed by an overview of the rest of the book.
ORGANIZATION DEVELOPMENT DEFINED
Organization development is both a professional field of social action and an area of scientific inquiry. The practice of OD covers a wide spectrum of activities, with seem- ingly endless variations upon them. Team building with top corporate management, structural change in a municipality, and job enrichment in a manufacturing firm are all examples of OD. Similarly, the study of OD addresses a broad range of topics, including the effects of change, the methods of organizational change, and the factors influenc- ing OD success.
A number of definitions of OD exist and are presented in Table 1.1. Each definition has a slightly different emphasis. For example, Burke’s description focuses attention on culture as the target of change; French’s definition is concerned with OD’s long- term interest and the use of consultants; and Beckhard’s and Beer’s definitions address the process of OD. More recently, Burke and Bradford’s definition broadens the range and interests of OD. Worley and Feyerherm suggested that for a process to be called organization development, (1) it must focus on or result in the change of some aspect of the organizational system; (2) there must be learning or the transfer of knowledge or skill to the client system; and (3) there must be evidence of improvement in or an intention to improve the effectiveness of the client system.1 The following definition incorporates most of these views and is used in this book: Organization development is a systemwide application and transfer of behavioral science knowledge to the planned development,
2 CHAPTER 1 General Introduction to Organization Development
improvement, and reinforcement of the strategies, structures, and processes that lead to organiza- tion effectiveness. This definition emphasizes several features that differentiate OD from other approaches to organizational change and improvement, such as management consulting, innovation, project management, and operations management. The defi- nition also helps to distinguish OD from two related subjects, change management and organization change, that also are addressed in this book.
First, OD applies to changes in the strategy, structure, and/or processes of an entire system, such as an organization, a single plant of a multiplant firm, a department or work group, or individual role or job. A change program aimed at modifying an organization’s strategy, for example, might focus on how the organization relates to a wider environment and on how those relationships can be improved. It might include changes both in the grouping of people to perform tasks (structure) and in methods of communicating and solving problems (process) to support the changes in strategy. Similarly, an OD program directed at helping a top management team become more effective might focus on interactions and problem-solving processes within the group. This focus might result in the improved ability of top management to solve company problems in strategy and structure. This contrasts with approaches focusing on one or only a few aspects of a system, such as technological innovation or operations manage- ment. In these approaches, attention is narrowed to improvement of particular prod- ucts or processes, or to development of production or service delivery functions.
Second, OD is based on the application and transfer of behavioral science knowledge and practice, including microconcepts, such as leadership, group dynamics, and work design, and macroapproaches, such as strategy, organization design, and international
Definitions of Organization Development
Organization development is a planned process of change in an organization’s culture through the utilization of behavioral science technology, research, and theory. (Warner Burke)2 Organization development refers to a long-range effort to improve an organization’s problem-solving capabilities and its ability to cope with changes in its external environment with the help of external or internal behavioral-scientist consultants, or change agents, as they are sometimes called. (Wendell French)3 Organization development is an effort (1) planned, (2) organization-wide, and (3) managed from the top, to (4) increase organization effectiveness and health through (5) planned interventions in the organization’s “processes,” using behavioral science knowledge. (Richard Beckhard)4 Organization development is a systemwide process of data collection, diagnosis, action planning, intervention, and evaluation aimed at (1) enhancing congruence among organizational structure, process, strategy, people, and culture; (2) developing new and creative organizational solutions; and (3) developing the organization’s self- renewing capacity. It occurs through the collaboration of organizational members working with a change agent using behavioral science theory, research, and technology. (Michael Beer)5 Based on (1) a set of values, largely humanistic; (2) application of the behavioral sciences; and (3) open systems theory, organization development is a system- wide process of planned change aimed toward improving overall organization effectiveness by way of enhanced congruence of such key organization dimensions as external environment, mission, strategy, leadership, culture, structure, information and reward systems, and work policies and procedures. (Warner Burke and David Bradford)6
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[Table 1.1][Table 1.1]
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relations. These subjects distinguish OD from such applications as management consult- ing, technological innovation, or operations management that emphasize the economic, financial, and technical aspects of organizations. These approaches tend to neglect the personal and social characteristics of a system. Moreover, OD is distinguished by its intent to transfer behavioral science knowledge and skill so that the system is more capable of carrying out planned change in the future.
