Downturn downtime? Organisation development in a recession

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OD in a downturnWith jobs haemorrhaging at every turn, organisation development (OD) can seem laughable, but creating a robust outfit that can surface from the recession as fit and healthy as before is important for those that wish to build capable businesses for the future. Annie Hayes looks at recession-beating OD strategies.

To make matters complex, it is far from clear what people mean when they talk about organisation development (OD). For some, it's not really OD unless its purpose is to change the organisation 'as a whole'. For others, OD refers to any intervention – whatever its scope – provided that it comes from the OD 'toolkit'.

Aficionados of OD would also argue that OD implies a set of humanistic, people-based values that need to inform all OD work. Others, though, would take a more pragmatic stance, says Chris Rodgers, honorary senior visiting fellow at Cass Business School and author of Informal Coalitions, a book on the dynamics of organisational change.

Whatever definition is agreed, however, there is a guiding principal that the purpose should be to enhance business performance; and, in a downturn, the challenges are readily felt. So should OD strategies change during a recession and if so how?

Changing fortunes/changing strategies

Virginia Merritt, managing director of Stanton Marris consultancy, recently quizzed 40 board level executives to find out their thoughts, with amazing results - just one of the respondents has changed their strategy in the light of the economic downturn: "The rest are amending and adapting theirs to be more realistic, as well as focusing on where they are making their strategy investments," says Merritt, who adds that the difficulty for some chief executives is keeping the faith – when any reduction in investment is made it's seen as an instant signal that the strategy is changing, whereas in their view it's just a "slimmed down version" of the existing plan.

"The basic nature and ways of dealing with the hidden, messy and informal dynamics of change are no different during a recession than at any other time."

Chris Rodgers, author of 'Informal Coalitions'

Merritt's research draws on a calmness and acceptance of the downturn, which is leading to longer-term thinking and resilience to build organisations that are purposeful for the future. Sylvia Baumgartner, principal consultant for OD at Roffey Park, agrees and is witnessing a movement in thought with organisations recognising that they've got to be focused on coming out of the recession the other side.

Yet Rodgers believes that for most organisations, the formal business agenda during a recession is likely to be different from that which would be evident in more expansive times but adds that: "At the same time, the basic nature and ways of dealing with the hidden, messy and informal dynamics of change are no different during a recession than at any other time."

So what of organisations that have yet to think about OD strategies - is the current economic climate conducive to kick-start plans?

The right time?

Rodgers warns it's dangerous to put "tomorrow on the back burner" even in the current economic climate: "Tomorrow's outcomes – good and bad - will be the result of decisions made and left unmade today."

He also points out that the difficulty is that many believe that organisational changes happens when managers say it should, which Rodgers states is not true: "Decisions and actions are being taken constantly that commit resources to one path and foreclose other options." All this means, according to Rodgers, is that tomorrow's formal changes are being seeded informally today.

Merritt also thinks organisations can't afford to rest on their laurels even during difficult times, and points to leadership capability as one area that cannot be ignored.

Valerie Garrow, associate director of HR research and consultancy at the Institute for Employment Studies, says that it may be more challenging to start thinking about OD when nothing is in place, but advises that those that do will reap the benefits from involving their people in the process.

So if it’s full-steam ahead, how can organisations ensure that any attempts at change and OD succeed and don't fail?

Ensuring success

Research consistently shows that around two-thirds of all planned change programmes fail to deliver the intended outcomes. It's far from confidence-building. And yet Rodgers says that when the sought-after benefits fail to materialise, this is most often blamed on poor implementation rather than unsound thinking.

"All organisations are good at starting off change but those that are really good maintain it."

Valerie Garrow, Institute for Employment Studies

With less than a one-in-three success rate, something vital is clearly missing from most models that currently inform change-leadership practice, says Rodgers, who points to a fault in conventional wisdom, notably that change is brought about through a formal, rational analysis of 'the facts' and step-by-step decision-making by people whose agendas are fully aligned, but says the reality is much less formal.

"By ignoring these hidden, messy and informal aspects of organisations, most formal change programmes inevitably contain the seeds of their own downfall," remarks Rodgers. "Managers therefore need to look below the surface of the formal change strategies, structures and systems, and actively engage with the underlying dynamics of their organisations, if they are to improve the chances of success."

