Organizational Development

The ability of an organization to adapt to change and become more effective.

Author: Christy Grimste
Christy Grimste
Christy Grimste
Real Estate | Investment Property Sales

Christy currently works as a senior associate for EdR Trust, a publicly traded multi-family REIT. Prior to joining EdR Trust, Christy works for CBRE in investment property sales. Before completing her MBA and breaking into finance, Christy founded and education startup in which she actively pursued for seven years and works as an internal auditor for the U.S. Department of State and CIA.

Christy has a Bachelor of Arts from the University of Maryland and a Master of Business Administrations from the University of London.

Reviewed By: Sid Arora
Sid Arora
Sid Arora
Investment Banking | Hedge Fund | Private Equity

Currently an investment analyst focused on the TMT sector at 1818 Partners (a New York Based Hedge Fund), Sid previously worked in private equity at BV Investment Partners and BBH Capital Partners and prior to that in investment banking at UBS.

Sid holds a BS from The Tepper School of Business at Carnegie Mellon.

Last Updated:November 13, 2023

What Is Organizational Development?

By developing, enhancing, and combining strategies, structures, and procedures, organizations can increase their ability to adapt to change and become more effective. This process is known as organizational development.

1. Critical thinking based on science

Effective development requires evidence-based practice. It's not a case of experimenting and seeing what works. Instead, it involves developing an organized and controlled procedure in which hypotheses are tested using scientific data as input. 

Finally, it involves determining whether the intervention's goals were reflected in the results.

2. Increase your effectiveness and ability to adapt

Effectiveness inside the organization is the goal of organizational development, as it produces various positive (business) results. 

These can vary depending on the company but typically include financial success, customer satisfaction, member participation in the organization, and an improved ability to adapt and renew the organization.

3. Creating, enhancing, and consolidating plans, arrangements, and procedures 

Our final clause specifies that organizational development refers to modifications to strategy, structure, and/or procedures. This suggests we use a systematic approach and concentrate on the overall organizational structure. 

This can apply to the entire company, a specific department, or one or more locations.

The primary participants in organizational development are inside and outside the business.

Globalization leads to greater interconnectedness and opens organizations to worldwide opportunities and threats. 

Finally, success is judged differently when business systems improve at gathering pertinent data. Advanced analytics can also contribute to improved organizational outcomes.

Let us now talk about organizations in general.

Types of Organization

There are five main structures organizations take on:

1. Line Organization

The simplest and oldest type of organizational structure is the line structure. It is referred to as a scalar form and is common in organizations, divisions, or the military. 

This structure transfers power directly and vertically from the top of the managerial hierarchy to lower-level managers and subordinates and, finally, to the workers who perform the task. It is also referred to as the scalar principle or the chain of command.

2. Line-and-Staff Organization

In management, line and staff organizations approach authorities (for instance, managers) to set objectives and provide guidance that workers and other personnel follow. 

With the use of a line-and-staff organizational structure, a vast, complex business can be presented in a more adaptable manner without compromising managerial control.

3. Functional Organization

One of the most prevalent organizational systems is the functional organization. They are divided into groups according to their unique expertise and skills. According to this structure, the company divides employees into groups based on a specific task or group of duties. 

However, when corporate plans have a minimal tendency for change or mobility and functional structures operate well in stable contexts, the degree of bureaucracy makes it challenging for firms to respond rapidly to market developments.

4. Matrix Organization

Also known as a solid-line or vertical-line structure, it is one in which certain employees report to more than one supervisor or leader. 

In a broader sense, it can also describe different work patterns that do not maintain strict corporate units or silos grouped by function and region.

5. Project structure organization

This structure establishes a positional hierarchy and authority of participants in a certain project. To accomplish the project's objective, this organizational structure is momentarily created. 

Departments that specialize in functional areas—production, engineering, quality control, marketing research, etc.—will be prepared to collaborate.

Organizational Development's Objectives 

As a practice, organizational development (OD) entails a continuous, systematic process of bringing about positive organizational transformation. OD is a field of study, research, and applied science that focuses on comprehending and managing organizational change.

In accordance with organizational development philosophy, OD gives managers a vehicle for systematically implementing change through applying a wide range of management strategies

The main objectives of this discipline are: 

1. To enhance overall organizational performance

Enhancing overall organizational performance is a goal of organizational development. OD has been the foundation of some of the most important institutions in human history. 

2. To motivate individuals to find solutions to issues 

Every firm faces numerous issues and difficulties. People are inspired by OD to tackle current and future issues. 

3. To form and maintain interpersonal relationships 

Organizational development initiatives may be carried out to foster and uphold relationships between the organization's members. This may guarantee ongoing development.