Third, OD is concerned with managing planned change, but not in the formal sense typically associated with management consulting or project management, which tends to comprise programmatic and expert-driven approaches to change. Rather, OD is more an adaptive process for planning and implementing change than a blueprint for how things should be done. It involves planning to diagnose and solve organizational problems, but such plans are flexible and often revised as new information is gathered as the change program progresses. If, for example, there was concern about the perfor- mance of a set of international subsidiaries, a reorganization process might begin with plans to assess the current relationships between the international divisions and the corporate headquarters and to redesign them if necessary. These plans would be modi- fied if the assessment discovered that most of the senior management teams were not given adequate cross-cultural training prior to their international assignments.
Fourth, OD involves the design, implementation, and the subsequent reinforce- ment of change. It moves beyond the initial efforts to implement a change program to a longer-term concern for appropriately institutionalizing new activities within the organization. For example, implementing self-managed work teams might focus on ways in which supervisors could give workers more control over work methods. After workers had more control, attention would shift to ensuring that supervisors contin- ued to provide that freedom. That assurance might include rewarding supervisors for managing in a participative style. This attention to reinforcement is similar to training and development approaches that address maintenance of new skills or behaviors, but it differs from other change perspectives that do not address how a change can be institutionalized.
Finally, OD is oriented to improving organizational effectiveness. Effectiveness is best measured along three dimensions. First, OD affirms that an effective organization is adaptable; it is able to solve its own problems and focus attention and resources on achieving key goals. OD helps organization members gain the skills and knowledge necessary to conduct these activities by involving them in the change process. Second, an effective organization has high financial and technical performance, including sales growth, acceptable profits, quality products and services, and high productiv- ity. OD helps organizations achieve these ends by leveraging social science practices to lower costs, improve products and services, and increase productivity. Finally, an effective organization has satisfied and loyal customers or other external stakeholders and an engaged, satisfied, and learning workforce. The organization’s performance responds to the needs of external groups, such as stockholders, customers, suppli- ers, and government agencies, which provide the organization with resources and legitimacy. Moreover, it is able to attract and motivate effective employees, who then perform at higher levels. Other forms of organizational change clearly differ from OD in their focus. Management consulting, for example, primarily addresses financial performance, whereas operations management or industrial engineering focuses on productivity.
Organization development can be distinguished from change management and organizational change. OD and change management both address the effective imple- mentation of planned change. They are both concerned with the sequence of activities, processes, and leadership issues that produce organization improvements. They differ, however, in their underlying value orientation. OD’s behavioral science foundation supports values of human potential, participation, and development in addition to
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performance and competitive advantage. Change management focuses more narrowly on values of cost, quality, and schedule.7 As a result, OD’s distinguishing feature is its concern with the transfer of knowledge and skill so that the system is more able to manage change in the future. Change management does not necessarily require the transfer of these skills. In short, all OD involves change management, but change man- agement may not involve OD.
Similarly, organizational change is a broader concept than OD. As discussed above, organization development can be applied to managing organizational change. However, it is primarily concerned with managing change in such a way that knowledge and skills are transferred to build the organization’s capability to achieve goals and solve problems. It is intended to change the organization in a particular direction, toward improved problem solving, responsiveness, quality of work life, and effectiveness. Organizational change, in contrast, is more broadly focused and can apply to any kind of change, includ- ing technical and managerial innovations, organization decline, or the evolution of a system over time. These changes may or may not be directed at making the organization more developed in the sense implied by OD.
The behavioral sciences have developed useful concepts and methods for helping organizations to deal with changing environments, competitor initiatives, technologi- cal innovation, globalization, or restructuring. They help managers and administrators to manage the change process. Many of these concepts and techniques are described in this book, particularly in relation to managing change.
