There is little doubt that business and HR leaders are facing strong headwinds as they navigate volatile commercial and labor markets, revenue and profit anxieties, and pressures to adopt technological advances that, while highly hyped, offer uncertain opportunities for improvement. Alone, any of these can drive changes in leadership perspectives on the need for change, but combined, they challenge leadership across enterprises in every industry, of every size, scale, and spread, to adapt and respond. For HR leaders, these challenges underscore a significant need to adopt approaches that address problems and shortcomings across their organizations, are efficient and accurate in addressing root causes, and directly focus on business performance. Organization Development offers a solid, robust, and repeatable methodology that focuses on what business leaders care about: improving organizational performance.

Understanding Organization Development (OD)

Organization Development (OD) is a structured, disciplined, data-based approach and methodology that targets specific organization performance improvements, especially at the group level, including teams, departments, functions, and business units. It focuses on identifying the nature and causes of performance, productivity, efficiency, and effectiveness at a systems level, meaning it investigates the interrelated elements that drive and support unit performance. That involves a review and assessment of how people, processes, and technologies, individually or in combination, serve as barriers or enablers to unit output (e.g., volume, time, cost, quality). 

The OD practice today began with Psychologist Kurt Lewin’s research on group dynamics, action research, and training in the 1930’s and evolved into a human-centric, integrated socio-technical work-systems focus. As such, it considers employee group performance as an ecosystem, rather than a purely human-driven concept. 

At its core, organization development is a structured approach and set of techniques that target the objective evaluation of performance issues (“root causes”), and the design of solutions that drive lasting changes in attitude, perception, behavior, and culture. As such, it is (per the OD Network) a collaborative effort to help teams and organizations “develop their system-wide capacity for effectiveness and vitality” or health.

Organization Development can be confused with organizational effectiveness (OE), which ATD defines as the outcome or objective of OD efforts. OE is sometimes used in HR functions as the name of a role, team, and/or capability, in which HR professionals leverage OD techniques and tools in support of a business unit or function. What is interesting is that the job responsibilities often mimic or overlap with those of an HRBP, albeit at a lower organizational level. In fact, the role appears to be emerging as a replacement for, or an evolution of, the traditional HR generalist or manager role, with administrative tasks, policy interpretation, employee relations, and inquiry handling eliminated.

Why Organization Development is so relevant and useful today

Organization Development targets group-level performance weaknesses and shortcomings that impact the achievement of its goals and objectives. As such, it is invaluable as a response mechanism to changes in the external environment and the internal work environment. Consider three major challenges that serve as excellent examples of issues that organizations need to address:

Volatilities in commercial, financial, and labor markets

External events and trends invariably drive changes in corporate priorities, objectives, and direction. Consider the effects of inflation (rising raw material and production costs), interest rates (higher borrowing costs, reduced access to credit), and shifts in federal trade policies (pressuring supply chain availability and costs). Equally impactful are widespread labor and critical skill shortages, elevated voluntary turnover rates, and fewer skilled, prepared graduates available to meet demand. These are driving changes in corporate strategy, product and service design, development, resourcing, and delivery. 

These create a dramatic need for organizations to:

• Evaluate and refine business plans and resourcing strategies
• Realign team and individual objectives, priorities, and goals
• Refine processes to squeeze more efficiency and cost-effectiveness out
  
  

Disruptions from rapid technological advances

The cross-industry march towards automation and AI-related technologies is driving evolving transformations to workflows, operating models, staffing profiles, and organizational structures. As a result, companies need to establish new pathways, build new capabilities, and thoroughly manage transformations across and within their operating units and functions, including:

• Review and refine business and operating models
• Reconsider organization design
• Assess how to upgrade and improve the customer value chain
• Redesign jobs, workflows
• Rapidly upskill and reskill workers
  
  

Distractions from re-sizing activities

The efforts to streamline company payrolls due to right-sizing, downsizing, reductions in force (RIFs), and organizational flattening represent a significant distraction to their people and operations, including the “how” (activities they perform), “what” (resources they access), “where” (those resources are located), and “who” (provides oversight to their actions). While those considerations should ideally occur before reductions occur, it is, a) rarely done beforehand, and 2) not completed comprehensively or effectively. This creates pressure to:

• Reconfigure teams 
• Redistribute capabilities 
• Reset workflows, individual and team roles, and responsibilities
• Redesign how work is managed or monitored, and by whom
• Reconsider how the organization's structure supports or restricts cross-unit coordination

All of these changes must be managed while working to stabilize the customer experience, product or service design, and delivery processes and outcomes.

