FINAL PAPER - Creating an Organizational Development Proposal

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Organization-Level Interventions

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Learning Outcomes After reading this chapter, you should be able to:

• Discuss the role of vision, mission, and values in driving organization-level change. • Describe key activities that facilitate strategic planning, such as environmental scanning, SWOT

analysis, SMART goals, and scenario planning. • Of the various organization designs, identify those that best facilitate the organization’s mis-

sion and those that need to be reorganized or restructured. • Explain how learning can be used strategically, such as by capturing organization learning and

developing a strategic learning organization. • Explore how culture influences organizations and can be changed through interventions. • Describe key talent management interventions, such as talent management strategy and

succession planning. • Examine the role of large-scale interactive events for organization change.

A nonprofit health care organization had been struggling to keep its doors open. When the region’s largest employer went out of business, the size and needs of the population served by the organization rose significantly; it was becoming increasingly difficult to provide services to clients. The executive director, Jane, was relatively new and decided the organization needed to improve its ability to raise funds. Jane contracted with an OD consultant, Jeff, to address the issue.

Jeff took Jane and the organization through the action research process to discover the root cause of the problem. He began by collecting data. He reviewed the organization’s website and bro- chures and interviewed employees, donors, and clients. After analyzing the data, he concluded that the organization was not clearly communicating its mission and services well enough and that it lacked a strategic plan. Jeff also suspected that the organization design was not conducive to carrying out its work.

Jeff and Jane began to address this problem by holding a retreat. During the retreat, board mem- bers and staff engaged in numerous exercises to express, clarify, and revise their mission, vision, and values statements. For example, they spent time identifying the organization’s strengths, weaknesses, opportunities, and threats over the short, mid-, and long term. They imagined vari- ous scenarios that would create very different outcomes for the organization, such as changes in health care coverage, escalating expenses, a new employer moving into town, future company closures, and an electronic medical record.

Immediately following the retreat, the organization updated its website, letterhead, and bro- chures to reflect its more concise mission, vision, and values. Jeff and Jane also worked with the board on developing a 5-year strategic plan that included more aggressive communication to potential donors, increased fundraising efforts, and enhanced diversity of both its board mem- bers and its donor base.

Part of the strategic plan included reorganizing the nonprofit around its programs to more readily respond to its distinct stakeholder groups, such as patients and insurance companies. The reorganization was preceded by a large-scale event that brought together employees, patients, other health care providers, board members, and other local nonprofits that worked closely with the organization to plan for the future and how best to meet its needs. Each of these steps will be illuminated in the following sections.

Organization-level OD interventions tend to be more comprehensive and long term than indi- vidual and group interventions. Their goal is to help the organization set direction, determine strategy, solicit feedback, facilitate learning, manage knowledge, change the culture, value diversity, develop the work force, and manage day-to-day activities. Although the list of poten- tial interventions is endless, this chapter introduces the range and variety of interventions that are typically used in OD. These can be categorized into seven areas: mission, vision, or values development; strategic planning; organization design; learning infrastructure; culture; talent management; and large-scale interactive events (see Table 9.1). The first of these is the develop- ment of mission, vision, and values statements.

Section 9.1Mission, Vision, and Values Development

Table 9.1: Categories of individual OD intervention

Mission, vision, and values development

Strategic planning

Organization design

Learning infra- structure Culture

Talent management

Large-scale interactive events

Mission Environ- mental scanning

Organization structure

Organization learning

Culture change

Talent management strategy

Interactive Strategic Planning

Vision SWOT analysis

Reorganization Learning organization

Diversity and inclusion

Succession planning

Future Search

Values SMART goals Scenario planning

— — — — Conference Model Redesign Open Space Technology

9.1 Mission, Vision, and Values Development If an organization is to communicate its core beliefs to the world, it must have a clear and concise statement of its mission, vision, and values. Start-up, merged, or significantly reorga- nized organizations need to develop or revise these statements, and even established organi- zations should revisit them periodically. OD consultants often get involved in these efforts.

Mission A mission statement explains why an organization exists. It identifies the organization’s tar- get audience and the product or service it provides in a way that expresses the organization’s core values. Good mission statements are easy to remember and describe.

Why Do OD Consultants Advocate Mission Statements? Mission statements create boundaries of service, motivate staff, and help evaluate whether the organization has met its goals. They succinctly communicate the organization’s purpose to both the internal and the external world. They can also help focus strategic planning, prod- uct development, and innovation.

Consider This Take a moment to jot down the vision, mission, and values of your organization. Can you do it from memory? If not, you are in good company, because most employees and other organi- zation stakeholders cannot; this signals that these statements are probably in need of some revision.

Section 9.1Mission, Vision, and Values Development

How Do OD Consultants Help Organizations Create Mission Statements? There are three parts of a good mission statement: the audience, the product or ser- vice, and the evaluative measures. Consider a social media company’s mission state- ment to evaluate these elements:

“TechConnect’s mission is to give people the power to communicate and connect worldwide.”

• Audience: The audience defines whom the organization serves. TechConnect is boundaryless to people who have access to a device and an Internet connection. Tech- Connect’s audience is “people . . . worldwide,” as noted in the statement.

• Product or service: The product or service identifies what the orga- nization provides. TechConnect’s service is social networking, with the aim of openly connecting the world.

• Evaluative measures: Evaluative measures are the standards by which the organization can be judged in terms of whether it is achieving its mission. TechConnect’s mission is to connect people throughout the world. How well it is doing that might be measured by the number of users, ad revenue, or site traffic.

Mission statements should be short, succinct, and easy to remember, like the ones listed ear- lier in this section. Management guru Peter Drucker was known to have advocated mission statements that were no longer than eight words and could easily fit on a T-shirt. In his opin- ion, anything larger was simply too long (Wartzman, 2012). Chances are, if you cannot state an organization’s mission, it may not be a good statement.

You can use Figure 9.1 to write your own mission statement or evaluate your organization’s mission according to how well it articulates audience, product or service, and evaluative measures.

Bloomberg/Getty Images An organization’s mission is its reason for being. It is usually based on a central product or service. eBay’s mission statement from 2013 was, “We exist to serve, and, through our service, we create an engaged and loyal eBay community.” In 2020, eBay’s website read, “Our mission is to be the world’s favorite destination for discovering great value and unique selection.”

Section 9.1Mission, Vision, and Values Development

Figure 9.1: Mission statement assessment worksheet

Use this worksheet to write or evaluate your organization’s mission statement. Download a copy in your e-book.

Jeff and Jane, from the opening vignette, planned a retreat with staff and the board, who used their time away to craft a mission statement that could be communicated more succinctly. A list of exemplary mission statements can be found at the following link: https://blog.hubspot. com/marketing/inspiring-company-mission-statements.