THE GROWTH AND RELEVANCE OF ORGANIZATION DEVELOPMENT
In each of the previous editions of this book, we argued that organizations must adapt to increasingly complex and uncertain technological, economic, political, and cultural changes. We also argued that OD could help an organization to create effec- tive responses to these changes and, in many cases, to proactively influence the strategic direction of the firm. The rapidly changing conditions of the past few years confirm our arguments and accentuate their relevance. According to several observ- ers, organizations are in the midst of unprecedented uncertainty and chaos, and nothing short of a management revolution will save them.8 Three major trends are shaping change in organizations: globalization, information technology, and manage- rial innovation.9
First, globalization is changing the markets and environments in which organizations operate as well as the way they function. New governments, new leadership, new mar- kets, and new countries are emerging and creating a new global economy with both opportunities and threats.10 The toppling of the Berlin Wall symbolized and energized the reunification of Germany; the European Union created a cohesive economic block that alters the face of global markets; entrepreneurs appeared in Russia, the Balkans, and Siberia to transform the former Soviet Union; terrorism has reached into every corner of economic and social life; and China is emerging as an open market and global economic influence. The rapid spread of Severe Acute Respiratory Syndrome (SARS) and its economic impact clearly demonstrated the interconnectedness among the social environment, organizations, and the global economy.
Second, information technology is redefining the traditional business model by changing how work is performed, how knowledge is used, and how the cost of doing business is calculated. The way an organization collects, stores, manipulates, uses, and transmits information can lower costs or increase the value and quality of prod- ucts and services. Information technology, for example, is at the heart of emerging e-commerce strategies and organizations. Amazon.com, Yahoo!, and eBay are among
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the survivors of a busted dot-com bubble, Google has emerged as a major competitor to Microsoft, and the amount of business being conducted on the Internet is pro- jected to grow at double-digit rates. Moreover, the underlying rate of innovation is not expected to decline. Electronic data interchange—a state-of-the-art technology application a few years ago—is now considered routine business practice. The ability to move information easily and inexpensively throughout and among organizations has fueled the downsizing, delayering, and restructuring of firms. The Internet has enabled a new form of work known as telecommuting; organization members from Captial One and Cigna can work from their homes without ever going to the office. Finally, information technology is changing how knowledge is used. Information that is widely shared reduces the concentration of power at the top of the organization. In choosing “You” as the 2006 Person of the Year, Time magazine noted that the year was “a story about community and collaboration on a scale never seen before. It’s about . . . Wikipedia . . . YouTube and . . . MySpace. It’s about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes (emphasis added).”11 Organization members now share the same key information that senior managers once used to control decision making.
Third, managerial innovation has responded to the globalization and information technol- ogy trends and has accelerated their impact on organizations. New organizational forms, such as networks, strategic alliances, and virtual corporations, provide organizations with new ways of thinking about how to manufacture goods and deliver services. The strategic alliance, for example, has emerged as one of the indispensable tools in strategy imple- mentation. No single organization, not even IBM, Mitsubishi, or General Electric, can control the environmental and market uncertainty it faces. Sun Microsystems’ network is so complex that some products it sells are never touched by a Sun employee. In addition, change innovations, such as downsizing or reengineering, have radically reduced the size of organizations and increased their flexibility; new large-group interventions, such as the search conference and open space, have increased the speed with which organizational change can take place; and organization learning interventions have acknowledged and leveraged knowledge as a critical organizational resource.12 Managers, OD practitioners, and researchers argue that these forces not only are powerful in their own right but are interrelated. Their interaction makes for a highly uncertain and chaotic environment for all kinds of organizations, including manufacturing and service firms and those in the public and private sectors. There is no question that these forces are profoundly affecting organizations.
Fortunately, a growing number of organizations are undertaking the kinds of organizational changes needed to survive and prosper in today’s environment. They are making themselves more streamlined and nimble, more responsive to external demands, and more ecologically sustainable. They are involving employees in key decisions and paying for performance rather than for time. They are taking the initia- tive in innovating and managing change, rather than simply responding to what has already happened.
Organization development plays a key role in helping organizations change them- selves. It helps organizations assess themselves and their environments and revitalize and rebuild their strategies, structures, and processes. OD helps organization mem- bers go beyond surface changes to transform the underlying assumptions and values governing their behaviors. The different concepts and methods discussed in this book increasingly are finding their way into government agencies, manufacturing firms, mul- tinational corporations, service industries, educational institutions, and not-for-profit organizations. Perhaps at no other time has OD been more responsive and practically relevant to organizations’ needs to operate effectively in a highly complex and chang- ing world.