How Organization Development makes the necessary impact

All the challenges facing organizations result in a tremendous number of changes that require employees, managers, and leaders to understand, accept, and adopt the new realities of how they conduct their work. They also create issues that predictably drag down performance and delivery, often not obvious or visible, primarily because of the deep integration of people, processes, practices, and platforms that must be coordinated and aligned. 

Organization Development techniques help identify the root causes of shortcomings, pinpoint opportunities for improvement, engage the people who manage and perform the associated tasks, and create a greater, more impactful response to those changes.

The key principles and components of Organization Development

Given its historical roots, the practice of organization development is a combination of lessons learned from both behavioral science (human perception, motivation, behavior, group dynamics, and adaptation to change) and the scientific method (data-driven, experimental learning), as they apply to leading and structuring an organization to meet its mission and objectives. As a result, its core elements focus on the human experience of work, on structured and quantitative methods, and on optimizing work and goal achievement across an enterprise.

Ecosystem perspective

Organization development approaches trends, occurrences, issues, and changes from an integrated view of the organization being studied. That means any review of an issue includes data and insights into how people, processes, technologies, and structures work together and contribute (individually or in conjunction) to inefficient or ineffective performance. Those elements that make up the basis for this systems thinking view include, but are not limited to:

• People (employees, managers, leaders, contractors): How effective and mission/values/objectives-aligned is the workforce, and its culture, behaviors, values, capabilities (skills, knowledge, and experience), and coaching/direction? 
• Process (workflow design fluidity, efficiency, and effectiveness): Individual and team roles and responsibilities, collaboration, coordination, and handoffs. The degree to which role and task autonomy, standardization, authority, and decision-making structures are effectively driving organizational goals and objectives 
• Platform (systems, digital and physical technologies): The extent and effectiveness of cross-systems integrations, user access and experience, automation, augmentation (AI, robotization, and knowledge warehouse) of work and administrative support systems and capabilities.
  
  

Strategic and business outcome-focused

OD efforts target business outcomes—operational improvements, process optimizations, quality of outputs, customer satisfaction and loyalty, and expense or cost reductions—that can be achieved through better-aligned human-system interactions. While certain solution projects may focus on purely human interventions (team building, management development, performance management, or skill development), others will target process reengineering, merger workflow and assignment integrations, customer interface automation, or organization redesign. In all of these cases, they are implemented to improve operational outcomes, such as speed to market, production volume, efficiency, sales effectiveness, or customer retention.

Evidence-based, data-driven change

With their roots in behavioral sciences and research, Organization Development approaches are grounded in evidence rather than assumptions or “gut feel”. That fact creates opportunities for a strong foundation for lasting solutions while opening the door to resistance from leaders and managers. The reliance on structured, multi-source data collection and analysis provides a more comprehensive understanding of a problem and often unearths root causes that defy stakeholders' less-informed theories. That, in turn, can create resistance that a skilled and trusted advisor may need to overcome. Included is the essential element of strategic change management methods, which supports employee acceptance and adoption of the planned changes.

Human-centered focus and engagement

OD practices leverage a humanistic, employee-centered foundation to generate greater business performance, productivity, and mission- and objective-aligned behaviors, actions, and decision-making. The target is to align employees' efforts with business objectives, a process that psychological research has shown improves when interpersonal trust, communication, and collaboration are fostered. As a result, OD is designed to carefully construct a plan that brings leaders and employees “along for the ride”, directly engaging them in the process using employee listening, change management strategies, and work methods improvement techniques. Through their involvement, sponsorship, and co-ownership, the organization prioritizes the “dignity, trust, and empowerment of employees and teams to drive both personal and organizational success."

The flow of the Organization Development process

Numerous OD models have emerged over the years, from Lewin’s Change Management (3-Step) Model to more modern, ecosystem- or integration-based models such as McKinsey’s “7S” Framework, which emphasizes a structured, research-like approach. What is most important, however, is the adoption of a process that is standardized for all assigned practitioners, and allows for flexibility (“freedom within a framework”) to apply different tools and methods within that structure while requiring certain core elements (contracting with the manager, leveraging multiple sources of data and insight).