Vision A vision statement articulates an organization’s desired end state. When the organization is able to articulate its image of a desired future—that is, where it wants to go and what it will be like once it gets there—it has clear vision (Senge, Kleiner, Roberts, Ross, & Smith, 1994). Although leaders are responsible for formulating vision, Senge and colleagues (1994) argued that fostering and fulfilling the vision is everyone’s responsibility. Examples of good vision statements include these:

Motorcycle company: “To awaken adventure through motorcycling”

Mission Statement Worksheet

The Audience (the boundary)

The Product or Service

Evaluative Measures

Now, put the three functions together in a succinct statement:

Section 9.1Mission, Vision, and Values Development

Wine maker: “To be the world’s most distinguished producer of fine wines”

Chain restaurant: “To create a first-rate, accessible dining company”

Why Do OD Consultants Advocate Vision Statements? Noting that “not all visions are equal” (p. 299), Senge and colleagues (1994) identified several attributes that make a vision powerful. Powerful visions “tap into an organization’s deeper sense of purpose and articulate specific goals that represent making that purpose real, [and] have unique power to engender aspirations and commitment” (Senge et al., 1994, p. 299).

Creating a shared vision requires stakeholders to reflect on the organization’s purpose and future. Senge and colleagues (1994) equated building shared vision with building shared meaning that yields a collective sense of what is important.

How Do OD Consultants Help Organizations Development Vision Statements? The consultant helps the client determine how it hopes its products or services might change the world. The vision statement should capture the organization’s dream; it is a picture of the organization’s ultimate success.

There are multiple methods for creating vision statements. These include simple word smith- ery and generative activities in which multiple participants identify key vision ideas that are collated and ranked. Other companies may use exercises involving pictures and visual aids to create images of the desired future. Table 9.2 compares the characteristics of vision and mis- sion statements.

A list of exemplary vision statements can be found at https://fitsmallbusiness.com/ vision-statement-examples/.

Table 9.2: Comparing mission and vision statements

Mission statements: Why the organization exists

Vision statements: The organization’s desired end state

Succinct one-sentence statement explaining why the organization exists. It should

1. be simple and clear, 2. avoid jargon, 3. be easily memorized, 4. be distinctive, and 5. not be confused with a vision statement.

Succinct one-sentence statement describing the organization’s long-term desired end state. It should

1. be simple and clear, 2. avoid jargon, 3. be easily memorized, and 4. not be confused with a mission statement.

Examples of mission and vision statements

Automobile Company Mission Go the distance: We go the distance to exceed the expectations of our customers in quality and performance.

Automobile Company Vision To be the world’s leading provider of automotive products and services

Children’s Hospital Mission Committed to making them all better: We make chil- dren better today, and healthier in the future.

Children’s Hospital Vision To transform the landscape of pediatric health care and improve the health of all children

Section 9.2Strategic Planning

Values An organization’s values are principles that govern how the organization expects to function in pursuit of its vision. OD consultants are often hired to help the organization clarify and articulate its values, along with its mission and vision.

Why Do OD Consultants Help Clients Develop Values Statements? A values statement brings the mission and vision statements to life by describing what the organization believes in and how it will behave. These statements signal the organization’s beliefs and culture. Values statements can serve as a moral compass for the organization by defining leadership expectations, establishing standards, and guiding decisions.

How Do OD Consultants Help Clients Develop Values Statements? Values are usually derived in conjunction with mission and vision statements. They are gen- erally based on consensus and ideally involve input from top management and stakeholders across the organization.

OD interventions often center on helping organizations articulate their mission, vision, and values in a collective process that is developmental. This process may involve other visioning interventions introduced later in this chapter, such as a Future Search Conference, SWOT analysis, or environmental scanning. Creating the mission, vision, and values statements is often an integral part of strategic planning.

9.2 Strategic Planning Strategic planning is “a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization (or other entity) is, what it does, and why it does it” (Bryson, 2004, p. 6). Strategic planning seeks to accomplish several goals, includ- ing establishing or revisiting long-term vision, values, and mission statements that span several years. Strategic planning scans the environment to assess the competitors, prod- ucts, and services that characterize the industry context. The plan generates strategies to be implemented over a 5-year period that delineate specific activities, champions to advocate for the plan, and deadlines for accomplishing tasks. For example, Jeff and Jane led the non- profit health organization’s staff and board through a strategic planning process that helped accomplish these goals.

Consider This What are the values of an organization of which you are a part? How are the values com- municated or visible? For example, Patagonia communicates its value of “saving the planet” in how it manufactures, markets, and affects the environment: https://www.patagonia.com/ company-info.html.

Section 9.2Strategic Planning

The strategic planning process has several steps, including

• engaging in comprehensive, effective information gathering; • clarifying the organization’s mission, vision, and values; • identifying issues to be addressed in pursuit of the mission; • developing and exploring strategic alternatives; • emphasizing the future impact of present decisions; and • creating specific, measurable actions and timelines, usually in 5-year increments.

Strategic planning helps organizations communicate their mission and goals to employees and other stakeholders. The process is often collective and seeks input from across the orga- nization and its constituents. It represents multiple agendas, interests, and values. It also cre- ates a deliberative assessment of the past, present, and future and establishes accountability measures. An organization typically makes a public commitment to its strategic plan and uses the plan to guide its decisions and actions. Figure 9.2 outlines a simple approach to strategic planning.

Figure 9.2: Strategic planning steps

Strategic planning is a three-step process to determine where you are, where you want to be, and how to get there.

An effective strategic plan will communicate the organization’s mission, vision, and values to the organization’s constituents. The plan will also help the organization prioritize and allocate resources and provide a basis for measuring progress and change. Consultants who facilitate a strategic planning process must educate themselves on the necessary steps,

Determine where you are

Decide where you want to be

Plan how to get there

• Mission and vision

• Programs and services

• People and skills

• Organization structure

• Communications

• Budget support

• Mission and vision

• Programs and services

• People and skills

• Organization structure

• Communications

• Budget support

• Strategic plan

• Restructuring and reengineering

• Hiring and training

• IT and HR plans

• Communications

• Budget allocations

• Metrics

Section 9.2Strategic Planning

usually by undergoing continuing education or graduate study. They should also use products such as OnStrategy (https://onstrategyhq.com/) to track progress and make the plan and accomplishments visible on the organization website. Additionally, they can access strategic planning tools and resources through the Council of Nonprofits: https://www.councilofnon profits.org/tools-resources/dashboards-nonprofits.

Several interventions support the strategic planning process. These include environmental scanning, SWOT analysis, creating SMART goals, and scenario planning. Each will be profiled in the following sections.

Environmental Scanning When the organization scrutinizes external and internal factors that provide critical informa- tion about its future, the organization is engaged in environmental scanning. Environmental scanning involves both external and internal scans:

• External scans examine industry and government reports, journals, conferences, and any other sources that can be used to evaluate the industry. This information might include competitors, market conditions, government regulations, demographics, technology, economic development, global trends, or anything else that might affect the organization’s livelihood.

• Internal scans draw on stakeholder interviews, annual reports, planning documents, analysis reports, customer surveys, employee surveys, marketing reports, board meeting minutes, human resource databases, and other sources that provide rel- evant information.

Why Do OD Consultants Recommend Environmental Scanning? Environmental scanning systematically scrutinizes the organizational context (economic, competitive, social, political, and so forth) and collects data to develop a picture of current and future conditions that could positively or negatively affect the organization. Environmen- tal scanning is important for organizations to maintain or improve their competitive position. The data generated by an environmental scan is used to develop or change strategies and plans. Environmental scanning can be done on any scale. Individuals may engage in it on a personal level when they try to understand the job market or select the best product to buy. Organizations use it regularly to anticipate the future and be more internally and externally strategic.

