Organizational Development and Design: Theory and Practice

Table of Contents

1.Introduction

2.History Overview

3.ODD’ Characteristics: Models &Theories

4.Comparison of Classical and Systematic Approach

5.Travel Group: PESTLE & SWOT analysis

6.Cultural Theory: Merger & Sustainability

7.Analytical Tools in ODD

8.Conclusion

9.Reference List

Introduction

Business and any company’s change processes involve a set of measures that are designed to
improve performance. The transformation uses ways to support an organization’s mission, goals,
and operations in a way that systematically impacts the company’s declining quality metrics. An
organizational development and design (ODD) approach expands an organization’s understanding of
its structure, changes perceptions of purpose and mission, and improves attitudes about
performance metrics. ODD is a unique model for transforming an organization to achieve high
performance.

History Overview

Organizational development and organization design are practices used to transform a company
with a focus on high performance and sustainable development. ODD as a general phenomenon
appeared only in the late ’90s because researchers first paid attention to different elements
(Anderson, 2018). Organizational development emerged after much psychological research covering
the impact of structure on employee behavior and motivation. Psychologists found that human
resources are the backbone of an organization more than solid leader. Levine Kurt lay down the idea
of researching a company’s ecosystem-based on dynamic waves in the team. His experiments
provided clear examples of how proper planning can positively influence employees’ perceptions of
work (Cummings et al., 2016).

Organizational design became the second stage of transformation: motivated and committed
employees became more enthusiastically involved in learning the policies and structure of the
metrics (Pertusa-Ortega et al., 2018). The organization’s hard elements originated under Fayol’
influence; he explained the need for separation of positions and authority. The competent
management functions pushed leaders to reconsider the principles of feedback, making adjustments
and deviations as a regular part of the business. Instead of being strictly confined within a
framework, organizational design links employees and leaders.
ODD’ Characteristics: Models &Theories

Organizational models have become a way to combat market monopolization and develop healthy
competition. Automation of business processes and pressure from competitors force companies to
look for new ways to design workspaces to improve their operations. Various models and theories
can achieve high performance based on the ODD approach. The purpose of organizational design
models is to diagnose the current state, identify development prospects, and specify current goals
and culture (Pertusa-Ortega et al., 2018).

McKinsey’s 7 model is an analytical complex model covering both hard and soft elements of business
systems. Each piece is connected to the other, making it possible to develop several branches at
once (Kocaoglu and Demir, 2019). A company can strengthen one of the seven components with a
differentiated approach or conversely weaken the focus on the other. The model allows for assessing
and reallocating resources from one element to another. The advantages of the model are its
versatility and the ability to combine critical structures. However, the disadvantages are significant:
the model does not address change management but only specifies the direction.

Among the transformational models, it is worth noting the Burke-Litwin technology, which
demonstrates various change factors and ranks them in terms of importance. It can be represented
conventionally in a diagram, where the most critical factors are at the top, and the least important
are at the bottom (Satrevics, 2014). This technique reveals several groups of influencing factors:
external factors, strategic factors (leadership and strategy), operational factors (structure,
management, policy), and individual factors (motivation, values, and needs). The model states that
all aspects are integrated and a change in one of them will eventually affect the whole system. The
roots of organizational transformations can be found in the external environment (Pertusa-Ortega et
al., 2018). Critical factors in organizational success are often influenced by changes outside the
organization. The model’s advantages are the consideration of soft and hard elements, which allow
one to analyze the relationship between strategies and individual skills. The disadvantages are not
significant: at first, the model seems inaccessible and complex, but gradual implementation can
make a miracle with the company’s status.

The agile organization model is company transformation practice that takes the traditional type to
the next level and captures new market niches. At present, there are not enough brutal practices in
company management because they significantly limit the ability of employees to transform the
space (Anderson, 2018). Instead of releasing new products, traditional companies prefer to follow an
understandable path that increasingly loses relevance. The model suggests four stages of
transformation: breaking down boundaries, network disruptors, systems thinking, and changing
conditions. The result is effective teamwork and a changed vision for the organization. The model’s
advantages are making decisions on a specific issue and eliminating bureaucracy with the
development of autonomous teams. The disadvantages of the flexible model can be described as a
long time and the need to invest resources in retraining managers.

