Organizational Development Strategy: Key Things to Know
Why should we care about organizational development?
The organizational development strategy aims to gain employees’ commitment and to exploit the infrastructure of the company successfully.
Today you will read about:
- What is Organizational Development and why does it matter?
- Functions of the organization,
- What benefits should be obtained when implementing a good organization development strategy,
- The organizational development process and the goals alignment process,
- Phases of the Organizational Development Strategy,
- What to pay attention to when implementing the Organizational Development Strategy?
Let’s find out more with the help of information retrieved from Research in organizational change and development by Richard W. Woodman and Strategy and Organisational Development by Ralph Lewis.
What is Organizational Development and Why Does it Matter?
Organizational Development refers to the development of the people and the infrastructure of a company within a certain economic environment.
Without its people, customers, technologies, and values, the organization cannot exist. Companies must think of the organization’s development as a tool for enriching these mentioned areas.
There are two aspects. On one hand, the strengthening of the specific traits of the company, including the technologies and the target audience. On the other hand, the commitment, the engagement, and the motivation of the people inside the company.
An Organizational Development Strategy depends on the following pillars.
1. The Infrastructure and the Resources of a Company
The people that establish the organization’s development strategy must analyze what resources can be used in creating the strategy.
Let’s give an example. A start-up in sustainable tourism with 7 employees doesn’t have too many resources for building an Organization Development Strategy. At this phase, the CEO of the start-up can think of motivating its people with non-financial rewards (such as flexible working schedule, extra leave, opportunity to attend various workshops and business events, recognition on social media). Another point would be the attraction of more customers with unique perks, different from those of other companies (personal shop assistant, store attractiveness, premium loyalty programs, smart retail technology, sharing customers’ stories on social media).
2. The Productivity of the Company
Those companies that lack a high level of productivity need an Organizational Development Strategy for improving the weakest areas.
Here is a short example. We mentioned 4 areas: people, customers, technologies, and specific traits.
A company in the beauty industry spends a lot of money on attracting more customers. However, it doesn’t possess some unique traits and perks. Since all the companies deliver the same type of products, our company doesn’t get too much attention. The company can become more productive if it comes with elements that distinguish it from the rest of the organizations (such as a diverse range of products that appeal to clients).
3. The Goals of the Company
When there are few resources, the leaders must sacrifice one area for another.
Not all goals can be achieved at once. Some prioritization must be done (Work OS: The Missing Team Management Tool). This is why a lot of companies prefer to take care of each area at different periods. If the main goal is to increase sales, the resources will be redirected towards that particular aspect.
4. The Personnel Knowledge
Leaders make the Organization Development Strategy but employees take care of it.
The worker’s knowledge is one of the keys to applying this strategy with success. When the company attracts people with high skills, it becomes better at discovering innovative ideas and manages to sustain its activities. When the employees themselves focus on improving their working environment and working relationships, the job of the CEO becomes easier.
5. The Image of the Company
We all know the famous line: “It takes years to build a reputation and one second to destroy it!”.
The organization development strategy depends on what image the company is portraying and what values it emphasizes. An organization that stays true to its values and brings wealth to society, can develop more sustainably.
Functions of the Organization
To understand the basis of organizational development, we need to understand first what are the main functions of an organization:
- Get resources. The survival of an organization depends on the resources it has. Without resources, no activity can be done and no goal can be accomplished. It is important to manage the resources for survival in the first place and then to innovate. Through innovation, new accomplishments can be achieved (i.e. 3D printing, cloud technologies, smart skin). Thus the activities of the organization become more diverse and strengthen the status.
- Obtain profit. Non-profit organizations want to perform their work while supporting their members and helping society in general. Companies look for financial profit and investment opportunities in the first place. Attack is the best defense and that is why companies need to make a profit to remain relevant.
- Inclusion. Organizations are the intriguing combination between diverse people and technologies that interact in a specific context shaped by complex factors. Fitting in with the rest of society is essential for humans. The human personnel want to belong to a business community and to follow the main conventions of that society. At the same time, workers also want to make a difference in the world.
- Manage the environment. Organizations are influenced by a lot of factors that affect the environment in which they operate as independent bodies. Managing the world around them, being proactive, and predicting future trends are what the best companies do.
- Do practical tasks for accomplishing the goals. All the goals of the organization are achieved by following certain tasks and workflows that fit its mission. For each activity, there are rules, processes and resources. Each department has to apply those rules and frames. Each type of resource has to be used properly for avoiding high costs and losses.
- Keep people motivated to work together and to develop along the way. Technologies don’t need motivation. Technologies need maintenance and inputs. People do need motivation. People are encouraged to develop themselves so that they can perform better for current and future assignments.
What Benefits Should Be Obtained When Implementing a Good Organizational Development Strategy?
No company creates an organization development strategy to get more useless reports. The Organizational Development Strategy is an orientation tool that will lead to several gains.