How Do OD Consultants Facilitate Environmental Scanning? Environmental scanning involves the following steps:

1. Collect data about the context in which the organization operates, including a. economic, b. government, c. legal,

Section 9.2Strategic Planning

d. demographic, e. social, f. political, and g. environmental.

2. Use data sources such as a. publications, b. focus groups, c. industry leaders, d. internal leaders, e. media, and f. civic associations.

3. Critically examine competitors to discover trends, opportunities, and threats that have implications for the organization.

4. Conduct an internal scan to examine the organization’s strengths and weaknesses. This should include reviewing short- and long-term goals.

5. Assess where the organization is now and where it should be in 10 years. Conduct a gap analysis as discussed in Chapter 4.

6. Collect relevant data from the community in which the organization operates. Out- comes might be joint projects or strategies. Relevant stakeholders might include a. nonprofit organizations, b. governmental or social agencies, c. higher education institutions, and d. religious organizations.

7. Analyze the data and use it to develop or modify strategy.

Have you ever participated in environmental scanning? See the activity at the end of the chap- ter to practice.

SWOT Analysis During a SWOT analysis, employees and other stakeholders come together to identify an organization’s strengths and weaknesses and to examine environmental opportunities and threats. It is often done as part of strategic planning and is very effective if performed correctly.

Why Do OD Consultants Do SWOT Analysis? The act of simply carrying out an analysis using the SWOT framework can be enough to reveal what needs to change and to stimulate new ideas. SWOT analyses are often undertaken fol- lowing environmental scanning to establish strategies to maximize opportunities and mini- mize threats.

How Do OD Consultants Do SWOT Analysis? To carry out a SWOT analysis, reflect on the questions listed in Table 9.3.

Section 9.2Strategic Planning

Table 9.3: SWOT analysis

Strengths Weaknesses

• What are our advantages? • What do we do well? • What are our

• Unique capabilities? • Natural advantages? • Superior resources?

• What could we improve? • What are we doing badly? • What should we avoid? • What are our

• Key vulnerabilities? • Disadvantages? • Resource and capability shortfalls?

Opportunities Threats (Challenges)

• Where are the good chances facing us? • What are the interesting trends? • What are the

• Changes in the social, economic, and political environment?

• Changes in technology? • Changes in government policy? • Changes in markets? • Weaknesses of our competitors? • Unmet customer needs? • Staff and supplier capabilities? • Size, location, and strategic positioning? • Changes in social patterns, population

profiles, lifestyle changes, etc.? • Local events that have potential?

• What obstacles do we face? • What is our competition doing? • Are the required specifications of our work,

products, or services changing? • Is changing technology threatening our

position? • Do we have bad debt or cash flow problems? • Are we at risk of

• Resistance to change? • Lack of interest or motivation? • Lack of commitment? • Lack of flexibility or focus? • Mismatch of skills and resources with the

strategic direction? • High risks or impossible odds?

Facilitating a SWOT analysis for a client involves following these steps:

1. Ask participants to individually brainstorm on each of the SWOT categories (strengths, weaknesses, opportunities, and threats). Have them write down their ideas on Post-it notes.

2. Invite participants to place their Post-it notes on flip charts stationed around the room. Each flip chart should be devoted to one SWOT category. Individuals will work around the room in carousel fashion, adding one issue to each flip chart until all ideas are exhausted.

3. Tally the issues. Seek consensus on prioritization of the key issues in each SWOT category.

4. Review and discuss the issues. 5. Invite the group to raise questions and answers. 6. Help the group plan action around key issue(s). 7. Summarize the process and outcomes.

Keep in mind that groups have a tendency to get stuck in the process of identifying issues and have difficulty moving toward commitment to action. Plan for transition out of the SWOT analysis to bridge the gap between idea generation and meaningful action.

Returning to the vignette, the nonprofit organization underwent a SWOT analysis as part of its planning to adjust priorities and goals. The process helped clarify the nonprofit’s chal- lenges around fundraising in particular.

Section 9.2Strategic Planning

SMART Goals Strategic plans should incorporate SMART goals. SMART goals are

• Specific • Measurable • Attainable • Realistic or Relevant • Time bound

The SMART mnemonic was introduced by George Doran, Arthur Miller, and James Cunning- ham in 1981 (Doran, Miller, & Cunningham, 1981). Since that time, it has served as the stan- dard tool for creating effective goals.

How Do OD Consultants Help Clients Set SMART Goals? Table 9.4 offers descriptions and examples of SMART goals.

Table 9.4: Setting SMART goals

Description Personal example Organization example

Specific A specific goal can be clearly visual- ized. Specifics help us focus and clearly define actions. Specifics are the what, why, how, and who of the SMART model.

WHAT are you going to do? Use action words such as increase, orga- nize, collaborate, lead, develop, plan, establish, and build.

WHY is the goal important at this time? What do you ultimately want to accomplish?

HOW are you going to do it?

WHO is going to do it?

Instead of setting a goal to lose weight, set a specific goal, such as losing 2 inches off your waistline, losing 5 pounds in 5 weeks, or walking 5 miles at an aerobically challenging pace.

Instead of setting a goal to retain employees, set a specific goal, such as improving retention by 10% over the next 90 days and implementing an onboarding program to provide orientation to new employees.

Measurable An old management adage is “If you cannot measure it, it does not matter.” Furthermore, you cannot manage it. A goal provides a measur- ing stick. If the goal is accomplished, success has been achieved. An organization may also build several short-term or small measurements into the goal to measure incremental progress along the way.

A goal that is dif- ficult to measure would be “Lose weight.” A better goal with measur- able steps would be “Lose 1 pound per week for 5 weeks” or “Exercise for 30 minutes every day.”

“The organization will improve retention by 10% over the next 90 days.”

(continued on next page)

Section 9.2Strategic Planning

Table 9.4: Setting SMART goals (continued)

Description Personal example Organization example

Attainable Goals should be attainable and pos- sible to reach. The goal should create some challenge in that it is neither too easy nor too difficult to reach and will require push to attain. The goal should be within the employee’s or organization’s ability and resources to achieve and should align with the work unit goals.

Aiming to lose 10 pounds in 1 week is not attainable (or healthy). A more attainable goal is to lose 1 to 2 pounds per week for a sustained period of time.

Aiming to improve reten- tion by 10% is realistic, and after the 90-day period, the organiza- tion can adjust its goal and approaches (e.g., onboarding) to see if that affects retention.

Realistic or relevant

Realistic does not mean “effortless.” A realistic SMART goal is within the employee’s or team’s capabil- ity. Although the goal may challenge employees to develop new skills and knowledge, it will not throw them into the panic zone or break their motivation to continue because it seems possible to reach.

This part of the SMART goal frame- work is called “relevant” by some models. Relevant means that the goal is linked to roles and responsibili- ties and to the overall organization mission. Either way, the stated goal should be tied to the mission and should challenge the organization to attain it.

“Lose 25 pounds in 7–8 months in an effort to have a healthier lifestyle.” This type of goal requires us to fur- ther develop capac- ity to take steps to lose weight, but it is not unrealistic in what it is asking. An unrealistic goal might be one with a much shorter amount of time.

Reducing turnover is realistic in terms of being within the organization’s capability and highly relevant, as retaining staff has multiple benefits that affect customer care, product or service quality, morale, and costs.

