E x p e r i e n t i a l A p p r o a c h t o O r g a n i z a t i o n D e v e l o p m e n t B r o w n 8 e ISBN 978-1-29202-054-9 Experiential Approach to Organization Development Donald Brown 9 781292 020549 Eighth Edition Experiential Approach to Organization Development Donald Brown Eighth Edition ISBN 10: 1-292-02054-7 ISBN 13: 978-1-292-02054-9 Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk © Pearson Education Limited 2014 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affi liation with or endorsement of this book by such owners. ISBN 10: 1-292-02054-7 ISBN 13: 978-1-292-02054-9 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Printed in the United States of America 1111222333681479369241771737339137 P E A R S O N C U S T O M L I B R AR Y Table of Contents 1. Organization Development and Reinventing the Organization Donald R. Brown 1 2. Organization Renewal: The Challenge of Change Donald R. Brown 31 3. Changing the Culture Donald R. Brown 63 4. The Diagnostic Process Donald R. Brown 87 5. Overcoming Resistance to Change Donald R. Brown 117 6. OD Intervention Strategies Donald R. Brown 147 7. Process Intervention Skills Donald R. Brown 171 8. Employee Empowerment and Interpersonal Interventions Donald R. Brown 197 9. Team Development Interventions Donald R. Brown 233 10. Intergroup Development Donald R. Brown 267 11. Work Team Development Donald R. Brown 293 12. High-Performing Systems and the Learning Organization Donald R. Brown 323 13. Goal Setting for Effective Organizations Donald R. Brown 349 I 334792151 14. Organization Transformation and Strategic Change Donald R. Brown 371 15. The Challenge and Future for Organizations Donald R. Brown 395 Index 421 II Organization Development and Reinventing the Organization LEARNING OBJECTIVES Upon completing this chapter, you will be able to: 1. Define the concept of organization development and recognize the need for change and renewal. 2. Describe organization culture and understand its impact on the behavior of individuals in an organization. 3. Understand the expectations of the psychological contract formed on joining an organization. 4. Describe the five stages of organization development. PREMEETING PREPARATION 1. Read this chapter. 2. Read and prepare analysis for Case: TGIF. CHANGE IS THE CHALLENGE FOR ORGANIZATIONS Change is coming down upon us like an avalanche, and most people are utterly unprepared to cope with it. Tomorrow’s world will be different from today’s, calling for new organizational approaches. Organizations will need to adapt to chang- ing market conditions and at the same time cope with the need for a renewing rather than reactive workforce. Every day managers confront massive and accelerating change. As one writer comments, “Call it whatever you like—reengineering, restructuring, transformation, flattening, downsizing, rightsizing, a quest for global competitiveness—it’s real, it’s radical and it’s arriving every day at a company near you.”1 Global competition and economic downturns have exposed a glaring weakness in American organizations: the fact that many of them have become overstaffed, cumbersome, slow, and inefficient. To increase productivity, enhance competi- tiveness, and contain costs, organizations have changed and continue to change the way they are organized and managed. Organizations are never completely static and they do not exist in isolation of other entities. They are in continuous in- teraction with external forces including competitors, customers, governments, stockholders, suppliers, society, and unions. Their interactions with their environment are illustrated in Figure 1. The conditions facing today’s organizations are different from those of past decades. Many companies face global as well as domestic competitors. Changing consumer lifestyles and technological breakthroughs all act on the organization to cause it to change. Government regulation and deregulation are continually changing, while at the same time, international trade agreements present both new opportunities and obstacles. Stockholders are demanding more accountability. Suppliers, providing both products and services to organizations, come more and more from the world economy. The society within which an organization operates influences the modes, values, and norms that are developed within the organization. The employees and unions have a direct and substantial influence on how well an organization functions. The CEO of Intel Corporation, Paul Otellini, expressed his frustration with operating in an en- vironment of unknowns in a Wall Street Journalinterview. “The problem is that there used to be one set of rules out there— U.S. antitrust laws were the de facto rules of the world. Now with globalization, we have different sets of rules for different regions, such as the EU, written around entirely different philosophies. It would sure make things easier if we decided on a single set of rules once again—whatever they are. Then we’d know how to behave and we could plan better for the future.”2 The type and degree of external forces vary from one organization to another, but all organizations face the need to adapt to these forces. Many of these changes are forced upon the organization, whereas others are generated internally. Because change is occurring so rapidly, there is a need for new ways to manage it. General Mills is one of a number of From Chapter 1 of An Experiential Approach to Organizational Development, 8/e. Donald R. Brown. Copyright ©2011 by Pearson Education. Published by Prentice Hall. All rights reserved. 