Organisation development

Organisations operate in a constantly changing environment. External changes can include a new competitor, evolutions in technology, or new legislation. Internal changes include changes in leadership agendas, cultural evolution and staffing changes. As a result, organisations often find that business practices which used to perform well are no longer as effective. Such practices need adjusting to maximise their impact on organisational goals.

ODV uses a systematic approach to drive business performance. It looks at elements such as organisational culture, capability, values and relationships. It takes a systems approach to understand these elements and how they influence behaviour and performance.

Many different definitions of ODV exist, but they all share common features. We define ODV from a people professional perspective as: ‘a planned and systematic approach to enabling sustained organisational performance through the involvement of its people’. See how ODV fits into our Profession Map.

ODV has developed from various disciplines and, because of this, ODV approaches and career pathways are wide ranging. But, regardless of the approach, ODV is critical for maintaining organisational performance within a rapidly changing environment. Effective ODV enables an organisation to achieve its goals and improves the customer and employee experience. 

ODV can take many forms and can focus on different aspects of an organisation. But, some fundamental principles tend to be present:

1. Maximising the value gained from the organisation’s resources. For example, in an automated manufacturing plant, development might focus on mechanical efficiencies. If an organisation produces people services, it might focus on people capabilities.
   
   
2. Aligning to an organisation’s strategy, goals and core purpose. All development is carried out to achieve these things to a greater extent. Development without such a focus can become incompatible with the rest of the organisation and can cause issues in other areas.
   
   
3. Applying behavioural science knowledge and practice. For example, leadership, group dynamics and work design. This ensures that people practices develop based on scientific understanding of how and why people behave the way they do.
   
   
4. Aims to institutionalise continual improvement within organisations. Done continuously, it's a type of planned, ongoing, systematic change. It's also related to change management. Many developments are implemented using change management practices.

These principles could be seen to apply to almost any HR activity or improvement in an organisation. But it’s important to recognise ODV activities as different in that they are done for a different reason. ODV specialists have expertise in:

• navigating complexity to unpick what the organisation is trying to achieve;
• diagnosing underlying issues, challenges and opportunities; and
• selecting the best approaches to develop the organisation.

ODV professionals need to collaborate with other people professionals. This is because their work draws upon and develops many HR and/or learning and development processes to bring about the required change. Employees are often at the centre of the changes to the organisation, and people professionals need to have a solid understanding of the relationship between organisation development, organisational strategy and the HR agenda. They should:

• leverage their expertise and knowledge of the organisation to question assumptions;
• help surface non-obvious problems/issues;
• diagnose barriers and enablers of execution; and
• manage change effectively.    

Some areas of ODV are now considered core knowledge for all people professionals. This includes managing change, and continuous improvement and innovation. For more on this, listen to our podcast on how people professionals can adopt ODV practices in their workplace, and read our report People Profession in 2030: a collective view of future trends.

If the range of areas that require development are large, the level of work required is significant, or the interconnectivity of those areas requires a wholesale organisation change, this is where organisation development transcends into organisation design. Organisational design and development are complementary, but distinct, capabilities.

One way to approach ODV is to use organisational metrics and people analytics to identify the ‘fit’ between the organisation’s goals and the practices that are attempting to fulfil them. So, for example, information from a staff survey might show that there are engagement issues. This in turn might be having an impact upon absence and performance levels. This might be a trigger for an ODV initiative to review and redesign related practices to improve the connected areas.

There can also be a more time-bound trigger for undertaking organisational development activities. With the current pace of change, organisations are having to review their strategy frequently, often altering their course in response to external forces.

The ODV process has various stages including:

1. Organisation review. To identify what it needs - ‘needs analysis’. This uses a range of tools and approaches including:

• Strategic review.
• Future state analysis.
• SWOT.
• PESTLE.
• Quantitative performance targets.
• Target Operating Model.

2. Diagnose the extent to which those needs are being met. This is similar to doing a gap analysis to identify the difference between a current position and the desired future position, but uses a range of frameworks or diagnostic tools to analyse the situation fully, including:

• ISO.
• Lean / Six Sigma.
• Force Field Analysis.
• Total Quality Management (TQM).
• Organisation design frameworks (used as diagnostics). For example, McKinsey’s 7S model, the Burke Litwin framework, or the 5 Star model.

3. Deciding what intervention would best fit the gap identified, and whether to design it or buy it in. ODV's multidisciplinary roots means there are different types available:

• Human process interventions – coaching, mentoring, training, group work, facilitation, action learning.
• Techno-structural interventions – Lean / Six Sigma, business process re-engineering (BPR), outsourcing.
• Human resource interventions – performance management, reward and motivation, employee surveys, psychometrics.
• Strategic interventions – business planning, cultural change, transformation programmes.

4. Implement the initiative. It’s always good practice to use robust change management practices. This will include focusing on communication, stakeholder involvement, and evaluation metrics. Our Transformational change: Theory and practice report gives practical action points for change interventions in organisations. It’s complemented by case studies of organisations applying the approaches in practice. Evaluating the effectiveness of any intervention is also integral to the ODV process.

Contacts

Organization Development Network

Books and reports

Cannon, J.A. and McGee, R. (2016) Organisational development and change. 2nd ed. CIPD toolkit. London: Chartered Institute of Personnel and Development.

Cheung-Judge, M-Y. and Holbeche, L. (2015) Organization development: a practitioner's guide for OD and HR. 2nd ed. London: Kogan Page.

Francis, H., Holbeche, L. and Reddington, M. (2012) People and organisational development: a new agenda for organisational effectiveness. London: Chartered Institute of Personnel and Development.

Tosey, P. (2017) Understanding organisation development. London: Kogan Page.

Visit the CIPD and Kogan Page Bookshop to see all our priced publications currently in print.

Journal articles

Atkinson, P. (2015) OD strategies: installing a lean and continuous improvement culture. Management Services. Vol 58, No 4, Winter, pp12-17.

Axelrod, R.H., & Axelrod, E.M. (2017). The scholar-practitioner mindset: how texts and experience influence organizational change practice. Academy of Management Review. Vol 42, No 3, pp561-571.

Jacobs, K. (2023) Organisation development: what is it and how does HR ‘do OD’ successfully? People Management (online). 3 October.

Jeffrey, R. (2020) Why the pandemic has been OD's time to shine. People Management (online) 4 June.

Poper, J. (2018) By development not design. HR Magazine. November. pp20-29.

Zink, H. (2023) Why team coaching is an effective organizational development tool. People Management (online). 17 November.

CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.

Members and People Management subscribers can see articles on the People Management website.