Time bound

Creating a timetable or Gantt chart for a goal is imperative. Specific time frames by week, month, semester, or year offer manageable targets to work toward. Without deadlines, it may be difficult to secure com- mitment to achieving the goal. A timetable creates a sense of urgency to achieve the goal. Make sure the timing is measurable, attainable, and realistic!

“To lose 10 pounds in time for a class reunion in 6 months.”

“To improve retention by 10% in 90 days.”

Why Do OD Consultants Help Clients Set SMART Goals? SMART goals help clients develop goals that hold them accountable for implementing their strategic plan. Addressing each aspect of the SMART goals helps clients develop good goals.

Scenario Planning Scenario planning is a strategic planning approach that assesses all possible environ- mental changes that could affect the organization and creates a story about the outcomes.

Section 9.3Organization Design

Strategic responses to the stories are developed so that all imaginable contingencies have been considered.

Why Do OD Consultants Do Scenario Planning? Organizations use scenario planning to plan long-term strategy in a shifting environment. For example, the process was used by Royal Dutch Shell to predict future shifts in the oil industry. The creation of scenarios can give organizations a context and situation that mimic reality and more readily allow problem solving and innovation.

How Do OD Consultants Do Scenario Planning? Scenario planning was introduced in the 1960s as a military tool to design weapons technol- ogy. It was then adopted for business planning and community building (Haeffner, Leone, Coons, & Chermack, 2012). Chermack (2011) suggested that scenario planning involves

1. emphasizing changed thinking, 2. creating informed narratives or stories of plausible futures, 3. making better decisions about the future, and 4. enhancing human and organization learning.

For example, during the nonprofit retreat profiled in the vignette, Jeff and Jane developed potential stories of what might happen in the future if fundraising further diminished or increased dramatically.

9.3 Organization Design Organization design consists of five elements:

1. strategy: long-term vision 2. structure: roles, responsibilities, and relationships among organization units or

functions 3. process and lateral capacity: decision-making process, cross-functional and integra-

tive roles 4. reward systems: compensation, recognition, metrics 5. people practices: human resource or personnel functions such as hiring, talent man-

agement, learning, and development (Anderson, 2016; Galbraith, 2002)

When an organization’s design does not work well or prevents the organization from achiev- ing its goals, it will redesign or restructure.

Organization design may change following a shift in strategy, a merger or acquisition, or out- sourcing and downsizing. Such a shift allows the organization to more effectively meet the changing demands and market conditions.

Organization Structure The order of reporting relationships and their general design is known as organization struc- ture, which also incorporates processes and lateral capacities in terms of how individuals and

Section 9.3Organization Design

groups work and make decisions together. There are several varieties of structure, includ- ing functional, divisional, matrix, process, and network (Cummings & Worley, 2018). We will define each type shortly. Having an appropriate structure facilitates the organization’s work and productivity.

Why Do OD Consultants Address Organization Structure? An organization’s structure determines reporting relationships, level of formality, and how work gets accomplished. Consultants examine organization structure to assess how well it fits with the organization’s overall mission, vision, and values.

How Do OD Consultants Address Organization Structure? Consultants first assess the organization’s type of structure and then examine the mission and vision, key processes, and functions to see if the structure makes sense. For example, most automotive companies have hierarchy, assembly lines, and clear productivity targets. However, that type of structure would not befit a company focused on the latest technology, quick responses, and innovation.

Types of Organization Structure This section profiles common organization structures. See if you can identify the structure of an organization you belong to as one of these types.

Functional Structure Functional organizations are organized according to functional activities such as finance, human resources, and operations (Cummings & Worley, 2018). The functional structure val- ues skill specialization, in that certain subdivisions carry out all tasks associated with that function for the organization. This structure promotes career development within the func- tion, sometimes at the expense of exposure to other functions. The functional structure is sometimes accused of being “siloed” in that the functions become isolated from each other and lack understanding and communication across the organization. See Figure 9.3 for an example of a functional structure.

Figure 9.3: Functional structure

This structure is the classic hierarchy most of us think of when we envision organization structure.

CEO

VP Marketing

VP Research VP Finance VP Human Resources

VP Manufacturing

Section 9.3Organization Design

Divisional Structure In a divisional structure, also called a self-contained unit, activities are organized according to products, services, customers, or geography (Cummings & Worley, 2018). Because members identify with the product or service rather than their own function and are oriented to the customer, departments tend to be more cohesive across the organization as compared with the functional structure. Cross-training is also more easily facilitated. However, the divisional structure may not be as efficient as the functional structure because of duplication of services, and career advancement within a specialty is more difficult. Divisional structure is depicted in Figure 9.4.

Figure 9.4: Divisional structure

The advantage of a divisional structure is the cohesiveness it tends to create.

Matrix Structure The matrix structure combines two or more organization structures. For example, an engi- neer may report to the head of engineering and, on a special project around process changes in a manufacturing plant, will also report to the manager of the project, perhaps a manufac- turing director. This structure results in employees reporting to more than one supervisor, as in the case of the engineer. Matrix structure promotes the sharing of functional and prod- uct knowledge across functions. It requires a flexible and supportive management, because employees often report to both functional and product managers, making this structure more politically contested and difficult to implement than other structures. Matrix structures are not usually permanent. They shift according to organization need. See Figure 9.5 for an exam- ple of a matrix structure.

CEO

VP Product A

VP Product B

Manager Sales

Manager Manufacturing

Section 9.3Organization Design

Figure 9.5: Matrix structure

The matrix structure allows for sharing of information across functions, but because employees may report to more than one person (e.g., functional and product managers), this structure often creates tension and is more difficult to implement.

Process-Based Structure Glavan and Vukšić (2017) described the process-based structure, or business process orien- tation (BPO), as occurring when an “organization pays attention to its relevant (core) pro- cesses (end-to-end view across the borders of departments, organizations, countries, etc.)” (p. 138). They surveyed 127 Croatian companies and found that BPO enhances both financial and nonfinancial performance. Anderson (2018) noted that process-based structures are con- sidered horizontal and boundaryless in nature and emerged in high-tech where competitive edge means organizations are nimble and quick in innovating new products and getting them to market. This requires a breakdown in hierarchy and instead uses cross-functional, self- managed teams to accomplish work. A process orientation involves a continuous improve- ment mindset, where the organization is perpetually seeking ways to improve. For example, ensuring the hiring process is well integrated throughout the organization and top diverse candidates are being recruited, interviewed, and hired requires constant attention. Hiring processes have evolved, with new capabilities using social media and hiring analytics. A busi- ness process–oriented organization seeks to improve processes across the organization that sustain and evolve over time.

The BPO structure is a relatively flat structure with a small senior management team. Each major process has an owner who oversees its management. This structure is highly customer oriented and able to quickly adapt to the environment. There is generally strong teamwork based on the need to work across process groups to serve the customer, and thus teams work rapidly to set goals, adapt to change, and build collaborative working relationships. Success- fully organizing according to process requires a shift in thinking about management’s role. Moreover, it may take longer to make decisions and accomplish tasks in the process-based structure. See Figure 9.6 for an example.