1 Organization Development and Reinventing the Organization Competitors Employees and Unions Customers An Organization Society Governments Suppliers Stockholders FIGURE 1 The Organization Environment companies that has recognized the challenges confronting it. As the economy unraveled during the first few years of the 2000s, General Mills looked far afield to come up with ways to cut costs. “We can’t get by doing what we did yesterday,” says retired CEO Stephen Sanger.3Organizations are changing and will continue to do so in order to survive in this complex environment. This book has been written to help managers and would-be managers learn about organization development (OD) and the part it can play in bringing about change in organizations. The purpose is twofold: (1) to create an awareness of the changing environmental forces confronting the modern manager and (2) to provide the techniques and skills needed for dealing with change in organizations. Organizations are using OD techniques to increase their effectiveness and their adaptabil- ity to changing conditions. In this chapter, you will learn about this exciting field: What OD is, why it has emerged, and some basic concepts pertaining to the process of organization change. The chapter concludes with a model for organizational change describing the stages of the organ- ization development process. WHAT IS ORGANIZATION DEVELOPMENT? What makes one organization a winner, whereas another fails to make use of the same opportu- nities? The key to survival and success lies not in rational, quantitative approaches, but rather in a commitment to irrational, difficult-to-measure things like people, quality, customer service, and, most important, developing the flexibility to meet changing conditions. Employee involve- ment and commitment are the true keys to successful change. Organization development (OD)comprises the long-range efforts and programs aimed at improving an organization’s ability to survive by changing its problem-solving and renewal processes. OD involves moving toward an adaptive organization and achieving corporate excel- lence by integrating the desires of individuals for growth and development with organizational goals. According to a leading authority on OD, Richard Beckhard, “Organization development is an effort: (1) planned, (2) organization-wide, (3) managed from the top, (4) to increase organiza- tion effectiveness and health, through (5) planned interventions in the organization’s processes using behavioral science knowledge.”4 Organization development efforts are planned, systematic approaches to change. They in- volve changes to the total organization or to relatively large segments of it. The purpose of OD efforts is to increase the effectiveness of the system and to develop the potential of all the individ- ual members. It includes a series of planned behavioral science intervention activities carried out in collaboration with organization members to help find improved ways of working together to- ward individual and organizational goals. Another way of understanding OD is to explain what it is not: • OD is not a micro approach to change.Management development, for example, is aimed at changing individual behavior, whereas OD is focused on the macro goal of developing an organization-wide improvement in managerial style. 2 Organization Development and Reinventing the Organization • OD is not any single technique.OD uses many different techniques, such as total quality management or job enrichment, and none of them by itself represents the OD discipline. • OD does not include random or ad hoc changes.OD is based on a systematic appraisal and diagnosis of problems, leading to planned and specific types of change efforts. • OD is not exclusively aimed at raising morale or attitudes.OD is aimed at overall organi- zational health and effectiveness. Participant satisfaction may be one aspect of the change effort, but it includes other effectiveness parameters as well. Organization development is an emerging discipline aimed at improving the effective- ness of the organization and its members by means of a systematic change program. Chester Barnard and Chris Argyris, among other management theorists, have noted that a truly effec- tive organization is one in which both the organization and the individual can grow and de- velop. An organization with such an environment is a “healthy” organization. The goal of organization development is to make organizations healthier and more effective. These con- cepts apply to organizations of all types, including schools, churches, military forces, govern- ments, and businesses. Change is a way of life in today’s organization, but organizations are also faced with maintaining a stable identity and operations in order to accomplish their primary goals. Conse- quently, organizations involved in managing change have found that the way they handle it is critical. There is a need for a systematic approach and for the ability to discriminate between features that are healthy and effective and those that are not. Erratic, short-term, unplanned, or haphazard changes may introduce problems that did not exist before or result in side effects that may be worse than the original problem. Managers should also be aware that stability or equi- librium can contribute to a healthy state. Change inevitably involves the disruption of that steady state. Change just for the sake of change is not necessarily effective; in fact, it may be dysfunctional. The Characteristics of Organization Development To enlarge upon the definition of OD, let us examine some of the basic characteristics of OD pro- grams (see Table 1). • Change.OD is a planned strategy to bring about organizational change. The change effort aims at specific objectives and is based on a diagnosis of problem areas. • Collaborative approach.OD typically involves a collaborative approach to change that in- cludes the involvement and participation of the organization members most affected by the changes. • Performance orientation. OD programs include an emphasis on ways to improve and enhance performance and quality. • Humanistic orientation.OD relies on a set of humanistic values about people and organi- zations that aims at making organizations more effective by opening up new opportunities for increased use of human potential. • Systems approach.OD represents a systems approach concerned with the interrelationship of divisions, departments, groups, and individuals as interdependent subsystems of the to- tal organization. • Scientific method. OD is based upon scientific approaches to increase organization effectiveness. TABLE 1 Major Characteristics of the Field of OD Characteristics Focal Areas 1. Change Change is planned by managers to achieve goals. 