Organizational Excellence – How Can Organization Development (OD) Help?

Preface

I wish to dedicate my first ever blog post to my three adult children, Jeremy, an Aquatic Biologist, Tyler, a Construction Manager, and Meghan, a Registered Nurse. As their number one fan and coach, it is my hope that I can effectively share my knowledge on management and leadership to help them in their future roles as managers in their respective fields and organizations.

Introduction

Fortune’s “100 Best Companies for Which to Work” came out recently. Once again, our local favorite, Wegman’s Food Markets, is near the top at number two right behind Google. We all love Wegman’s around here – it’s a tourist destination for many visitors to Upstate New York. While their focus on customer service is outstanding, their products and selection are second to none, and their employee relations and opportunities for advancement are excellent, what Wegman's and the rest of these top 100 employers have in common is the “culture” that they create. I’m not talking about cafeterias, employee gyms, or power-napping stations (although I do like naps). Rather, it's the social and emotional environment that exists in the workplace that instills motivation, teamwork, accountability, and high performance.

The organizational culture, or "how it feels to work around here," is a critical factor that determines the level of an organization's effectiveness and performance, and the culture is predominantly a function of the leadership style of key management personnel. In other words, how people are treated at a fundamental level is very important. The temperament and behavior of every executive, manager, and business owner affects the organizational culture, and ultimately is a primary determinant of an organization's performance. An engaging and cooperative culture can positively influence motivation, commitment, teamwork, accountability, and ultimately, performance, including, quality, efficiency, productivity, customer satisfaction, and the bottom line.

Much has been written and studied about leadership and management, and outstanding leaders constantly seek to hone their craft like successful and effective professionals in any field. Continual education, training, and leadership development can help any executive and manager improve their organization’s performance and long-term sustainability.

Organizations are complex and there are no simple solutions, but with this and future blog posts, I will try to boil it down to some basic principles and practices that can help to build a foundation for ongoing improvement efforts and the process of organizational self-renewal.

Organizational Excellence

First, it’s important to understand what organizational effectiveness looks like. There are many theories, models, and definitions of “excellence” that can be used as an overarching umbrella to guide an organization’s self-assessment, strategic planning, and continuous improvement process. The McKinsey 7S Framework is a well-renowned classic and enduring framework consisting of “hard” and “soft” elements.

McKinsey 7S Framework

Organizational leaders must understand the various elements that make up organizational effectiveness and, more importantly, how the elements interact as an integrated system if they are to affect the desired organizational results and performance.

While there are many research-based models or frameworks of organizational excellence in the literature, quite possibly the "mother of all models" is the widely-used Malcolm Baldrige National Quality Award Criteria which are used to recognize U.S. organizations in the business, health care, education, and nonprofit sectors. The Baldrige Program and associated award was established by the Malcolm Baldrige National Quality Improvement Act of 1987 and were named for the United States Secretary of Commerce during the Reagan administration. It is administered and managed by the National Institute of Standards and Technology (NIST), an agency of the Department of Commerce. It is a comprehensive framework for performance excellence that is based on the best thinking and research on management and organizational theory over many decades.

Baldrige Criteria for Performance Excellence

There is an extensive process to apply for the Baldrige National Quality Award, including preparation of a detailed report and site visits by trained expert examiners to evaluate and audit the organizational operation from top-to-bottom, but many organizations use the Baldrige Criteria merely for self-assessment, self-renewal, and planning for the future even if they do not go through the award application process.

The Baldrige Criteria for Performance Excellence are:

1. Leadership: How upper management leads the organization, and how the organization leads within the community.

2. Strategy: How the organization establishes and plans to implement strategic directions.

3. Customers: How the organization builds and maintains strong, lasting relationships with customers.

4. Measurement, analysis, and knowledge management: How the organization uses data to support key processes and manage performance.

5. Workforce: How the organization empowers and involves its workforce.

6. Operations: How the organization designs, manages and improves key processes.

7. Results: How the organization performs in terms of customer satisfaction, finances, human resources, supplier and partner performance, operations, governance and social responsibility, and how the organization compares to its competitors.

Kraus Model of Organizational Effectiveness

There are numerous models available, but clearly, some of them are rather complex frameworks that may be difficult for a typical organization to apply in their real worlds. In an attempt to simplify, I have boiled down some complex models of organizational effectiveness into four basic elements that may serve as a good starting point to get an overall perspective on your organization and a baseline starting point for future evaluation and improvement.

Kraus Model of Organizational Effectiveness

Consider several aspects of organizational effectiveness in the change planning process, and seek balance and integration of the four basic elements:

Strategy - Mission, goals, action plans - purpose and alignment of "The What"

Systems - Policies, procedures, processes - "How" the work gets done

Structure - Functional responsibilities and reporting relationships - "Org Chart"

Culture - Climate, values, behavior - the "Human" side of the enterprise

I will discuss this model and each of its elements in more detail in future blog posts, but let it suffice to say that organizations should find, adopt, create, or steal some form of broad-brush organizational excellence model to use as a foundation for organizational self-assessment and strategic planning.

