09 Organizational Development and Change

How organizations develop and change

Organizations adjust how they work in response to new goals, technologies, growth, and external pressures. Culture, structure, and work processes are interconnected, so changing one can affect the others.

Organizational culture shapes shared expectations and everyday behavior; organization design arranges work and authority; change efforts alter these and other parts of the organizational system. Considering how these elements fit together helps organizations respond to current needs and build the capacity to adapt.

Understanding organizational culture

Organizational culture consists of shared beliefs, values, and behaviors that shape how people interpret situations and work together. It appears in everyday choices and in visible features such as stories, rituals, language, dress, and workspace. A framework associated with Edgar Schein distinguishes three levels:

• Artifacts: visible practices and symbols, including meeting routines and office layout.

• Espoused values: stated principles and priorities, such as commitments to safety or customer service.

• Underlying assumptions: deeply held, often taken-for-granted beliefs about what is normal, acceptable, or likely to succeed.

The levels do not always align. An organization might promote collaboration while rewarding only individual results. Understanding such a gap requires examining actual decisions and routines, not relying only on official statements.

Culture can support coordination and a sense of shared purpose, but established norms may make new practices difficult to adopt. Culture may also vary across departments, occupations, or locations, which can develop distinct subcultures. Diagnosing it therefore involves listening to different groups and examining how policies, leadership behavior, and daily work reinforce particular norms—not simply declaring new values.

Planning organizational change

Organizational change is an adjustment to an organization’s structure, technology, processes, strategy, or culture. Change may be incremental, refining existing practices, or transformational, substantially altering how the organization operates. It may be planned toward a defined goal or emerge unexpectedly.

A new information system, for example, may affect more than technology: it can also alter responsibilities, coordination, and required skills. Because organizational components are interdependent, a process change may require changes to roles, training, decision rights, and measures of success.

A practical change effort begins by clarifying the desired outcome and the people affected. Leaders and change facilitators should explain why change is needed, invite relevant perspectives, identify likely impacts, and provide resources to adopt new ways of working. Resistance can signal uncertainty, conflicting interests, loss of valued routines, or a flaw in the proposed change. Listening to concerns can help improve the plan.

For example, a growing business replacing informal team coordination with a shared workflow system would need to involve employees who use the workflow, clarify who owns each step, provide practice and support, and monitor whether delays and rework decrease. Installing the system alone would not ensure the intended improvement.

Designing work and authority

Organization design is the deliberate arrangement of work, authority, and coordination to support organizational goals. Design choices include how tasks are divided, how jobs or units are grouped, who makes which decisions, and how information moves.

Work can be grouped by:

• Function, such as finance or marketing.

• Product.

• Process.

• Customer.

• Geography.

Each grouping choice offers benefits and trade-offs. Functional groups build specialized expertise, while product or customer groups may make it easier to focus on particular offerings or users.

Design also varies in specialization, hierarchy, centralization, and formalization. More centralized, formal structures can support consistency and clear accountability. Decentralized, flexible structures can allow faster local decisions and adaptation. Neither approach is universally best: design should fit the organization’s strategy, size, environment, and work, while enabling coordination across units. As organizations grow, they may need more defined roles and processes while preserving enough flexibility to respond to new conditions.

Using organization development

Organization development (OD) is a planned, collaborative approach to improving organizational effectiveness and capacity for change using behavioral and social science knowledge. It treats the organization as a connected system and involves members in understanding problems and developing solutions. Its purpose includes addressing immediate issues and helping the organization learn to respond to future challenges.

The iterative OD process

The OD process commonly includes five stages:

1. Start and contract: clarify the concern, desired outcomes, stakeholders, and how the work will proceed.

2. Gather information: use appropriate methods, such as interviews, surveys, observation, or operational data, to understand the current situation.

3. Analyze and share findings: identify patterns, strengths, possible causes, and opportunities, then discuss them with relevant members.

4. Select and implement interventions: choose actions that address diagnosed needs and fit the organization’s context.

5. Evaluate and sustain: assess outcomes, make adjustments, and establish practices that support continued improvement.

The stages can overlap or repeat as new information emerges. Evaluation should check both implementation and results—for example, whether a new team process was adopted and whether it improved coordination.

Matching interventions to needs

An OD intervention is a structured activity designed to support change and learning. The intervention should match both the diagnosed issue and the level at which it occurs:

• Individual-level interventions: coaching, mentoring, or leadership development to build skills and self-awareness.

• Team-level interventions: team-building, facilitated discussions, or role clarification to improve relationships and coordination.

• Organization-level interventions: strategic planning, organization-wide feedback and dialogue, or redesign of roles and processes to improve alignment across units.

If service delays stem from unclear handoffs between departments, training one team may not address the root cause. Mapping handoffs with both departments, clarifying decision rights, and testing a revised process may be more appropriate. Effective intervention choices depend on evidence, stakeholder input, and the organization’s capacity to carry them out.