Coordinator Product A

Manufacturing Employees Product A

Marketing Employees Product A

Coordinator Product B

Coordinator Product C

Manufacturing Employees Product B

Manufacturing Employees Product C

Marketing Employees Product B

Marketing Employees Product C

VP Coordinators VP Manufacturing VP Marketing

Section 9.3Organization Design

Figure 9.6: Process-based structure

The process-based structure has teams focusing on core processes instead of products.

Network Structure A network structure abandons the traditional hierarchical functional structure, reducing functions down to key competencies and a network that helps the organization achieve its goals (Anderson, 2018). Network structures have been described as spider webs, clusters, or starbursts. They are characterized by vertical disaggregation, or the splitting of business functions into separate organizations that perform specialized work. Network organizations do not have hierarchies but are often managed by brokers who orchestrate processes, much as a general contractor draws on a network of specialties to construct a building (Cummings & Worley, 2018). Brokers coordinate a variety of informal relationships, contracts, and mar- ket mechanisms.

Network structures are flexible and adaptable to the environment and are usually good at meeting customer and market demands. However, this structure is complex and unstable, making recruitment and retention challenging. See an example in Figure 9.7.

Senior management

New product development

Customer service

Processes

Etc.

Section 9.3Organization Design

Figure 9.7: Network structure

The most adaptable of the organization structures, the network structure allows for a flexible environment to meet customer and market demands.

Organization design is driven by the organization’s mission, vision, values, and strategic plan. When there is a mismatch, reorganization is usually necessary.

Reorganization and Restructuring Organizations must make changes that allow them to more nimbly respond to environmental factors such as increased competition, globalization, and new technologies. Often, these fac- tors require organizations to rethink their structures through reorganizing or restructuring their operations to allow them to more effectively meet market conditions.

Why Do OD Consultants Help Clients Reorganize and Restructure? Organizations often decide to reorganize to improve communication, quality, or customer satisfaction or to improve productivity and performance. These activities can also be part of strategic plan implementation, particularly when the goals relate to improved performance and efficiency.

Engineering organization

Manufacturing organization

Broker organization

Supplier organization

Distributor organization

Section 9.3Organization Design

How Do OD Consultants Help Clients Reorganize and Restructure? Restructuring is the process by which an organization design is changed. Organizations will usually shift from a more traditional structure (such as functional, divisional, or matrix) to a more integrative and flexible structure (such as process based or network). Also known as flattening, restructuring involves shifting the organization to become more agile, responsive, productive, and effective. Restructuring is influenced by the environment, the geographic span of operations, organization size, technology, and the strategic plan. Here, we discuss three common approaches to restructuring: reengineering, mergers and acquisitions, and downsizing.

Reengineering Reengineering (Hammer & Champy, 1993) is the radical redesign of the organization’s core work processes to provide greater linkage and coordination among tasks. The goal is to achieve higher, faster performance and better customer service. Reengineering is primarily concerned with streamlining business processes and pays little attention to the human social system (French & Bell, 1999; McLean, 2006). The reengineering process is often associated with technological advances that the organization must adopt. Reengineering questions tasks and processes and attempts to unearth the assumptions that govern them. The result is usu- ally radical changes in thinking and practice and improved customer service.

Reengineering is accomplished by preparing the organization, usually through data and edu- cation, about the need for the change. Preparatory work also involves clarifying the organiza- tion’s strategy and objectives so that the reengineering effort supports the long-term vision and mission. The reengineering process begins with a fundamental rethinking of how work gets accomplished by identifying and analyzing core business processes, defining perfor- mance objectives, and designing new processes. Next, the organization restructures around the new business processes. Typical process changes include shifting from functional depart- ments to process teams, changing jobs from simple tasks to multidimensional work, empow- ering workers to have more authority in their roles, shifting compensation and performance measures from activities to results, flattening the organization’s structure, and shifting mana- gerial behavior from supervisory to coaching (Cummings & Worley, 2018).

Since reengineering’s emergence in the early 1990s, it has been used as a business improve- ment process in many sectors including energy management conservation (Chassiakos, Karatzas, & Farmakis, 2019), information technology investment and employee performance (Huang, Lee, Chiu, & Yen, 2015), public administration (Esbenshade, Vidal, Fascilla, & Ono, 2016; Rinaldi, Montanari, & Bottani, 2015), and total quality management (Serban, 2015), to name a few.

Mergers and Acquisitions Restructuring is usually necessary when companies merge or acquire new businesses. McLean (2006) identified four methods of restructuring after a merger or acquisition:

1. Limited integration: Operations continue as they were premerger; alternatively, the acquisition is managed by a holding company, which houses several other organiza- tions. For example, Walt Disney is the world’s largest mass media holding company,

Section 9.3Organization Design

with theme parks, studios, television channels (Disney, ESPN, A&E, and ABC Family), as well as familiar figures like Mickey Mouse.

2. Dominant company: The acquiring company absorbs the acquired company into its operations.

3. Mutual best of both: Melds the best of each organization into a new organization 4. Transformation to new company: Although similar to mutual best of both, this struc-

ture adopts entirely new organization practices to create a new organization.

Have you ever been part of an organization that experienced one of these changes? If so, which structure did you experience?

Mergers and acquisitions often stimulate multiple OD efforts at the individual, team, and organization levels. Sometimes, mergers and acquisitions stimulate downsizing.

Downsizing “When you strip away the fancy jargon, a successful business fundamentally makes more money than it spends” (Ashkenas, 2012, para. 1). When an organization decreases its size to reduce cost and bureaucracy, it is downsizing. Downsizing is usually prompted by mergers and acquisitions, restructuring, lost revenue and market share from industrial and techno- logical change, or social pressure to create a small, lean organization (Cummings & Worley, 2018). Additionally, McLean (2006) identified economic downturn, change in product or ser- vice demand, technological shifts, improved processes, and flattening as reasons organiza- tions downsize.

Downsizing is usually accomplished through workforce reduction, organization redesign, or systemic redesign (Cameron, Freeman, & Mishra, 1991; Cummings & Worley, 2009):

• Workforce reduction seeks to reduce the organization’s head count and is usually a short-term downsizing tactic accomplished through layoffs, attrition, retire- ment incentives, and buyout packages.

• Organization redesign seeks more fundamental organization change than workforce reduction and is a longer-term strategy accomplished by merging units, redesigning tasks, and eliminating functions, layers, and products.

• Systemic redesign seeks transfor- mational culture change. A long- term strategy, it involves changing responsibilities, adopting continuous improvement programs, simplifying processes, and accepting downsizing as a way of life.

Katleho Seisa/E+/Getty Images Plus Organizations downsize to save money, although there is little evidence to show it effectively accomplishes cost savings.

Section 9.4Learning Infrastructure

Downsizing is not cost-free, and organizations may not realize the hidden costs, which can be so high that they might cancel any gains made in salary savings (Ashkenas, 2012). When organizations lay off workers, they take on the costs of severance pay, benefit extensions, and outplacement counseling. Longer term, organizations lose institutional knowledge, dis- rupt relationships, and create more burden and angst for employees who remain (Ashkenas, 2012). One study of 318 companies and more than 4,000 participants indicated that 77% of organizations have increased errors and mistakes after a downsizing.