The steps in the process have been promoted for internal consulting, but are also commonly used by management consultants. They provide a structure that engages leadership, encourages shared ownership, leverages comprehensive fact-finding and analysis, involves employee expertise and motivation to design improvements to their work and environment, and establishes business-aligned measures to validate and track improvements. Adapted from recommended flows from the OD Network, the Institute of Organization Development, and those used in leading management consulting firms, the process steps include:

1. Intake and contracting

"What is the problem or shortcoming?”

The process starts with an initial meeting(s) where the “internal client” (leader, manager) identifies a concern related to their team/organization’s performance. The OD practitioner uses “powerful” questioning and active listening to simultaneously generate a detailed explanation of the problem, the leader’s view of its source(s), the timeframe, and resources they are willing to commit, and the preferences and limits they want addressed. The practitioner provides feedback and insights, then offers a plan to move forward, generating an agreement or “contract” on how to proceed. The core purpose of using those techniques is to establish trust, a collaborative, jointly owned approach, and an openness to new ideas, previously unearthed root causes, and solution possibilities on the leader’s part.

2. Exploration

“What is the true scope and nature of the problem?”

This step identifies and compiles the data needed to generate a comprehensive view of the problem at hand, focusing on objectively identifying its root cause(s). Depending on the nature of the performance issue, data may be collected from across functions and platforms, including financial, operational, and talent (HR) activity and outcome metrics from reports, dashboards, systems, and integrated data repositories. It often includes reviewing (or creating) process flowcharts, conducting employee interviews, or holding focus groups. Insights are also often gathered through interviews, focus groups, surveys, or direct observations. These are combined to identify insights that reveal how big the problem is, how complex it is, and how many (or few) elements contribute to the issue.

3. Analysis and diagnosis

"What is the root cause of the problem?”

The OD practitioner (and project team) compiles and analyzes the collected data to identify the organization's current state. Once collected, activities may include either 1) conducting statistical (e.g., regression) analyses to determine the factors causing or contributing to the performance issue, and/or 2) presenting the combined insights to a management or project team and having them participate in a facilitated session to perform a qualitative “root cause analysis”. Once completed, improvement targets are identified and presented to the leader(s), during which the practitioner confirms their understanding, obtains their support for the assessment's accuracy, and secures agreement to move forward with developing a solution.

4. Design, planning, and implementation

“How will we resolve the issue(s)?” 

The development of interventions (solutions) is a crucial step that requires continued input and support from the leader, and, to the extent practical (e.g., when redesigning a work process or roles and responsibilities), from the affected employees themselves. At this point, a solution set (see below) is identified and developed, along with an implementation project plan, timeframe, schedule, budget, and employee resources to be engaged. The plan is presented to leadership, with their agreement and buy-in on the solution's nature, scope, and resource requirements; once approved, the project proceeds according to the plan. The inclusion and embedding of robust change management activities significantly increase the likelihood of effective, lasting change. Similarly, identifying and installing process and outcome measures, along with collection/analysis tools, will enable tracking of key success indicators as implementation progresses.

5. Evaluation

“How much did we impact the issue?” 

Given that evidence-based, data-driven change is a key principle of OD, measuring outcomes and the level of success achieved is a crucial element of the organization development process. This includes generating before-and-after comparisons of the primary unit performance issue (e.g., sales levels, production times, cross-team hand-off errors, customer complaints), and the core elements addressed by the intervention as appropriate to the nature of the change, such as employee adoption of the changes (for process or technology adoptions), improved co-worker collaboration behaviors (for team building). A post-mortem review (after 3, 6, 9 months) can be used to assess the “stickiness” or sustainability of results, reflect on lessons learned, and identify opportunities for fine-tuning and additional enhancements. The metrics can be included in the organization’s master dashboard to reinforce the strategic importance of the improvements and track continuing progress over time.

Types of Organization Development initiatives

The range of organization development interventions is as broad as there are drivers of human and organizational performance and success. That said, those can be classified using ATD’s OD initiatives categorization scheme, which is used to communicate the possible applications of this approach and model. Those include initiatives related to improvements in:

Human process

These efforts focus on assessing and improving the ways people work and collaborate most effectively in teams. They tend to focus on team building, inter-team communication, interpersonal understanding and acceptance, collaboration, coordination of work activities, coaching, and conflict resolution.