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OD is obviously important to those who plan a professional career in the field, either as an internal consultant employed by an organization or as an external consultant practicing in many organizations. A career in OD can be highly rewarding, providing challenging and interesting assignments working with managers and employees to improve their organizations and their work lives. In today’s environment, the demand for OD professionals is rising rapidly. For example, large professional services firms must have effective “change management” practices to be competitive. Career oppor- tunities in OD should continue to expand in the United States and abroad.
Organization development also is important to those who have no aspirations to become professional practitioners. All managers and administrators are responsible for supervising and developing subordinates and for improving their departments’ perfor- mance. Similarly, all staff specialists, such as financial analysts, engineers, information technologists, or market researchers, are responsible for offering advice and counsel to managers and for introducing new methods and practices. Finally, OD is important to general managers and other senior executives because OD can help the whole organi- zation be more flexible, adaptable, and effective.
Organization development can also help managers and staff personnel perform their tasks more effectively. It can provide the skills and knowledge necessary for establish- ing effective interpersonal relationships. It can show personnel how to work effectively with others in diagnosing complex problems and in devising appropriate solutions. It can help others become committed to the solutions, thereby increasing chances for their successful implementation. In short, OD is highly relevant to anyone having to work with and through others in organizations.
A SHORT HISTORY OF ORGANIZATION DEVELOPMENT
A brief history of OD will help to clarify the evolution of the term as well as some of the problems and confusion that have surrounded it. As currently practiced, OD emerged from five major backgrounds or stems, as shown in Figure 1.1. The first was the growth of the National Training Laboratories (NTL) and the development of training groups, otherwise known as sensitivity training or T-groups. The second stem of OD was the classic work on action research conducted by social scientists interested in applying research to managing change. An important feature of action research was a technique known as survey feedback. Kurt Lewin, a prolific theorist, researcher, and practitioner in group dynamics and social change, was instrumental in the development of T-groups, survey feedback, and action research. His work led to the creation of OD and still serves as a major source of its concepts and methods. The third stem reflects a normative view of OD. Rensis Likert’s participative management framework and Blake and Mouton’s Grid® OD suggest a “one best way” to design and operate organizations. The fourth background is the approach focusing on productivity and the quality of work life. The fifth stem of OD, and the most recent influence on current practice, involves strategic change and organization transformation.
Laboratory Training Background This stem of OD pioneered laboratory training, or the T-group—a small, unstruc- tured group in which participants learn from their own interactions and evolving group processes about such issues as interpersonal relations, personal growth, lead- ership, and group dynamics. Essentially, laboratory training began in the summer of 1946, when Kurt Lewin and his staff at the Research Center for Group Dynamics at the Massachusetts Institute of Technology (MIT) were asked by the Connecticut Interracial Commission and the Committee on Community Interrelations of the
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Normative Approaches
Quality of Work Life
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American Jewish Congress for help in research on training community leaders. A workshop was developed, and the community leaders were brought together to learn about leadership and to discuss problems. At the end of each day, the research- ers discussed privately what behaviors and group dynamics they had observed. The community leaders asked permission to sit in on these feedback sessions. Reluctant at first, the researchers finally agreed. Thus, the first T-group was formed in which people reacted to data about their own behavior.13 The researchers drew two conclu- sions about this first T-group experiment: (1) Feedback about group interaction was a rich learning experience, and (2) the process of “group building” had potential for learning that could be transferred to “back-home” situations.14
As a result of this experience, the Office of Naval Research and the National Education Association provided financial backing to form the National Training Laboratories, and Gould Academy in Bethel, Maine, was selected as a site for further work (since then, Bethel has played an important part in NTL). The first Basic Skill Groups were offered in the summer of 1947. The program was so successful that the Carnegie Foundation provided support for programs in 1948 and 1949. This led to a permanent program for NTL within the National Education Association.