Downsizing should not be about lowering the budget. A good measure is to assess the PEST costs: What are the Political, Economic, Social, and Technical costs of laying off workers? Downsizing was a desperate response some organizations had to the Great Recession that occurred from approximately 2008 to 2010. Yet, the costs of cutting the work force at that time were significant: Valuable knowledge was lost with the laid-off long-term workers, new workers were under incredible pressure to learn new skills with little time and minimal men- toring, innovation was hurt, workloads increased, and trust and willingness for workers to engage diminished, along with company loyalty. The sum total was a disaster for many orga- nizations, which were left in a tumultuous period without knowledge, loyalty, or enthusiasm for working at their companies.

Downsizing can be avoided if organizations pay attention to structure and do not allow it to become overly complex. Organizations have to shift with innovation and customer tastes and be willing to phase out products and services people no longer want. The Kodak corporation featured in an earlier chapter was not able to digest the growing demand for digital photog- raphy. The company did not phase out its film business and wound up downsizing as a result. Organizations also need to accurately forecast the future and balance profitability in the short term and sustainability and growth in the long term.

Incidentally, the rise of the contingent work force is a consequence of downsizing. Research on downsizing has indicated that it does not achieve the intended results in cost reduction or productivity gains (Cummings & Worley, 2018). For a comprehensive reference, see the Soci- ety for Human Resource Management’s 2009 “Employment Downsizing and Its Alternatives”: ht t ps://w w w.shrm.org/hr-today/trends-and-forecasting/special-repor t s-and-exper t -views/Documents/Employment-Downsizing.pdf.

9.4 Learning Infrastructure When an organization embraces learning as a process and strategy and creates systems to capture and share learning, it is concerned with learning infrastructure. We have shifted from the industrial age to the knowledge age, and with that change we need to facilitate learning and thinking that begins at the individual level and ideally spreads throughout the organization. “Organizations will no longer remain competitive with informal approaches to knowledge and learning” (Gilley & Maycunich, 2000, p. 16). Organization-level interven- tions aimed at learning seek to raise awareness of how knowledge can give organizations a competitive edge. Two learning infrastructure interventions—organization learning and the learning organization—gained popularity in the 1990s, particularly with the publication of

Section 9.4Learning Infrastructure

Peter Senge’s (1990) The Fifth Discipline: The Art and Practice of the Learning Organization. These are discussed here.

Organization Learning An organization concerned with describing the nature and process of internal learning is focused on organization learning (Callahan, 2003). When an organization focuses on learn- ing, it pays attention to how knowledge is developed and shared.

Why Do OD Consultants Facilitate Organization Learning? Developing organizational capability for learning builds adaptive capacity that is important in continually shifting markets that are highly competitive and driven by knowledge. The quality of individual learn- ing affects organizations, yet learning is often riddled with errors that prevent change and progress.

In his classic Harvard Business Review arti- cle “Teaching Smart People How to Learn,” Argyris (1991) argued that most people do not know how to learn. Even people who are regarded as the smartest are rarely effective learners. He suggested that professionals’ greatest fears are to make mistakes and fail; they therefore create elaborate mechanisms to defend themselves against either outcome, at the expense of the system. For instance, when most people are confronted with a question they cannot answer, they make up one instead of admitting they do not know (or pledging to find out). People will go to great lengths to avoid appearing ignorant or inexperienced. Yet such behavior can ultimately hurt both individuals and organizations, especially when it results in poor decisions or unshared learning. Argyris also found that otherwise smart people go to great lengths to cover up mistakes. Argyris called this unwillingness to admit ignorance or mistakes learned incompetence. Interestingly, most individuals and organizations are not even aware that they have learning deficiencies.

How Do Consultants Facilitate Organization Learning? Argyris and Schön (1974) developed the original models of organization learning. The orga- nization uses learning to change behavior; the new knowledge helps the organization trans- form information, which improves its long-term capacity (Callahan, 2003). Organizations committed to organization learning will undergo interventions such as reflective practice, action learning, team learning, learning and development programs, and problem solving.

alvarez/E+/Getty Images Plus Interventions that support learning value the process and strategy for creating a learning culture.

Section 9.5Culture

Learning Organization Senge (1990) defined a learning organization as “an organization that is continually expand- ing its capacity to create its future” (p. 14). Watkins and Marsick (1993) viewed it as learning that transforms or changes the organization and observed that it occurs at four interdepen- dent levels: individual, team, organization, and society.

In effective learning organizations, the work force is accustomed to participatory manage- ment, a supportive culture, ongoing learning opportunities, and rewards for learning. Such organizations

• encourage managers to be coaches, mentors, and facilitators of learning; • build a culture of feedback and disclosure; • take a systemic, holistic view of the organization; • create shared vision with all stakeholders; • establish systems for sharing learning and using it in the business; • provide regular opportunities to learn from experience; • foster trust throughout the organization; and • embrace the unexpected as opportunities to learn (Marquardt & Reynolds, 1994;

McLean, 2006).

Embracing organization learning usually requires a significant shift in the organization’s cul- ture. This is the subject of the following section.

9.5 Culture Every human being belongs to multiple social groups that have rules, rites, and rituals that shape members’ beliefs, values, and behaviors. These variables mesh together to create cul- ture. Nations, cities, organizations, churches, sports teams, universities, and so forth all have distinct cultures. The meaning of culture has been debated and studied for decades. In fact, during the 1950s, Kroeber and Kluckhohn (1952) found more than 150 definitions of culture in academic literature.

Edgar H. Schein’s (1991) groundbreaking work suggested that by understanding culture, we gain a deeper appreciation for the way it affects members’ thoughts, feelings, and actions. Schein defined culture as a pattern of basic assumptions that are invented, discovered, or developed by a given group as it learns to cope with problems adapting to the external envi- ronment. Culture is thus a learned value system or structure for solving problems that is passed down from old members to new ones. It is a significant influence on how members perceive, think, and feel about their environment, as well as how they behave.

Culture is often described as encompassing three levels: (a) basic underlying assumptions, (b) espoused beliefs and values, and (c) artifacts (see Table 9.5). As important as culture is claimed to be in organizations, 61% of new employees reported receiving no training on the culture of their new company (Moran, 2019).

Section 9.5Culture

Table 9.5: Levels of culture As you study this table, think of a culture to which you belong. How would you describe each of these levels? Consider fans of a sports team and a corporation as examples:

Culture features Sports team examples Corporation examples

Basic underlying assumptions (Generally known, but not discussed or written anywhere: “The way we do things around here.”)

Team superiority Support the team whether it

wins or loses Sportsmanship

Product or service superiority Long hours Honesty (or a lack thereof ) Protocol (hierarchical or flat

communications across the company)

Espoused beliefs and values (Public statements about the culture)

“We are number one” “We are the Bulldawg Nation”

(as said at the University of Georgia)

Videos for fans

Mission statement Vision statement Posted values Strategy Traits management displays Promotion of product/service

Artifacts Mascot Cheers and behaviors Logoed attire Stadium

Office layout Company logo Products Rituals such as how employees

are recognized and celebrated

We will examine two different culture interventions: culture change and diversity and inclusion.

Culture Change Most people are unaware of the extent to which culture dictates their thoughts and actions, including in organizations. All members of an organization participate in and shape its cul- ture. For example, working long hours may be a part of one organization’s culture. Although this rule is not written anywhere or explicitly discussed, it is understood by everyone who is part of the organization, and newcomers quickly adopt it. When members fail to comply with cultural rules, the culture finds ways to correct, reprimand, or remove them.

