Organizational Development: Building a Company Ready for Change

What is Organizational Development?

Organizational Development is a systematic approach to managing change within a company. This field is gaining traction in companies globally, and forward-thinking organizations are already establishing specialized HR units dedicated to these tasks.

The primary goal of organizational development is to help a company adapt swiftly to market shifts and improve the quality of its internal processes. Historically, top leadership managed these responsibilities, but the accelerating pace of change and increased workload now often necessitate a dedicated team of specialists.

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Organizational development specialists typically focus on four main areas:

Organizational development can be reactive or proactive. In a reactive approach, a company only changes in response to external triggers — such as competitors leaving the market or new legislation coming into effect. A proactive approach, however, involves continuous trend analysis and preparing for potential changes in advance. Such companies build flexible processes, develop employee competencies, and test new operational methods before they become an absolute necessity.

Work on organizational development is never truly finished. The world changes rapidly, and companies must constantly adjust to new market conditions or internal business requirements. Even during stable periods, OD specialists focus on optimizing management processes and helping employees work more productively.

The Connection Between Organizational Development and Human Resource Management

The HR department acts as a key partner in implementing organizational changes. Human resources professionals help convey the purpose of these changes to employees, recruit new talent for new teams, or retrain current staff to operate within modified processes. HR ensures that changes are implemented as smoothly as possible for the workforce and as effectively as possible for the business.

Key areas of HR involvement in organizational development include:

1. Personnel Assessment: Analyzing leadership productivity, auditing management skills, and evaluating the ability to delegate tasks effectively.
2. Team Building: Forming new departments in response to structural changes, reallocating employees between units, and sourcing specialists for new roles and responsibilities.
3. Change Adaptation: Training employees on new structures, clarifying new goals and tasks, and providing informational and psychological support during periods of transformation.
4. Results Evaluation: Monitoring goal achievement, measuring team and individual KPIs, and collecting feedback on the implemented changes.

The success of organizational development largely depends on its deep integration into the company's overall HR strategy. When OD and HR work in close alignment, all personnel processes improve: recruiters better understand which candidates will strengthen teams; training systems incorporate programs for developing currently relevant skills; employee evaluations consider contributions to company development; and motivation systems encourage beneficial initiatives. This deep integration helps HR specialists build personnel processes systematically and in line with the company's overarching business objectives.

Goals of Organizational Development

The fundamental goal of organizational development is to enable a company to adapt quickly and effectively to any kind of change. Typically, businesses turn to implementing OD due to external pressures or internal strategic decisions.

In the first scenario, a company reacts to external shifts, such as entering new markets or opening branches in different cities. Sometimes, operations must be restructured due to new legislation or mergers with other companies. Competitors might also exit the market, creating an opportunity for a company to fill the void — this also requires rapid process adaptation to meet new demands.

In the second scenario, a company proactively decides to enhance the maturity of its internal processes. This could involve, for example, speeding up decision-making or improving information exchange between departments. Scaling a company often brings the challenge of needing to execute tasks more efficiently. Since the quality of leadership directly impacts company results, refining management processes becomes a priority.

Tools for Organizational Development

You can't manage what you can't see. Therefore, the first step in organizational development is to create a clear picture of the company using organizational modeling. This tool helps visualize three key aspects: the organizational structure, business processes, and the system of goals.

Specialists model the company's structure to understand all interconnections between departments and employees. They create models of processes and job descriptions to comprehend how work is organized. And modeling goals reveals how individual employee tasks align with the company's overarching strategic objectives. Once these three aspects are made visible, they can be analyzed and improved. Before implementing any changes, the team can test them on the company model to assess risks and prepare employees for the upcoming transitions.

When the model for future changes is ready, the company moves to organizational design — the practical implementation of the planned initiatives. If organizational modeling allows for visualizing and analyzing the situation, organizational design brings the necessary changes to life.

Organizational design specialists modify the organizational structure, re-engineer work processes, and implement the new system of goals. They may need to update employment contracts, revise job descriptions, establish new decision-making processes, and monitor the achievement of set objectives. Thanks to this comprehensive approach, changes within the company occur systematically and lead to the desired outcomes.

IT solutions, including HRM (Human Resource Management) systems, often play a key role in executing organizational development activities. These systems help visualize the organizational structure, manage company goals, track employee and department performance indicators, and automate various HR processes.

SimpleOne HRMS supports all key organizational development processes:

• It allows for modeling, implementing, and displaying the company's functional structure.
• It helps manage strategic company goals and decompose them for teams and individual employees.
• It enables the creation and updating of job descriptions.
• It automates personnel assessment and work with individual development plans.

Methods of Organizational Development

Beyond IT solutions, OD processes require interconnected methods for implementing change. These methods help systematically navigate all stages of organizational development, from diagnosing the current situation to evaluating the results of implemented changes:

• Diagnostics: Analyzing the current organizational structure, assessing management processes, auditing the decision-making system, and reviewing the distribution of authority. Diagnostics help evaluate the company's current state and identify areas for growth.
• Target model design: Creating a new organizational structure, describing revised processes, defining new roles and responsibilities, and developing success metrics. In OD, target models represent the desired future state of the organization and a clear action plan to transform processes.
• Change management: Preparing a plan for transitioning to the new model; informing employees, training them on new processes, and collecting and analyzing feedback. This is a significant effort to support changes within the company, ensuring the transition to new processes is smooth for both employees and the business.
• Results analysis: Comparing metrics before and after changes, evaluating the speed of new processes, measuring employee satisfaction, and calculating the economic impact. Tracking metrics allows for assessing the utility of the changes and adjusting the action plan if necessary.

Globally, organizational development methods are continually evolving, with many companies adopting established international approaches and adapting them to their unique circumstances. Each company ultimately creates its own unique set of methods, considering its business specifics and objectives.

Organizational development often borrows methods from various management disciplines. For instance, Agile approaches help quickly test changes on small groups, gather feedback, and adjust plans. Design thinking tools allow for a deeper understanding of employee needs and the creation of solutions that consider their experiences. It's also crucial to manage resistance to change — identifying reasons for disagreement, involving those who are resistant in discussions, and helping them see the benefits of new processes. For this, OD or HR specialists use group facilitation techniques that help gather diverse opinions, find common ground, and develop collective solutions.

Evaluating the Effectiveness of Organizational Development Efforts

The results of organizational development are directly tied to the problem or task that initiated the changes. Specialists assess the success of a transformation based on various criteria, for example, whether the initial problem was solved: duplicate functions eliminated, a merger completed successfully, plans consistently met, or other business challenges addressed.

Nevertheless, it's important to remember that organizational development is an ongoing process. Work doesn't stop after one project is completed; OD specialists continue to monitor indicators, gather feedback, adjust processes, and seek new growth opportunities. Ultimately, the company gains not a one-time result, but a continuously operating system of improvements.

Summary

Organizational development is becoming an increasingly important focus for companies worldwide, helping businesses adapt rapidly to market changes and refine internal processes. Unlike one-off changes, organizational development establishes a continuously functioning system for improvement.

The HR department plays a crucial role in organizational development, helping to implement changes in a way that is as comfortable as possible for employees while delivering real business benefits. In turn, HR processes themselves become more systematic and closely aligned with the company's strategic business goals.