In the 1950s, three trends emerged: (1) the emergence of regional laboratories, (2) the expansion of summer program sessions to year-round sessions, and (3) the expansion of the T-group into business and industry, with NTL members becom- ing increasingly involved with industry programs. Notable among these industry efforts was the pioneering work of Douglas McGregor at Union Carbide, of Herbert Shepard and Robert Blake at Esso Standard Oil (now ExxonMobil), of McGregor and Richard Beckhard at General Mills, and of Bob Tannenbaum at TRW Space Systems.15
The Five Stems of OD Practice [Figure 1.1][Figure 1.1]
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Applications of T-group methods at these companies spawned the term “organization development” and, equally important, led corporate personnel and industrial relations specialists to expand their roles to offer internal consulting services to managers.16
Over time, T-groups have declined as an OD intervention. They are closely associ- ated with that side of OD’s reputation as a “touchy-feely” process. NTL, as well as UCLA and Stanford, continues to offer T-groups to the public, a number of proprietary programs continue to thrive, and Pepperdine University and American University con- tinue to utilize T-groups as part of master’s level OD practitioner education. The practi- cal aspects of T-group techniques for organizations gradually became known as team building—a process for helping work groups become more effective in accomplishing tasks and satisfying member needs. Team building is one of the most common and institutionalized forms of OD today.
Action Research and Survey Feedback Background Kurt Lewin also was involved in the second movement that led to OD’s emergence as a practical field of social science. This second background refers to the processes of action research and survey feedback. The action research contribution began in the 1940s with studies conducted by social scientists John Collier, Kurt Lewin, and William Whyte. They discovered that research needed to be closely linked to action if organization members were to use it to manage change. A collaborative effort was initiated between organization members and social scientists to collect research data about an organiza- tion’s functioning, to analyze it for causes of problems, and to devise and implement solutions. After implementation, further data were collected to assess the results, and the cycle of data collection and action often continued. The results of action research were twofold: Members of organizations were able to use research on themselves to guide action and change, and social scientists were able to study that process to derive new knowledge that could be used elsewhere.
Among the pioneering action research studies were the work of Lewin and his students at the Harwood Manufacturing Company17 and the classic research by Lester Coch and John French on overcoming resistance to change.18 The latter study led to the development of participative management as a means of getting employees involved in planning and managing change. Other notable action research contributions included Whyte and Edith Hamilton’s famous study of Chicago’s Tremont Hotel19 and Collier’s efforts to apply action research techniques to improving race relations when he was commissioner of Indian affairs from 1933 to 1945.20 These studies did much to establish action research as integral to organization change. Today, it is the backbone of many OD applications.
A key component of most action research studies was the systematic collection of survey data that were fed back to the client organization. Following Lewin’s death in 1947, his Research Center for Group Dynamics at MIT moved to Michigan and joined with the Survey Research Center as part of the Institute for Social Research. The institute was headed by Rensis Likert, a pioneer in developing scientific approaches to attitude surveys. His doctoral dissertation at Columbia University developed the widely used 5-point “Likert Scale.”21
In an early study by the institute, Likert and Floyd Mann administered a companywide survey of management and employee attitudes at Detroit Edison.22 The feedback process that evolved was an “interlocking chain of conferences.” The major findings of the survey were first reported to the top management and then transmitted throughout the organization. The feedback sessions were conducted in task groups, with supervisors and their immediate subordinates discussing the data together. Although there was little substantial research evidence, the researchers intuitively felt that this was a powerful process for change.
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In 1950, eight accounting departments asked for a repeat of the survey, thus gen- erating a new cycle of feedback meetings. In four departments, feedback approaches were used, but the method varied; two departments received feedback only at the departmental level; and because of changes in key personnel, nothing was done in the remaining two departments.
A third follow-up study indicated that more significant and positive changes, such as job satisfaction, had occurred in the departments receiving feedback than in the two departments that did not participate. From those findings, Likert and Mann derived several conclusions about the effects of survey feedback on organization change. This led to extensive applications of survey-feedback methods in a variety of settings. The common pattern of data collection, data feedback, action planning, implementation, and follow-up data collection in both action research and survey feedback can be seen in these examples.