Why Do OD Consultants Facilitate Culture Change? There are good and bad cultures. OD interventions targeted at culture aspire to make the cul- ture more positive, productive, inclusive, or innovative.

How Do OD Consultants Facilitate Culture Change? Culture change is challenging because it attempts to change “business as usual.” “Changing an organization’s culture is one of the most difficult leadership challenges. That’s because an organization’s culture comprises an interlocking set of goals, roles, processes, values, com- munications practices, attitudes and assumptions” (Denning, 2011, para. 1).

A good way to approach culture change is to use survey research. Conducting a survey about how people regard the organization’s culture, practices, policies, products, and management

Section 9.5Culture

provides a baseline (or comparative data, if a survey has been conducted before). This type of data offers management rich feedback on what is working well and less well. The results can provide an agenda for change that the organization can prioritize and implement.

Next, the leadership needs to offer a vision for the future once the organization changes. This might be product innovation, market dominance, customer satisfaction, or efficiency. The vision needs to be communicated clearly and broadly so that the organization both under- stands and supports it.

If the changes require new roles, then management needs to articulate what these are. It also needs to establish new reward systems that recognize contributions to the new culture, along with metrics that measure progress. For example, if the leadership culture is being changed from autocratic to participative, managers would be rewarded for exhibiting participative behavior, such as including employees in decision making. There also need to be clear conse- quences for supporting (or not supporting) the desired culture changes. Finally, infrastruc- ture to support the new culture needs to be created. This might include resources, new posi- tions, new policies, or new procedures. See Case Study: World Bank for a real-life example of a culture change.

Diversity, Equity, and Inclusion Organizations and their members are inimitable. Each has distinctive values, cultures, identi- ties, and social norms that blend into the complex sociocultural system of work. Diversity, equity, and inclusion interventions aim to make organizations more welcoming and affirm- ing of an increasingly varied work force; as such, they address changing demographics, the dearth of ongoing diversity and inclusion interventions, their spotty success rates, and their pitfalls and strategies:

Inclusion is an active process in which individuals, groups, organizations, and societies—rather than seeking to foster homogeneity—view and approach diversity as a valued resource. . . . [I]t is about presence, participation, safety, voice, authenticity, equity, and equality for more people across multiple iden- tity groups. (Ferdman, 2017, p. 238)

Valuing diversity, equity, and inclusion can also give organizations a competitive edge in attracting talent. According to Moran (2019), 67% of job candidates want to join a diverse

Case Study: World Bank Culture change at the World Bank has proved difficult over the years, particularly because it presents a unique culture change challenge. The organization’s formal purpose is ambiguous, and the institution is a combined philanthropic foundation, university, and bank. Governments around the world own this international organization, with a resident board of directors and staffs who operate the World Bank on a day-to-day basis and regularly question the manage- ment. Read a case study of culture change at the World Bank: http://www.forbes.com/sites/ stevedenning/2011/07/23/how-do-you-change-an-organizational-culture.

Section 9.5Culture

team, and companies with diverse organizations are 35% more likely to have above-average financial returns for their industry.

See Assessment: Equity and Diversity.

Why Do OD Consultants Promote Diversity, Equity, and Inclusion? The U.S. Census Bureau (2019) has predicted dramatic demographic shifts over the next 50 years, the ramifications of which are already being felt in many organizations. “By 2030, all baby boomers will be older than age 65,” making 1 out of 5 people of retirement age, and “adults will outnumber children for the first time in U.S. history” (U.S. Census Bureau, 2019, para. 3). By approximately 2043, the United States is projected to become a majority–minor- ity nation, meaning that although the non-Hispanic White population will continue to be the largest single group, no group will constitute a majority.

“The worldwide phenomenon of economic globalization not only has provided differ- ent logistics and consumption habits, but also has generated a new workplace envi- ronment much more diverse than ever” (Castro, 2013, p. 37). Today’s organization is characterized by people of different gen- ders, generations, ethnicities, sexual orien- tations, physical abilities, countries of ori- gin, and religious beliefs working side by side. Each of these groups has its own cul- ture, needs, and expectations from work.

Historically, U.S. organizations have been designed and run by heterosexual White males. People outside of that cultural group have been offered fewer training and development opportunities, received fewer promo- tions, suppressed their identity in order to assimilate to patriarchal culture, and experienced harassment or other mistreatment (Bierema, 2002, 2016b, 2017). Obviously, diversity and inclusion interventions are needed throughout U.S. organizations, yet, according to Castro

Assessment: Equity and Diversity Take the equity and diversity quizzes available at the following links to assess your level of awareness related to issues of diversity and inclusion:

• https://www.proprofs.com/quiz-school/quizshow.php?title=equity-diversity -awareness-quiz&q=1

• http://www.edchange.org/multicultural/quizzes.html

What do you need to work on in the future to become more inclusive in your own life and work?

Cecilie_Arcurs/E+/Getty Images Plus The U.S. work force is becoming increasingly diverse.

Section 9.5Culture

(2013), only 40% of 300 multinational organizations surveyed intend to deliver multicultural programs to develop leaders; only 9% already do. This indicates that a majority of organiza- tions are not taking steps to prepare for an increasingly diverse work force. Moreover, 36% of organizations surveyed were not even aware of the meaning of a “multicultural program.” Nancherla (2008) reported on a study that found 68% of companies do not hold senior execu- tives accountable for diversity and inclusion oversight, 65% lack a global diversity strategy, and 53% do not sponsor any training in this area. Given these statistics, diversity and inclu- sion interventions are likely to continue to be important for years to come, until organizations become much more accommodating of diverse perspectives and needs.

A survey of more than 16,000 employees in 14 countries was conducted regarding what diversity, equity, and inclusion interventions were common and how effective they were for women, racial or ethnic groups, and LGBTQ employees (Krentz, 2019; Krentz et al., 2019). According to the researchers, day-to-day bias is pervasive and underestimated, with half of the respondents observing bias as their daily work experience. Half had little confidence that their organization had policies and practices in place to ensure that major decisions (e.g., hiring, promotion, assignments) are bias-free. Providing a stark contrast, White heterosexual males were 13% more likely to rate their daily work experiences as bias-free. Diversity and inclusions that respondents prioritized included robust, well-crafted, and consistently fol- lowed antidiscrimination policies; effective training to mitigate biases and increase cultural competency; and removing bias from evaluation and promotion decisions.

Even when organizations engage in diversity and inclusion interventions, they may not find them effective. Numerous researchers have observed that these interventions lack a track record of success (Cavaleros, Van Vuuren, & Visser, 2002; Kochan et al., 2003), or worse, do not work (Lipman, 2018). For example, a comprehensive review of 31 years of data from 830 mid- to large-sized U.S. workplaces found that diversity training at most firms precipitated a 7.5% drop in the number of women in management. The number of Black female managers fell by 10%, and the number of Black males in top positions fell by 12%. Similar trends were seen for Latinos and Asians (Kalev, Kelly, & Dobbin, 2006; Vedantam, 2008). This discouraging research highlights the need for OD consultants to have training and expertise in this area. Recently, a Diversity and Inclusion Index (D&I Index) was created to measure relative performance against multiple factors that define diverse and inclusive workplaces. The top 100 ranked firms are available via Refinitiv Diversity and Inclusion Index, accessed at the following link: https://www.refinitiv.com/content/dam/marketing/en_us/documents/reports/diversity -and-inclusion-top-100-companies.pdf.