Executives and managers can be extremely busy dealing with many details of the day-to-day operation, but it is important to take time for reflection and to zoom out to gain a "big picture" perspective on the overall functioning of the organization as a part of a periodic strategic planning process.

The Perceived Need for Change

Just as individuals sometimes take inventory of their lives and seek to make change, organizations of all kinds in various sectors, for-profit or not, large and small are exploring how to change and improve performance. The impetus for change may vary for organizations. Some are struggling to exist in a competitive market. Others see symptoms such as employee dissatisfaction or complaints, absenteeism, conflict, and turnover. Yet others have challenges with quality and unhappy customers. And, still others may have external pressure to comply with the rigors of government regulations for product safety and integrity, or are experiencing pressure from employees to unionize. Many just have a gut feeling that they can do better and need to change. Whatever the reasons driving the perceived need for change, it is critical that organizations and their management teams give very serious consideration to what must change and how to do it.

Culture Change

"A lot of people talk about the weather, but nobody ever does anything about it."

It is much the same with culture change - we often hear about organizational "culture," but what is it, and how can executives and managers influence the culture of their organizations?

Clearly, there are many kinds of changes that organizations can undertake as part of their continuous improvement strategies, but it is my view that "culture change" is the critical leverage point for any organization. No matter how well managers and leaders improve their strategic planning process and align goals and plans throughout the organization, or work to improve their quality systems and procedures, or change the management structure and reporting relationships, it comes down to leadership and how people are treated at a fundamental level where real change can begin to take place.

First and foremost, your organization has a "culture" whether you intentionally try to influence it or not. Many organizations develop statements of "core values" and "visions" to articulate and communicate their desired future cultures, but more often than not, the actual current culture is nothing like the elaborate descriptions that they espouse. Unless the Senior Management Team is actually willing to "walk the talk," organizations should just not bother. The only way to bring about change is to model, teach, and coach the expected behavior, desired values, and the change process.

Organizational Culture Defined

In his book, Organization Development: A Process of Learning and Changing, W. Warner Burke of Columbia University's Graduate School of Education, Health & Psychology describes organizational culture this way:

“Organizational culture consists of many elements, but the primary element is the unique pattern of norms, standards, or rules of conduct to which members conform. Fundamentally, it is how people are treated, how power and authority get exercised, and how decisions get made, along with communication patterns, organizational values, behaviors, attitudes, and beliefs.”

"Culture change" is no easy task and does not happen quickly. Experts have said that it can take years for an organization to change its culture, and only if they do it really well. So, if executives decide to embark on a journey of culture change, they better get ready to look at themselves as a part of the process.

It is important for leaders and managers to understand that implementing leadership training programs, employee involvement initiatives, or other interventions will not necessarily bring about the desired change. It's deeper than that, and sometimes an investment in "people programs" can do more harm than good. For example, an "Employee of the Month" recognition program with VIP parking might sound like a good idea, but it can end up just being a question of who's turn it is and lose its meaning, or maybe worse - fuel resentment, so be careful!

Organization Development (OD)

Many larger organizations have their own internal Human Resources (HR) functions with managers and experts in Hiring and Selection, Compensation and Benefits, Employee Relations, and Training and Development, including some expertise in OD, but most smaller companies do not have extensive resources readily available.

There are thousands of consultants in the field of OD out there, but for general managers and executives, it can be helpful to have some basic understanding of what OD is and what it isn't. Many OD practitioners who provide leadership development services are not even quite clear on the definition of "OD" even if they have been doing it for years.

Warner Burke states:

"To be clear, much of what is called 'OD' is the use of OD techniques -- off-site teambuilding, training, facilitation of ad-hoc meetings, providing private and individual feedback to managers and executives, and so on, but using OD techniques is not necessarily providing organization development."

So, what is OD? According to Burke,

"Organization Development is a planned process of change in an organization's culture through the utilization of behavioral science technologies, research, and theory."

Remember, organizational culture includes the behavioral norms, communication patterns, how power and authority is exercised, and how decisions get made - basically, how people are treated, so it's no surprise that it is difficult to do and takes time. Executives must understand some basic OD principles if they are going to be able to effectively engage their HR experts and consultants in change management. They can't "delegate" this important task to the HR Manager or external resources.

If top management does not perceive a need for culture change and/or are not willing to look at their own leadership approach in the process, then they should not engage in OD. If, however, senior executives believe that increased employee engagement, high-involvement and participation, and team-based structures and techniques are desirable, then they should seek guidance from HR and OD professionals in developing a solid change management strategy that may include leadership development, teambuilding, and rewards and recognition programs.

Conclusion

Searching for "excellence" is a noble objective, and for long-term continuous improvement in quality, productivity, safety, and other key measurements of performance, it is critical that executives embark a journey of organizational self-renewal, but not just any program or latest fad will get you there.

Find or create an overarching umbrella for excellence, and learn how to engage the entire organization in the change and improvement process, and don't hesitate to talk to HR and OD experts for guidance. Good luck!

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