Among ODD theories, different ways of organizing a company that addresses one aspect of business
are considered. Organizational design theories mainly include bureaucratic models, unitary and
multidimensional forms, mechanistic and organic structures, heterarchies, and autonomies. While
bureaucratic models and unitary states are considered outdated, the others show positive market
dynamics. The application of the theory is due to the original structure of the organization, and often
leaders resort to a combined method.

There is no specific theory of business incentives in organizational development, but two approaches
can be distinguished: modernist-objective and symbolic interpretive perspectives. The modernist
organizational theory focuses on objective data derived from reality. These include the physical
characteristics of the workspace and the development of the relationship between technology and
society. Modernists believe that real situations and an organization’s reactions to them are the
driving force behind a business. Symbolic-interpretation theory focuses on using specific symbols
and how they affect relationships within a company (Nicotera, 2020). It means that employees’
collective and individual experiences in a particular organization become the starting point for
subsequent activities. This theory refers to the subjective perception of reality, composed of
emotional and personal feelings in shaping business activities.

Comparison of Classical and Systematic Approach

There are different views on the approach to business, which vary in the principles of creating the
organization and its activities. Taylorism is a direction of management that argues for the need to
maintain differentiation and division of labor. However, each component requires a standard of
operation based on scientific methods. The bureaucratic business model was proposed by Weber,
who derived regulating responsibilities according to a hierarchy. Fayol recommended a division of
labor, as did Taylor, but the responsibility always rested with the leader of the department or
company. In addition, Fayol did not recognize decentralization, arguing for the need for unity of
purpose and the leader.

The classical approach to strategy emphasizes rationality and analysis. Under this approach, the
process must be formal explicit, and its goal must be specific actions to maximize profits. The
classical approach to strategy in business emerged in the 1960s, facilitated by the work of American
business historian Chandler and theorist Ansoff. The classical approach is based on recognizing profit
as the primary goal of any organization, and companies use rational planning to solve their problems
and achieve their goals. It attaches great importance to the willingness and ability of executives to
shape strategies to maximize profits through long-term planning.

The systems approach allows us to consider the organization as a system consisting of interrelated
elements. Initially, it was used in the exact sciences and engineering, and as applied to management,
it began to be used in the late 1950s, which was a significant success of the school of management
science. The systems approach assumes that each of the elements that make up the system has its
own goals. However, the essence of the systems approach is to ensure an increase in the
organization’s efficiency as a whole.
The systems approach is closely aligned with ODD’s humanistic stimuli, as it embeds employee
happiness and satisfaction into the overall company system. Instead of managing on teams and rigid
discipline, ODD uses the principles of motivation and ethics to achieve performance (Cornelis et al.,
2019). Psychological research over the past century has contributed significantly to the
understanding of group dynamics and T-group learning, stimulating the organization’s development.
Criticism of these practices was usually based on the impossibility of reconstructing consciousness
into positive thinking and the incompleteness of Lewin’s field theory (Cummings et al., 2016).

Travel Group: PESTLE & SWOT analysis

Analyzing the organizational structure for compliance with the functions performed in business
processes is necessary for building a comprehensive process model of the enterprise. It is depicted,
as a rule, in the form of a graphical scheme showing hierarchical subordination of personnel. TG has
a typical hierarchical structure: the head office is subordinate to subsidiaries with specific brands.
Travel UK is a newly formed structure with legal departments: business support, development, and
client work. Due to the rules and processes that guide the department managers, the systems
function successfully. The operation of union legislation in the UK also contributes to the successful
organizational regulation.

The SWOT analysis is the essential classic tool of business analysis, and all subsequent methods of
analysis are either refined or based on data from it. As part of strategy development, it is the second
fundamental element after the formation of the vision and mission of the company (Songhurst,
2017). The condition of a company depends on how successfully it can respond to various influences
from the outside. Therefore, SWOT analysis allows evaluating the influencing factors and projecting
future strategic and marketing plans. The analysis shows that the strengths are a clear sustainability
strategy and monthly advisory committees concerning TG. The weakness is probably the lack of due
attention to unexpected crises.