How Do OD Consultants Promote Diversity, Equity, and Inclusion? Organizations face several obstacles in promoting diversity and inclusion. This section identi- fies some of these and offers strategies for overcoming them. These obstacles and strategies have been adapted from Lankau (2013) and Nancherla (2008).

Diversity and Inclusion Intervention Pitfalls Obstacles to promoting diversity, equity, and inclusion commonly include the following:

• Managers and leaders assume diversity and inclusion is not their job, but rather the responsibility of human resources. In reality, it is everyone’s job, with zero tolerance for disrespect of diversity.

Section 9.5Culture

• The organization focuses on recruiting a diverse work force but not retaining one, because the organization values diversity but lacks inclusivity. Not surprisingly, people leave.

• There is little or no assessment of organization culture to evaluate how inclusive and diverse it is or to intervene as necessary.

• Training sessions are nonsubstantive; that is, they focus on nonthreatening top- ics such as appreciating different customs or foods but fail to help employees build capacity to manage intercultural conflict and differences.

• Training sessions have flawed content and delivery and do not help the organization build needed capacity to manage and celebrate difference.

• Diversity and inclusion programs are conducted to comply with compulsory legal requirements but have little organizational or leadership commitment.

• There is little or no buy-in from senior management and no role modeling. • Diversity and inclusion programs lack a strategic connection to the organization’s

long-term plans. • Expectations to embrace diversity and inclusion are not strategically embedded in

the rewards system or culture. • The organization does not productively deal with conflict—particularly conflict

related to diversity and inclusion issues. • Participation in diversity and inclusion training is mandatory, which makes employ-

ees resent it. • There are no goals or strategies for diversity and inclusion, and it is not a part of the

rewards or recognition system. • Diversity “fatigue” sets in—that is, people get tired of hearing about it and ignore it,

or they think “we do this well already” and shift their attention away from it. • The organization’s management lacks accountability for improving diversity and

inclusion.

Diversity and Inclusion Intervention Strategies The following are some common strategies organizations can adopt to promote diversity and inclusion:

• Initiate diversity actions with top management support and examples. • Maintain a clear and consistent emphasis on diversity and inclusion in the organiza-

tion’s vision, mission, values, and strategy. • Identify business drivers for diversity and how addressing it can improve organiza-

tion results (such as innovation, creativity, market growth, customer satisfaction, and supplier base).

• Appoint a diverse board of directors. • Support formal and informal mentoring programs that target diverse employees. • Engage employees in the process of creating a diverse and inclusive organization

through planning, participation in training, soliciting feedback, and evaluating the process.

• Set expectations for and reward diversity, equity, and inclusion. • Promote a culture of communication and productive conflict resolution around mis-

understandings and problems. • Reflect diversity in the organization’s hiring practices and leadership. • Tie diversity and inclusion to the bottom line.

Section 9.5Culture

• Articulate organization values around diversity and inclusion. • Integrate diversity and inclusion into the organization’s strategy. • Engage in a long-term multifaceted change strategy to make the organization more

diverse and inclusive. • Engage in community and philanthropy for multicultural nonprofits. • Partner with educational institutions to increase minority student enrollment. • Measure progress and create accountability mechanisms.

Ensuring management accountability will increase the likelihood of a successful diversity, equity, and inclusion intervention. Under CEO Jack Welch’s leadership, for example, General Electric implemented an aggressive diversity and inclusion strategy that appointed a chief diversity officer and used employee networks, regular planning forums, formal mentoring programs, and college recruitment of diverse populations to increase the diversity of its work force. From 2000 to 2005, the numbers of the company’s female, minority, and non–U.S. citi- zen employees increased 12% among top leadership and 11% among senior executives (Nan- cherla, 2008). The vignette at the beginning of the chapter featured a nonprofit that lacked diversity. Through its strategic planning process, it was able to create specific goals and mea- sures for pursuing more diverse board members and donors.

See Case Study: Culture Change in the More Company for an example of how a company insti- tutes a culture change.

Case Study: Culture Change in the More Company The More Company is in trouble. Sales are flat, and a recent survey of employees shows that more than half are dissatisfied with management, 25% are considering leaving in the next year, and an overwhelming 90% say culture change is needed. These results are the focus of an executive meeting.

“We obviously have problems and need to change,” notes CEO Lauren Gerald. “What do we need to do to create a culture where people are proud and happy to work here?” Discussion ensues among her team, which decides to call in an OD consultant who can help the company engage in some serious assessment and perhaps undertake cultural interventions. Lauren makes it clear that she expects improvement and change over the next year.

Joelle Herbert, the OD consultant, attends the next executive meeting. She asks a lot of ques- tions, such as these:

• How would you describe your current culture? • What is your strategy? • Who are your current leaders? Future leaders? • How do you perform in comparison with your competition? • What is the demography of your organization? • Why do you think people leave? Stay? • What supports are in place to help employees navigate the organization and develop in

their careers?

(continued on next page)

Case Study: Culture Change in the More Company (continued) Joelle carefully records and analyzes data from her visit with the leadership team. She also reviews the survey data and interviews frontline supervisors and a cross-section of employ- ees. The problems are clear. Employees do not trust management and have no idea where the organization is headed. They feel excluded from any decisions that affect the business’s strategy and consequently have no buy-in to the current strategy. A culture of mistrust has developed.

Joelle gives this feedback to the leadership team. The team members realize something has to change. They work together to draft a new vision for the organization that focuses on creating product excel- lence and service and building an organization that breeds employee loyalty and performance. They create SMART goals, communicate these to their respective teams, and invite input. The team decides to make four changes:

1. Increase the quality and quantity of manage- ment communication via multiple outlets, including face-to-face, written, online, and customer.

2. Strategically recruit top talent to contribute to the mission, and retain, train, and mentor the current work force to meet the new strategy.

3. Broadly solicit input into the strategic plan and modify as needed. 4. Change reward systems that are tied more directly to the strategic plan to reward

managers who advance the new, more open and collaborative culture.

The plan is implemented fairly quickly, but progress is slow. Culture change is difficult, and employees are usually suspicious of it. Some managers resist the change.

Subtle shifts begin once employees who work toward the change are repeatedly recognized. Managers begin consulting with their employees and allowing more time to discuss issues prior to making decisions. Communication improves. The changes are not total, but progress is made in the right direction.

The CEO, Lauren, did several things to position the organization for culture change:

1. Stage setting: The CEO put forth her expectations as a result of the negative survey and took action on it by hiring a consultant.

2. A vision for the culture change was shared broadly, and the strategic plan was modi- fied with employee input.

3. SMART goals were created across the organization. 4. Progress was measured and tracked. 5. Expected behaviors were clarified and rewarded.

Critical Thinking Questions

1. What other interventions might you make if you were CEO? 2. What steps might you take if you were the consultant? 3. What resistance to this change can be expected?

fizkes/iStock/Getty Images Plus Joelle, the consultant, attends an executive meeting to listen to, record, and then analyze feedback about the company culture.