Organizational Development

By Douglas Fox

Many people in business today think of Organization Development (OD) as a culmination of initiatives and performance factors, typified with managerial decision-making and control of change. This is certainly true, but is commonly combined into a single premise: Organizations are human social systems in which people are strongly influenced by the organizational culture. Therefore, the most compelling tool for improvement is cultural change (, n.d).


Another way of looking at this is to say that OD transforms the organization by working with social and technical systems such as (1) culture, (2) work processes, (3) communication, and (4) rewards. (Left are some examples.)

Many companies' problems are not caused by their underlying infrastructure, CEO, or general staff; the conflict is in the culture and social structure. As people who work in different cultures act and perform differently, changing the culture can, theoretically, allow everyone to perform more effectively and constructively.

Take Chrysler Motor Company OD initiative as an example:

In the early 1990s, Chrysler had terrible customer service and marketing, with a history of innovation, but at the present time, outdated products. Its market share was falling, and its overhead and losses were high. Bob Lutz, then the president, wanted Chrysler to become the technology and quality leader in automobiles -- a clearly global vision. A program of cultural change, Customer One, was built around it.

The results were impressive: overhead was cut by almost $5 billion in under four years, the stock price has quadrupled, and the company reversed its slide into bankruptcy and became profitable. A completely new and competitive line of cars or trucks has appeared each year since. They did this with the same people, but working in different ways.

  • Involvement of people - everyone got involved. Suppliers and customers gave design suggestions, and their input was documented and later implemented. Mechanics and assembly line workers were consulted as well, and the results were a never before seen alignment with consumer wants and needs.
  • Agreeing on objectives - Core objectives were agreed upon at the beginning by all departments. "Everybody agreed up front and we stuck to the plan. There were no last-minute changes in focus, which can result in expensive disasters (such as the Corvair, Vega, and Fiero). Because everyone is involved in setting goals, they take responsibility for living up to them." (Jeep/Truck team member, n.p.).
  • Learning - Changes in the production of cars began with help from Honda, who developed a successful line-up, generally using their own technology. Fourteen young engineers were told to learn how Honda designed cars; Bob Lutz and engineering chief Francois Castaing then reorganized their departments into Honda-style teams.
    Since then, Chrysler changed its teams by learning from its achievements and mistakes. They evaluate with a 'what went right, what went wrong' analysis at various points.
  • Emphasis on quality - Surveying all customers and basing dealer incentives on quality and support, the Chrysler dealerships rating process has been examined and improved at various points, making sure their customer satisfaction index is valid and reliable. Complaints are followed through, and negative surveys are returned to dealers for resolution. (, n.d).

(1) Organizational culture can loosely be defined as the shared assumptions, beliefs, and "normal behaviors" (norms) of a group. These are powerful influences on the way people live and act, and theydefine what is "normal" and how to sanction those who are not "normal." To a large degree, what we do is determined by our culture.

(2) Processes like work-flow mapping is one of the quickest ways to lower errors, increase productivity, affecting customer service. Map out the way work is currently done. Diagram each step, showing decision branches, time spent, any distances traveled or people contacted, and other important aspects of the work.

(3) Effective meetings are uncommon, yet the most universal approach to good communication. Ground rules: Know the problem, stay focused, get ideas flowing, expect conflict, spread the responsibilities,and follow through.

(4) Rewards are usually the result of employee evaluations. They should be done not for raises, promotions, or bonuses, but for growth, development, and communication. The most important aspect in every case is communicationbetween the employee and other people, instead of one-way communication, for higher performance.

(5) The person(s) responsible for initiating OD needs to gather information on the goals of the individuals and areas involved, the expectations for the project, organizational constraints, and other issues - (optimals/actuals/drivers).

(6) In order to raise motivation, one must look at how the organization's structure, technology, management, and/or culture may have frustrated the employee, punished initiative, or rewarded apathy.

(7) Continuous and necessary improvement is constantly adapting by getting and using information, and by evaluating changes to make sure they were effective.

Change Management

One of the most difficult parts of leadership is encouraging and managing organizational change. It seems that only a small percent of change efforts actually succeed. There are many reasons for this - indeed, the entire practice of organizational development is based on change management. (Schein, 1996).

  • Gather the information that supports your case for a change effort, and discuss it with those who will be affected by it. You can clarify your vision, anticipate and resolve potential problems, and sometimes even realize that the change is misguided, or that there are far better alternative solutions.
  • Use measurement tools: Tracking the effectiveness of the change effort both tells people that it is important and provides a way to judge how well it is being implemented, or how well it was designed.
  • Avoid eliciting resistance by involving workers from the beginning, clearly explaining the reasons for the change, having a clear strategy, direction, and vision, and respecting the viewpoints of other people.
Person in the field: Rachel Sage, Director of Communications and Training for Washington Mutual Bank, in direct communication, 1/30/04, spoke of when she came into "WaMu", where she was asked to help implement a lot of new technology into her training programs. What she found was a company and a training dept. that had a technology initiative in place over the past 5 years, using computer-based training programs to teach all their basic skills/knowledge issues. "But no one was learning," she said. A mapping and audience analysis showed that most employees were getting frustrated with the complexity of a lot of the software, and were creating their own systems for doing basic tasks. "I found a training executive who was very confused. He had put a lot of money into the CBT and had incorporated incentives to aid in making this part of the culture of the organization." He gave Rachel the reins and she stepped back, taking simpler approaches with her first training. She grouped learners up and gave them pads of paper, pencils and calculators. Mimicking what she said was "a freshman-level statistics class" she initiated a series of brief work-studies in which the employees ran through their daily processes with a pen and a calculator. Surveys at the end of the course said that this was the most useful training in years.

How to Implement OD in Your Organization

The Goal: To increase the long-term health and performance of the organization, while enriching the lives of its members.

The Approach: Emphasize organizational culture, which influences the way people work.

The Method: using (4) planned change based on analysis to (5) increase motivation, remove obstacles, and make change easier. The ideal is an organization where (6) continuous improvement is so prevalent that it is not thought of as an initiative.

The Results: The outcomes of organizational development may include increases in:

  • Profits (or cost reduction for not-for-profits).
  • Innovation.
  • Product and service quality.
  • Cost effectiveness.
  • Customer satisfaction.
  • Organizational flexibility.
  • Personal feelings of effectiveness.
  • Job, work, and life satisfaction (Maher, 1971)


History of Chrysler Corporation. (n.d.). Retrieved January 29th, 2004, from

IRI Consultants to Management. (n.d.). Retrieved January 29th, 2004, from

Maher, J.R. (1971). New Perspectives in Job Enrichment (1st ed.). New York: Reinhold.

Schein, E.H. (1996). Organizational Culture and Leadership (2nd ed.).
New York: Jossey-Bass.

Author Note


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