The PESTLE-analysis is one of the primary methods of analyzing the external environment of an
organization, preceding the SWOT analysis. It is used to identify market trends general industry
dynamics. Its results are essential for evaluating potential threats and opportunities of the
company’s environment (Dalirazar and Sabzi, 2020). Travel Group is interested in the company’s
technological development: it is visible in the use of modern systems to reduce CO2 emissions and
toxic agents. The political savvy is unstable: on the one hand, the company respects the opinion of
the union; on the other hand, it can create a weakness in the regulation of human resources. For
example, the hiring policy implies different conditions for employees before and after the merger,
increasing the dependence on internal quality indicators. TG cares about socio-cultural performance:
a focus on employee engagement in the overall strategy. It is a good indicator, and the company
profits considerably when it presents this policy in the market. The economic factors of TG are only
expressed in terms of environmental concerns: reducing water consumption.

The structure employed by TG is generally good management practice: clear hierarchical principles
governing legal relationships give a clear and understandable picture of responsibility. The company
uses three decisive criteria to evaluate performance, indicating a high level of management. As
previously mentioned, the issue of unions is quite controversial and is a weakness of the company. It
is probably necessary to review the corporate structure and make uniform rules despite the merger.
The company’s mission and goals are directed and clear, so they will not lose their relevance in the
future. Another hierarchical principle can likely be used for the company – for example, mechanistic
or autonomous theories. They can work because they specialize in developing centralized
management and responsibility

Cultural Theory: Merger & Sustainability

The accumulated experience in international business and empirical studies has shown the
importance of considering the cultural aspect. Culture should be understood as a way of life and the
worldview system inherent in a particular people (Panda and Gupta, 2018). This definition
encompasses all aspects of people’s lives, identifying a specific culture with a specific country. On
the other hand, culture is a set of values and norms of a given society, and this definition is the most
important for business. Corporate culture is based on the beliefs and rules considered valid in a
company. It is manifested in how the organization conducts business and how it treats its employees
and customers/

Merger theory is a business tool that allows companies to move from one plane to another and
grow. A necessary consequence of a merger is an initial reduction in price, which is typical when
structures are first announced to merge. Another indicator is the reallocation of resources to
subsiding industries. There are three types of mergers: horizontal, vertical, and conglomerate.
Horizontal mergers are companies from the same industry or category with roughly the same
performance and productivity. Horizontal mergers are necessary to reduce costs and expand
products. In some cases, it is possible to decrease competition by redistributing market activity. For
vertical mergers, a typical situation is when a large company buys out a firm in its industry, capturing
the market at the start of product sales (Salop, 2018). In TG’s case, this was probably used because
the company increased its demand by creating centralized offices and maintaining its hiring
conditions. Conglomerate mergers are characterized by combining unrelated companies to reduce
the risks of entering the market. As a result, the union created can become an effective sales
management target in certain intervals.

Kurt Lewin introduces the concept of quasi-need, which implies an intention that appears in a
specific situation and conditions a person’s activity and seeks to discharge. Each object has its
valence for a person – a kind of energy charge that causes a specific tension in a person, requiring
discharge. His theory applies to TG because it regulates the parameters of human qualities
evaluation and their value (Cummings et al., 2016).

Philip Kottler paid attention to the coordination parameters of marketing plans: he developed the
concept of 4P – product, price, promotion, and place. The marketing mix is a set of controllable
marketing variables, the aggregate of which a firm uses to elicit the desired response from the target
market. TG description according to it: the product is tourist services, the price is the cost of the
company and air transportation, the promotion is based on the theory of sustainable development,
and the place depends on the localization of centers.
The organization explicitly mentions another important business concept: sustainability, essential to
its improvement. The company strives to meet the needs of employees and customers by constantly
improving the process of interaction and development. TG also contributes to environmental
sustainability and the preservation of resources by addressing climate issues. The ethical aspect of
TG consists of the attitude towards employees and customers, which is achieved by comfortably
organizing the structure.