Techno-structural

These address how business units, functions, departments, and teams are structured and conduct/coordinate their operations in pursuit of shared business objectives. Interventions include organizational design and restructuring related to resizing/downsizing, RIFs, mergers and acquisitions, and work and job redesign. Process management and improvement efforts are included here, targeting the improvement of within- and cross-organizational effectiveness and efficiency related to the coordination of inputs and outputs, using various business process redesign methodologies (e.g., Lean, Agile, TQM, Six Sigma).

Strategic

Initiatives in this category focus on improving the alignment and adaptation of the organization with its operating environment. These include organizational transformations involving digital (e.g., adoption of AI, automation, or robotization), major shifts in business mission and direction, or product and service focus or mix. They can involve strategic planning, culture-building, change management, and leadership and management development designed to upskill leaders and strengthen their agility, strategic thinking, and decision-making, all of which are intended to drive organizational effectiveness and outcomes.

HR Management

Organization development interventions in this category address the primary talent outcomes of integrated HR and talent processes, practices, and policies. They are designed to improve employee engagement, employee experience (EX), performance, high-performing and critical-skill employee retention, and strategic skill acquisition and development. Specific elements targeted include candidate experience and sourcing, skills assessment and development, total rewards, coaching and mentoring, career pathing and mobility, and wellness and wellbeing.

The essential skills required for a robust Organization Development capability

Given the range of possible interventions, OD practitioners require a very broad set of skills commensurate with the challenge of designing and delivering impactful interventions across those. Given this, the list should be viewed as a menu from which multiple experts can be developed and deployed across the organization (HR and other functions). When reviewing this in the context of the range of solutions listed above, consider where those skills might exist in the organization, and the possibilities that can emerge from cross-functional project teams. 

That said, as a primarily HR-driven capability, the breadth and depth of skills required are most commonly found in professionals with education and experience bases that place them in mid-to senior business-facing roles such as HR Business Partner, OD or OE specialist, or Director/VP-level talent management or L&D roles. The skills and attributes that these practitioners should either possess or be developed include: 

• Business acumen. Understands how the business generates value and operates within and across functions and business units. 
• Trusted partnership. Knows how to build relationships based on trust, competence, consistency, and integrity. 
• Consulting skills. Understands and uses a formal process to identify issues and build effective, responsive, and lasting client solutions.
• Systems and integrative thinking. Understands how different operations, concepts, and methods do, or can work together to generate better solutions.
• Data literacy and evidence-based methodologies. Knows and applies structured processes to generate objectively based insights, with data and analysis to understand root causes and build responses to issues based on proven research. 
• Group facilitation and design. Ability to plan and lead group insight, awareness, and discovery sessions and effectively engage individuals’ participation.
• Change Management. Understands and applies the methodologies that explain, educate, and engage employees to accelerate their awareness, acceptance, and adoption of changes in the work and work environments. 
• Project Management. Understand how to effectively plan, schedule, budget, resource, and execute a project as a sequence of interlocking activities with stated objectives and timelines.
  
  

Relevant Practices & Tools

Applying Organization Development Principles to Uncover Opportunities for Improving Organizational Performance and Health. >

Organizations are constantly in flux, with multiple change efforts underway. HR is being called upon to facilitate more and more of these endeavors, using Organizational Development tools, methodologies, and frameworks... more »

Designing a Communication and Engagement Strategy that Involves Employees and Establishes Trust in the Changes. >

Effective communication and engagement strategies employ Fair Process research, which shows that people care not only about an initiative’s outcomes but also about the decision-making process that produces these outcomes... more »

Applying Lean Analysis to Assess Levels of “Flow” and “Waste” in Current HR Processes. >

A core element of Lean focuses on transforming HR into a data-informed, continuously improving system. “Flow” is the movement of value across a process without interruption, confusion, or delay. “Waste” represents anything that slows it down... more »

Conducting Performance Consulting-based Learning Needs Assessments for Specialized Solutions. >

“Performance Consulting” addresses workplace performance issues through a structured approach to understanding and resolving them... more »

The Performance Consulting Assessment Tool: Uncover Workforce Challenges and Supporting Data for Learning and Development Solutions. >

The Performance Consulting Assessment Tool documents conversation(s) with functional managers who are facing specific workforce challenges that the learning & development team members then use to create solutions for those managers... more »