2. Collaborative Approach Involves collaborative approach and involvement. 3. Performance Orientation Emphasis on ways to improve and enhance performance. 4. Humanistic Orientation Emphasis upon increased opportunity and use of human potential. 5. Systems Approach Relationship among elements and excellence. 6. Scientific Method Scientific approaches supplement practical experience. 3 Organization Development and Reinventing the Organization In more general terms, organization development is based on the notion that for an organization to be effective (i.e., accomplish its goal), it must be more than merely efficient; it must adapt to change. An OD practitioneris a person in an organization responsible for changing existing pat- terns to obtain more effective organizational performance. People using organization develop- ment have come to realize that conventional training techniques are no longer sufficient for achieving the types of behavioral changes needed to create adaptive organizations. Going to a company’s management class and listening to someone lecture about the need to change or the importance of effective organizations may be a good beginning, but speeches will not produce exceptional organizational performance. New techniques have been developed to provide organ- ization members with the competence and motivation to alter ineffective patterns of behavior. There are many OD techniques, and any individual using OD may rely on one or a combination of approaches. Regardless of the method selected, the objectives are to work from an overall organi- zation perspective, thus increasing the ability of the “whole” to respond to a changing environment. Organizations have objectives, such as making profits, surviving, and growing; but individ- ual members also have desires to achieve, unsatisfied needs to fulfill, and career goals to accom- plish within the organization. OD, then, is a process for change that can benefit both the organization and the individual. In today’s business environment, managers must continuously monitor change and adapt their systems to survive by staying competitive in a turbulent arena. Why Organization Development? Why has such a fast-growing field emerged? Organizations are designed to accomplish some purpose or function and to continue doing so for as long as possible. Because of this, they are not necessarily intended to change. But change can affect all types of organizations, from giants like IBM, GE, and Google to the smallest business. The year 2008 can lay claim to some of the great- est failures or near-failures of corporations blindsided by fast-developing economic and market conditions. The lists include some of the titans of American capitalism: American International Group (AIG), General Motors, Chrysler, and Lehman Brothers. No organization or person can escape change, and change is everyone’s job. Managers at all levels must be skilled in organiza- tion change and renewal techniques. Typical factors for an organization to initiate a large-scale change program include a very high level of competition, concern for survivability, and declining performance. Goals for change include changing the corporate culture, becoming more adaptive, and increasing competitiveness. In today’s business environment, managers must continuously monitor change and adapt their systems to sur- vive by staying competitive in a turbulent arena. Kodak, for example, is trying to change by focusing on consumers who use digital cameras instead of film cameras. “If they don’t invest in digital, that’s the end of Kodak,” according to Frank Romano, professor of digital printing at the Rochester Institute of Technology.5In the coming decades, changes in the external environment will occur so rapidly that organizations will need OD techniques just to keep pace with the accelerating rate of innovation. The Emergence of OD Organization development is one of the primary means of creating more adaptive organizations. Warren Bennis, a leading OD pioneer, has identified three factors as underlying the emergence of OD. 1. The need for new organizational forms.Organizations tend to adopt forms appropriate to a particular time; the current rate of change requires more adaptive forms. 2. The focus on cultural change.Every organization forms its own culture—a distinctive sys- tem of beliefs and values; the only real way to change is to alter the organizational culture. 