Here are the most important benefits after implementing a good Organizational Development Strategy:
- Productivity and profit
- Goals and planning consensus
- Open communication and increased participation
- Interpersonal and hard skill improvement
- Innovative initiatives
- Job satisfaction and motivation
- Stability and control over the environment
- Cohesion inside the teams and flexibility
- Employee retention
- Resilience when facing challenges
The Organizational Development Process and the Goals Alignment Process
The organizational development strategy also means aligning the goals of the company with an orientation towards people, innovation, knowledge creation, and community-based development.
Let’s see how each aspect plays a role in transforming a business .
1. Orientation towards people.
Small companies can have a better focus on all the individuals inside the team. Large companies bet on the heads of the teams to assess the needs and skills of each individual. In both cases, people need help to respond better to challenges.
2. Orientation towards innovation.
Companies are forced by the markets, the customers, and the disruptions in society to develop new and better infrastructure. The innovations simplify the tasks of the employees, help leaders to make decisions, and ease the interaction with the clients.
3. Orientation towards knowledge creation.
With both orientations to people and innovation, it enhances the use of knowledge. As we have seen in our previous article, the knowledge flow inside a company is essential for all daily activities.
At the same time, the more data and knowledge a company possesses, the more it will improve its business model and organizational culture.
4. Orientation towards community-based development.
As we said at the beginning of the article, one of the main functions of an organization is to manage its environment. Companies create products and services that fulfill the needs and the desires of the customers. The next step is not only to engage with its audience but also to create a community around those products and services.
A community is not made just of passive followers. It contains pro-active followers and clients that sustain the company brand. Community-based development gives the power to maintain a long-term and fruitful interaction with the people outside the company.
Phases of the Organizational Development Strategy
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Assign 3-4 elements to each member of the team and tell them to gather information related to these components. Add the information and visualize it with the customizable features on our collaborative platform.
The organizational development strategy is mainly formed of several important phases:
1. Planning of Organizational Development
This component refers to planning the overall goals and activities for developing the internal and external situation of the company:
- Objectives for the organizational development of the company
- Capabilities and resources
- Budget for the organizational development
- Calendar of activities
2. Key Areas of Organizational Development
This component refers to mapping the main key areas that form the basis of organizational development:
- Employees
- Working relations
- Workflow
- Product quality
- Innovation
- Community development
3. Solutions to Key Areas of Organizational Development
This component refers to brainstorming and analyzing of ideas with the teams and the rest of the stakeholders to develop practical and cost-effective solutions for organizational development. The steps are:
- Proposed solutions to the key areas of the organizational development
- SWOT Analysis of the proposed solutions
4. Implementation of Solutions
This component refers to the implementation of the proposed ideas by following a certain schedule.
- Schedule of activities
- Actual implementation
- Monitoring of the implementation
5. Evaluation of the Results
This component refers to the evaluation of the overall implementation and results achieved.
- Evaluation of the implemented solutions
- Evaluation of the overall results
- Feedback from the stakeholders involved
6. Continuous Improvement
This component represents the maintenance of a dialogue and knowledge sharing atmosphere inside the company to improve the process of organizational development.
- Dialogue with the stakeholders
- Informal debates
- Knowledge sharing
What to Pay Attention to When Implementing the Organizational Development Strategy?
The most common task in implementing the Organizational Development Strategy is to transform processes and infrastructure of the company. The hardest task is to transform not only the activities but also the mindset of the employees.
All the productive activities are made by workers that understand and benefit from the human-technology interaction and partnership. Sometimes, the company implements the organization development strategy but things don’t go according to the plans. When these issues arise, it is good to look at possible issues that triggered them.
Here is a list of the most common issues and possible solutions to mitigate the effect of these issues:
Issue 1. Market and economic uncertainties that hold back the development process and steal from the enthusiasm inside the company.
Possible solution: Provide a back-up plan and assure the people inside the organization that despite the economic struggles, their work is valuable and that they will find support from the upper management of the company.
Issue 2. Hardware and software failures. These things happen and urgent actions need to be taken to solve these malfunctions.
Possible solution: Make an inventory with the most urgent hardware and software that need to be fixed or replaced and think of ideas to get or buy them. Renting can also be a solution when it comes to temporary activities.
Issue 3. The staff doesn’t pay attention to the development process and prefers to remain passive.
Possible solution: Explain to the employees that organizational development is a process through which all the people inside the company can learn new things and skills and enrich their professional experience.
Issue 4. Wrong communication with the employees, customers, and stakeholders, the messages might not be positive and motivating enough.
Possible solution: Express from the beginning the true objectives of the process revolving around the organizational development and convey those objectives into clear messages that are positive and that call for reflection and action.
Issue 5. Extremely opposite views, when people don’t understand the necessity of the strategy or start conflicts because of the different views they have.
Possible solution: Discuss with the parties that don’t agree and try to reach a compromise by emphasizing the benefits each party might get after going through this process.