Baumgartner agrees and says the spanner in all the best-made plans is that change isn't always predictable: "It’s how you navigate that unpredictability that is important."

Garrow also admits that most change efforts do tend to fail and says that part of the problem is that whilst many change initiatives are launched with energy and focus, much of that is deflated as the process continues: "All organisations are good at starting off change but those that are really good maintain it."

For Merritt, it's about ensuring the fallout isn't monumental: "Everyone knows the best strategies can be de-railed but it's what you can do to ensure issues don't become real icebergs that is important."

Leading from the front

Weathering the storm does fall largely in the leader's lap and their role in OD can be crucial.

According to Rodgers, line managers and those in formal leadership positions are the only ones that can lead change: "Others, such as specialist staff groups, special project teams, change-consultants and so on can facilitate the process, but only line managers can lead it."

And perception, it seems, is everything: "If the words and actions of the line manager are perceived to be genuinely supportive of the formally announced changes, there is a much greater chance that these changes will be successful than if that endorsement is ambivalent or absent altogether," says Rodgers.

"The best strategies can be de-railed but it's what you can do to ensure issues don't become real icebergs that is important."

Virginia Merritt, Stanton Marris

"Actively sponsoring change, through the ways in which they interact each day with their direct reports, is therefore a crucial role for leaders to fulfil. Within this, the ways in which managers are seen to act in private, informal interactions will have more impact than what they say and do in formal, set-piece communications."

Garrow refers to this as "walking the talk", whilst Merritt says you can’t put enough value on communication: "The number of chief executives that say you can't be doing enough of it [communication] is unbelievable."

HR's role in all this shouldn't be overlooked either. Merritt says that at a basic level it centres on ensuring that leaders have the capabilities and skills to do what they have to as well as taking regular 'pulse checks' to monitor what people are thinking.

Baumgartner goes one step further and says the challenge for HR in the downturn is treading the tightrope between making financial savings and building the skills for the future. Garrow is witnessing a sea-change in the HR capability in this area and says that HR has more of an OD mindset than in the past, which is helping.

Where HR is given the OD mantle, Rodgers says it's crucial it is able to command respect from other departments: "If HR/OD is associated solely with 'the soft side of change', it is unlikely to be able to bring its influence to bear on the so-called 'hard' aspects of the change agenda."

OD strategies clearly have a role to play in building capable organisations for the future – getting them right, when all around you companies are failing, takes commitment, confidence and a fair smattering of resilience. HR and organisation leaders must champion the case if they are to succeed where most sadly fail.

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29th Jan 2009 12:53

I know it sounds corny, but really successful OD starts with the top team. I agree that two thirds of all planned interventions do not meet their objectives. Further, two thirds of "new" business strategies fail to meet their objectives. Michael Beer, of Harvard Business School has researched this extensively, and claims that more than half of these failures can be attributed to the actual behaviours of the top team - either as individuals or as a supposed team. Having lived through rather a lot of change in global private sector companies, and in the UK public sector, I agree with Beer. Beer has some interesting tools (e.g. "gold-fish bowl") to help top teams figure out whether or not they are going to succeed. I've used them (adapted, as if Beer's consultancy does it for you it is too expensive). His tools work, but are not for every organisation. You have to have a brave CEO and top team to receive feedback from within the organisation, for a couple of hours, which tells you it will be your fault if the strategy fails! Not surprisingly, some CEOs do not want to hear this, but would rather blame some on else.

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29th Jan 2009 12:22

Hi Annie
Great article
OD is not just a strategy for recession beating but a great methodology for growth in 'normal' times too.

It is interesting that in the UK we have adopted elements of OD tools without the overall strategy of OD. For example 360 reviews, training, talent management, management development etc. OD provides the framework for all of these strategies with which to align to the business strategy being fully supported.

Looking at the history of OD, Bennis in his early work "organizational Development: nature, origins & prospects" defines OD as:

"a response to change, a complex educational strategy intended to change the beliefs, attitudes, values and structure of organizations so that they can better adapt to new technologies, markets and challenges"

This is just as true today as it was in 1969!


We now know what it takes to have successful OD strategies and interventions, but why do so many organisations still ignore these simple steps? Read my full view in the HRZone members' blog

Mike

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