3. The increase in social awareness. Because of the changing social climate, tomorrow’s employee will no longer accept an autocratic style of management; therefore, greater so- cial awareness is required in the organization.6 THE ONLY CONSTANT IS CHANGE Although many organizations have been able to keep pace with the changes in information tech- nology, fewer firms have been able to adapt to changing social and cultural conditions. In a dy- namic environment, change is unavoidable. The pace of change has become so rapid that it is 4 Organization Development and Reinventing the Organization difficult to adjust to or compensate for one change before another is necessary. Change is, in essence, a moving target. The technological, social, and economic environment is rapidly chang- ing, and an organization will be able to survive only if it can effectively anticipate and respond to these changing demands. The first decade of the twenty-first century has seen change in political, not-for-profit, and business institutions that were hardly imaginable in the last decade of the pre- vious century. As we move into the second decade, there will, undoubtedly, be additional changes that will provide both challenges and opportunities for corporations to compete effectively. Given this increasingly complex environment, it becomes even more critical for manage- ment to identify and respond to forces of social and technical change. In attempting to manage today’s organizations, many executives find that their past failures to give enough attention to the changing environment are now creating problems for them. In contrast, 3M Corporation has de- veloped an outstanding reputation for innovation. 3M is big but acts small. 3M’s 15 percent rule allows its people to spend up to 15 percent of the work week on anything as long as it is product related. The most famous example to come out of this is the Post-it note. General Electric (GE), another company that cultivates a climate for change, has a Leadership Center, a tool that GE uses to spread change throughout the company. For more information about GE’s Leadership Center, see OD Application: GE’s Epicenter of Change. OD Application: GE’s Epicenter of Change7 General Electric Company is well known the world over for its The classes have a broad functional and global mix with courses light bulbs, jet engines, refrigerators, locomotive engines, NBC, typically having 50 percent non-U.S. participation. With GE hav- wind turbines, and toasters. But one of its most successful and ing such a large worldwide presence, there are now leadership important accomplishments is their “university” that it operates courses that are taught in places that include Shanghai, Munich, the world over. It is headquartered at the John F. Welch Leader- India, Africa, and, Dubai. ship Center at Crotonville, located in Ossining, N.Y. Here, GE A recent program at the Leadership Center was Leader- turns out the internal leaders it needs, which was the center’s ship, Innovation, and Growth (LIG). The program brought to- initial mission when it was founded over 50 years ago. gether all the senior managers of a business unit for four days Through the years and particularly during the tenure of with the expressed purpose of expanding GE’s businesses and CEO Jack Welch, now retired, the center evolved to become much creating new opportunities. GE calls this “filling in the white more than a training center for future GE managers. The center is spaces.” Attending each session were several teams from now the tool to spread change throughout GE. The company’s around the world. This was a new approach at the Leadership Web site says the center “has been at the forefront of real-world Center as it brought in existing teams at one time to work on a application for cutting-edge thinking in organizational develop- specific issue. In addition to intensive work sessions, there were ment, leadership, innovation and change.” With the current CEO, external speakers who frequently came from a university and Jeff Immelt, the center is branching out by inviting its customers to internal speakers who were GE managers and had applied the join with GE employees to discuss and solve big issues. concepts that the teams were learning. On the last day, all the GE invests about $1 billion world-wide every year on train- teams at the session delivered a 20-minute presentation to ing and education for its people. This has been the case even in CEO Immelt that covered what the team members had decided the recessionary years of 2008 and 2009. “We have always be- they should do to optimize growth. Once back at their home lieved that building strong leaders is a strategic imperative,” says office, they had to refine their presentation into a letter to Im- CEO Immelt. “When times are easy, leadership can be taken for melt that was no longer than two pages. From 2006 to 2008, granted. When the world is turbulent, you appreciate great peo- 2,500 people and their 260 teams went through the program ple.” An indication of Immelt’s personal commitment to leader- with a follow-up in 2009. ship and learning is that he spends approximately 30 percent of GE discovered over 50 years ago when the CEO at that his time on leadership development. time, Ralph Cordiner, established the Leadership Center that The Leadership Center at Crotonville is the epicenter for their success depended upon having well-trained and developed GE learning, but the students are not just top executives. It hosts leaders. Though GE has experienced some critical challenges around 10,000 employees and customers ranging from entry- during recent recessionary times, their success for the future will level to the highest-performing executives. For many, it is a in part depend upon how well their employees learned their les- defining career event. The courses, typically running one to three sons at the Leadership Center. weeks, cover a broad range of topics including: Questions • Essential skills courses such as hiring, team building, and 1. How does the Leadership Center serve as a center for presentations. change at GE? • Leadership courses for new managers. 2. Visit GE’s Web site to learn about the Leadership Cen- • Executive courses in leadership, innovation, strategy, and ter’s current programs at www.ge.com/ and www.ge. manager development. com/company/culture/leadership_learning.html. • Customer programs including change management and integration. 5