Normative Background The intellectual and practical advances from the laboratory training stem and the action research/survey-feedback stem were followed closely by the belief that a human rela- tions approach represented a “one best way” to manage organizations. This normative belief was exemplified in research that associated Likert’s Participative Management (System 4, as outlined below) style and Blake and Mouton’s Grid OD program with organizational effectiveness.23
Likert’s Participative Management Program characterized organizations as having one of four types of management systems:24
Exploitive authoritative systems (System 1) exhibit an autocratic, top-down approach to leadership. Employee motivation is based on punishment and occa- sional rewards. Communication is primarily downward, and there is little lateral interaction or teamwork. Decision making and control reside primarily at the top of the organization. System 1 results in mediocre performance. Benevolent authoritative systems (System 2) are similar to System 1, except that management is more paternalistic. Employees are allowed a little more inter- action, communication, and decision making but within boundaries defined by management. Consultative systems (System 3) increase employee interaction, communication, and decision making. Although employees are consulted about problems and deci- sions, management still makes the final decisions. Productivity is good, and employ- ees are moderately satisfied with the organization. Participative group systems (System 4) are almost the opposite of System 1. Designed around group methods of decision making and supervision, this system fos- ters high degrees of member involvement and participation. Work groups are highly involved in setting goals, making decisions, improving methods, and appraising results. Communication occurs both laterally and vertically, and decisions are linked throughout the organization by overlapping group membership. System 4 achieves high levels of productivity, quality, and member satisfaction.
Likert applied System 4 management to organizations using a survey-feedback process. The intervention generally started with organization members completing the Profile of Organizational Characteristics.25 The survey asked members for their opinions about both the present and ideal conditions of six organizational features: leadership, motivation, communication, decisions, goals, and control. In the second stage, the data were fed back to different work groups within the organization. Group members examined the discrepancy between their present situation and their ideal, generally using System 4
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as the ideal benchmark, and generated action plans to move the organization toward System 4 conditions.
Blake and Mouton’s Grid Organization Development originated from research about managerial and organizational effectiveness.26 Data gathered on organizational excel- lence from 198 organizations located in the United States, Japan, and Great Britain found that the two foremost barriers to excellence were planning and communica- tions.27 Each of these barriers was researched further to understand its roots, and the research resulted in a normative model of leadership—the Managerial Grid.
According to the Managerial Grid, an individual’s style can be described according to his or her concern for production and concern for people.28 A concern for produc- tion covers a range of behaviors, such as accomplishing productive tasks, developing creative ideas, making quality policy decisions, establishing thorough and high-quality staff services, or creating efficient workload measurements. Concern for production is not limited to things but also may involve human accomplishment within the organi- zation, regardless of the assigned tasks or activities. A concern for people encompasses a variety of issues, including concern for the individual’s personal worth, good working conditions, a degree of involvement or commitment to completing the job, security, a fair salary structure and fringe benefits, and good social and other relationships. Each dimension is measured on a 9-point scale and results in 81 possible leadership styles.
For example, 1,9 managers have a low concern for production and a high concern for people: They view people’s feelings, attitudes, and needs as valuable in their own right. This type of manager strives to provide subordinates with work conditions that provide ease, security, and comfort. On the other hand, 9,1 managers have a high concern for production but a low concern for people: They minimize the attitudes and feelings of subordinates and give little attention to individual creativity, conflict, and commitment. As a result, the focus is on the work organization.
Blake and Mouton proposed that the 9,9 managerial style is the most effective in overcoming the communications barrier to corporate excellence. The basic assumptions behind this managerial style differ qualitatively and quantitatively from those underly- ing the other managerial styles, which assume there is an inherent conflict between the needs of the organization and the needs of people. By showing a high concern for both people and production, managers allow employees to think and to influence the organi- zation, thus promoting active support for organizational plans. Employee participation means that better communication is critical; therefore, necessary information is shared by all relevant parties. Moreover, better communication means self-direction and self- control, rather than unquestioning, blind obedience. Organizational commitment arises out of discussion, deliberation, and debate over major organizational issues.
One of the most structured interventions in OD, Blake and Mouton’s Grid Organization Development has two key objectives: to improve planning by develop- ing a strategy for organizational excellence based on clear logic, and to help managers gain the necessary knowledge and skills to supervise effectively. It consists of six phases designed to analyze an entire business and to overcome the planning and communi- cations barriers to corporate excellence. The first phase is the Grid Seminar, a 1-week program where participants analyze their personal style and learn methods of problem solving. Phase two consists of team development and phase three involves intergroup development. In phase four, an ideal model of organizational excellence is developed and in phase five, the model is implemented. The final phase consists of an evaluation of the organization.