Analytical Tools in ODD

Besides SWOT analysis, the vital organizational design tool is RACI – the system of definition of roles.
RACI methodology is a convenient and precise tool for designing and planning changes, namely the
participation of different roles in the procedures and tasks of the process. The RACI matrix allows
one to organize the relationships between the structural components of the system and improve the
process (Sitar and Watts, 2021).

Among the tools of assessment of organizational development for TG-type companies, it is necessary
to use measurement as a part of the change process. The companies connected with people should
use various quantitative system measurements that allow obtaining objective, reliable information
(Wilson and Zamberlan, 2015). One of the goals of TG is employee engagement, and this tool will be
helpful for a fresh look with new performance indicators.

At first glance, a seemingly strange theory of chance is also a powerful ODD tool. It relates to the
nature of systems functioning under uncertainty, which forces an organization to account for
random events. Since many events occur independently, it is impossible to control every variation.
However, understanding the overall environment (environmental and economic) will be a valuable
part of the company’s mission.

A company like TG, which depends on external and internal events, needs to consider system
transformation. A change in the marketing department will entail a change in commercial
operations, and the transformation of the human resources department is inextricably linked to the
union activities of the subsidiaries (Pertusa-Ortega et al., 2018). TG should improve internal
communication and relate these changes to possible external impacts. Although the organization is
focused on the three metrics, this is not enough to create a sustainability framework. Perhaps the
company needs new ways of organizing to improve its structure.

Conclusion

Thus, ODD is a set of activities required to create a stable and developed organization. The
emergence of ODD and its elements is associated with the development of psychological
management studies and competent management as a business theory. ODD consists of theories
and models that consider different organizational structure approaches. Compared to the classical
approach, the systems approach is relatively new and more effective because it allows you to assess
the whole picture. SWOT and PESTLE analysis are powerful tools to determine the state of a business
and choose the direction of its improvement. TG was formed through a vertical merger because it
expanded the market and retained its employment conditions. The ODD analytical tools help assess
the company’s condition: the RACI is necessary for role regulation, and the randomness theory is
helpful for error prevention.

Reference List

Anderson, D. L. (2018) Organization design: Creating strategic & agile organizations. New York: Sage
Publications.

Cornelis, T. et al. (2019) ‘Organisation design seen through systematic design’, in Proceedings of the
design society: International conference on engineering design. Cambridge: Cambridge University
Press, pp. 1553–1562.

Cummings, S., Bridgman, T. and Brown, K. G. (2016) ‘Unfreezing change as three steps: Rethinking
Kurt Lewin’s legacy for change management’, Human Relations, 69(1), pp. 33–60. Web.

Dalirazar, S. and Sabzi, Z. (2020) ‘Strategic analysis of barriers and solutions to development of
sustainable buildings using PESTLE technique’, International Journal of Construction
Management. Web.

Kocaoglu, B. and Demir, E. (2019) ‘The use of McKinsey s 7S framework as a strategic planning and
economic assestment tool in the process of digital transformation’, Pressacademia, 9. Web.

Nicotera, A. M. (2020) Origins and traditions of organized communication. New York: Routledge.

Panda, A. and Gupta, R. K. (2001) ‘Understanding organizational culture: a perspective on roles for
leaders’, Vikalpa, 26(4), pp. 3–20.

Pertusa-Ortega, E. M. et al. (2018) ‘Antecedents of environmental management: The influence of

Salop, S. C. (2018) ‘Invigorating vertical merger enforcement’, The Yale Law Journal, 127(7), 1962–
1994. Web.
Satrevics, V. (2014) ‘Industrial structures as competitive factor in organization development’,
Procedia – Social and Behavioral Sciences, 110, pp. 871-878. Web.

Sitar, D. and Watts, R. (2021) ‘What is a RACI Chart? Everything you need to know about this project
management tool’, Forbes. Web.

Songhurst, B. (2017) ‘SWOT Analysis’, in The outlook for floating storage and regasification units
(FSRUs). Oxford: Oxford Institute for Energy Studies, pp. 32–35.

Wilson, S. and Zamberlan, L. (2015) ‘Design for an unknown future: Amplified roles for collaboration,
new design knowledge, and creativity’, Design Issues 31, pp. 3–15. Web.

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