Despite some research support, the normative approach to change has given way to a contingency view that acknowledges the influence of the external environment, technology, and other forces in determining the appropriate organization design and management practices. Still, Likert’s participative management and Blake and Mouton’s Grid OD frameworks are both used in organizations today.
11CHAPTER 1 General Introduction to Organization Development
Productivity and Quality-of-Work-Life Background The contribution of the productivity and quality-of-work-life (QWL) background to OD can be described in two phases. The first phase is described by the original projects devel- oped in Europe in the 1950s and their emergence in the United States during the 1960s. Based on the research of Eric Trist and his colleagues at the Tavistock Institute of Human Relations in London, early practitioners in Great Britain, Ireland, Norway, and Sweden developed work designs aimed at better integrating technology and people.29 These QWL programs generally involved joint participation by unions and management in the design of work and resulted in work designs giving employees high levels of discretion, task variety, and feedback about results. Perhaps the most distinguishing characteristic of these QWL programs was the discovery of self-managing work groups as a form of work design. These groups were composed of multiskilled workers who were given the neces- sary autonomy and information to design and manage their own task performances.
As these programs migrated to America, a variety of concepts and techniques were adopted and the approach tended to be more mixed than in European practice. For example, two definitions of QWL emerged during its initial development.30 QWL was first defined in terms of people’s reaction to work, particularly individual outcomes related to job satisfaction and mental health. Using this definition, QWL focused pri- marily on the personal consequences of the work experience and how to improve work to satisfy personal needs.
A second definition of QWL defined it as an approach or method.31 People defined QWL in terms of specific techniques and approaches used for improving work.32 It was viewed as synonymous with methods such as job enrichment, self-managed teams, and labor–management committees. This technique orientation derived mainly from the growing publicity surrounding QWL projects, such as the General Motors–United Auto Workers project at Tarrytown and the Gaines Pet Food plant project. These pio- neering projects drew attention to specific approaches for improving work.
The excitement and popularity of this first phase of QWL in the United States lasted until the mid-1970s, when other more pressing issues, such as inflation and energy costs, diverted national attention. However, starting in 1979, a second phase of QWL activity emerged. A major factor contributing to the resurgence of QWL was growing international competition faced by the United States in markets at home and abroad. It became increasingly clear that the relatively low cost and high quality of foreign-made goods resulted partially from the management practices used abroad, especially in Japan. Books extolling the virtues of Japanese management, such as Ouchi’s Theory Z,33 made best-seller lists.
As a result, QWL programs expanded beyond their initial focus on work design to include other features of the workplace that can affect employee productivity and satis- faction, such as reward systems, work flows, management styles, and the physical work environment. This expanded focus resulted in larger-scale and longer-term projects than had the early job enrichment programs and shifted attention beyond the individual worker to work groups and the larger work context. Equally important, it added the critical dimension of organizational efficiency to what had been up to that time a primary concern for the human dimension.
At one point, the productivity and QWL approach became so popular that it was called an ideological movement. This was particularly evident in the spread of qual- ity circles within many companies. Popularized in Japan, quality circles are groups of employees trained in problem-solving methods that meet regularly to resolve work- environment, productivity, and quality-control concerns and to develop more efficient ways of working. At the same time, many of the QWL programs started in the early 1970s were achieving success. Highly visible corporations, such as General Motors, Ford, and Honeywell, and unions, such as the United Automobile Workers, the Oil, Chemical, and Atomic Workers, the Communications Workers of America, and the Steelworkers,
12 CHAPTER 1 General Introduction to Organization Development
were more willing to publicize their QWL efforts. In 1980, for example, more than 1,800 people attended an international QWL conference in Toronto, Canada. Unlike previous conferences, which were dominated by academics, the presenters at Toronto were mainly managers, workers, and unionists from private and public corporations.
Today, this second phase of QWL activity continues primarily under the banner of “employee involvement” (EI) as well as total quality management and six-sigma pro- grams, rather than of QWL. For many OD practitioners, the term EI signifies, more than the name QWL, the growing emphasis on how employees can contribute more to run- ning the organization so it can be more flexible, productive, and competitive. Recently, the term “employee empowerment” has been used interchangeably with the term EI, the former suggesting the power inherent in moving decision making downward in the organization.34 Employee empowerment may be too restrictive, however. Because it draws attention to the power aspects of these interventions, it may lead practitioners to neglect other important elements needed for success, such as information, skills, and rewards. Consequently, EI seems broader and less restrictive than does employee empowerment as a banner for these approaches to organizational improvement.
Strategic Change Background The strategic change background is a recent influence on OD’s evolution. As organ- izations and their technological, political, and social environments have become more complex and more uncertain, the scale and intricacies of organizational change have increased. This trend has produced the need for a strategic perspective from OD and encouraged planned change processes at the organization level.35
Strategic change involves improving the alignment among an organization’s envi- ronment, strategy, and organization design.36 Strategic change interventions include efforts to improve both the organization’s relationship to its environment and the fit between its technical, political, and cultural systems.37 The need for strategic change is usually triggered by some major disruption to the organization, such as the lifting of regulatory requirements, a technological breakthrough, or a new chief executive officer coming in from outside the organization.38
One of the first applications of strategic change was Richard Beckhard’s use of open systems planning.39 He proposed that an organization’s environment and its strategy could be described and analyzed. Based on the organization’s core mission, the differ- ences between what the environment demanded and how the organization responded could be reduced and performance improved. Since then, change agents have proposed a variety of large-scale or strategic-change models;40 each of these models recognizes that strategic change involves multiple levels of the organization and a change in its culture, is often driven from the top by powerful executives, and has important effects on per- formance. More recently, strategic approaches to OD have been extended into mergers and acquisitions, alliance formation, and network development.41
The strategic change background has significantly influenced OD practice. For exam- ple, implementing strategic change requires OD practitioners to be familiar with com- petitive strategy, finance, and marketing, as well as team building, action research, and survey feedback. Together, these skills have improved OD’s relevance to organizations and their managers.
EVOLUTION IN ORGANIZATION DEVELOPMENT
Current practice in organization development is strongly influenced by these five backgrounds as well as by the trends shaping change in organizations. The laboratory training, action research and survey feedback, normative, and QWL roots of OD are evident in the strong value focus that underlies its practice. The more recent influence
13CHAPTER 1 General Introduction to Organization Development
of the strategic change background has greatly improved the relevance and rigor of OD practice. They have added financial and economic indicators of effectiveness to OD’s traditional measures of work satisfaction and personal growth. All of the backgrounds support the transfer of knowledge and skill to the client system and the building of capacity to better manage change in the future.
Today, the field is being influenced by the globalization and information technology trends described earlier. OD is being carried out in many more countries and in many more organizations operating on a worldwide basis. This is generating a whole new set of interventions as well as adaptations to traditional OD practice.42 In addition, OD must adapt its methods to the technologies being used in organizations. As information technology continues to influence organization environments, strategies, and struc- tures, OD will need to manage change processes in cyberspace as well as face-to-face. The diversity of this evolving discipline has led to tremendous growth in the number of professional OD practitioners, in the kinds of organizations involved with OD, and in the range of countries within which OD is practiced.
The expansion of the OD Network (http://www.odnetwork.org), which began in 1964, is one indication of this growth. It has grown from 200 members in 1970 to 2,800 in 1992 to 4,031 in 1999 and has remained stable with about 4,000 in 2007. At the same time, Division 14 of the American Psychological Association, formerly known as the Division of Industrial Psychology, has changed its title to the Society for Industrial and Organizational Psychology (http://www.siop.org). In 1968, the American Society for Training & Development (http://www.astd.org) set up an OD division, which currently operates as the OD/Leadership Community with more than 2,000 members. In 1971, the Academy of Management established a Division of Organization Development and Change (http://www.aom.pace.edu/odc), which currently has more than 2,600 mem- bers. Pepperdine University (http://bschool. pepperdine.edu/programs/msod), Bowling Green State University (http://www.bgsu.edu), and Case Western Reserve University (http://www.cwru.edu) offered the first master’s degree programs in OD in 1975, and Case Western Reserve University began the first doctoral program in OD. Organization development now is being taught at the graduate and undergraduate levels in a large number of universities.43
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