4. Transparency in communications 

Conflict is caused by miscommunication. Close communication is a hurdle to progress. OD promotes the open communication style required to reduce conflict and promote idea exchange, creativity, and production. 

Open communication encourages exchanging ideas and information within the company, which benefits OD.

Organizational Development Strategy

The growing variety of learning and development, performance improvement, and talent management solutions to boost organizational effectiveness should be integrated. 

  1. Entry is the first interaction between a consultant and a client during which they present, investigate, and identify the issue, potential solutions, or circumstances.  An engagement contract or project plan that creates shared expectations and first agreements over project scope results from this phase (such as time, money, and resources).

  2. The fact-finding step is represented by diagnosis (assessment). Stakeholders from the organization and the consultant work together to collect, analyze, and review relevant information to understand the situation at hand better.

  3. Feedback is returning analyzed data to the client or client system, exploring data for comprehension, clarity, and accuracy, reviewing initial agreements regarding the scope and resource needs, and starting the client's ownership of the data.

  4. The term "solution" refers to the conception, creation, and application of a solution, or group of solutions, intended to address an issue, fill a gap, boost an organization's productivity or effectiveness, or take advantage of an opportunity.

  5. Evaluation is the ongoing process of gathering formative and summative evaluation data to ascertain whether the effort accomplishes the specified success indicators and reaches the desired goals.

Organizational Development Process

The relationship between OD and HRM tasks is described in these phases. You might recognize this procedure because it is similar to the people analytics cycle. 

This cycle includes the identification of a problem; the collection, analysis, and presentation of data; and the implementation of new policies.

1. Contracting and Entering 

When management or an administrator sees a chance for improvement, the first move is taken. This can be brought on by various things, including external changes, internal conflicts, disgruntled clients, a decline in profits, a shortage of innovation, or high rates of absenteeism or personnel turnover. 

These incidents are frequently signs of a more serious issue.

2. Diagnostics 

The second stage of the process is diagnostics. The OD specialist strives to comprehend how a system is currently operating. 

They gather data by conducting surveys or interviews or by looking at the data that is currently accessible to understand the issue accurately. All of this is done to identify the problems' underlying causes.

3. Gathering and examining data 

OD practitioners do data collection and analysis in the third step. Existing data from work systems, surveys, interviews, observations, and "fly-on-the-wall" techniques are just a few of the data collection techniques used.

4. Remarks 

The OD consultant must communicate facts to the client in this phase in a clear and goal-oriented way. 

Relevant, comprehensible, descriptive, verifiable, timely, limited, significant, comparative, and action-inspiring information is required. To effectively accomplish this, strategies like visualization and narrative can be applied.

5. Creating intervention plans 

An intervention plan must be made after giving the client input. This intervention should be based on causal knowledge of the outcomes and tailored to the organization's needs. The organization also needs to be able to absorb the changes properly.

6. Evaluation and change institutionalization 

Opportunities for improvement become apparent after a system has been put into place. For example, the user and employee experience will improve as a result of its implementation. 

These subtle modifications can characterize the rapid development of technology. Since change is increasingly a given, it is now almost impossible to adopt technology and call it a day. Instead, systems change throughout time, necessitating ongoing implementation.

Competencies for Organizational Development Practitioners

Strategic planning and thinking are essential for OD practitioners; hence the following abilities are necessary. 

The Talent Development Body of Knowledge describes the critical competencies of an OD professional as being knowledgeable about change, an effective designer, a business counselor, a credible strategist, and a knowledgeable consultant.

Specialists in organizational development examine businesses and other organizations from the top down to identify potential improvements that could transform them into industry leaders. The majority of OD professionals are self-employed consultants.

Data gathering and analysis, project management, management abilities, emotional intelligence, business savvy, communication, teamwork, and facilitation are a few of the skills mentioned.

To increase effectiveness and productivity at work, OD practitioners align strategy, structure, people, rewards, measurements, and management procedures. 

These professionals analyze and address issues with organizational systems that affect performance, productivity, and engagement. 

They may also oversee activities that promote personal development, such as management and leadership training, career development, and performance enhancement.

The report includes key values intended to reflect OD but can also be used to define necessary skills. These values are respect and inclusivity, cooperation, honesty, self-awareness, empowerment, democracy, and social justice.

The company strategy, change management, and effective communications/leadership skills are three ideas that the practitioner must grasp and put into practice to be most effective.

Organizational Development examples

OD has been employed by some of the most well-known businesses in the world to enhance numerous company procedures. 

For instance, Amazon recently launched a $700 million initiative to retrain its staff on how to use new technology and adjust to changing working circumstances and business practices. 

Additionally, Starbucks has put organizational growth rules into place. The international coffee chain recently implemented several green initiatives across its whole business, including more extensive recycling programs and a decrease in plastic cups. 

These new measures benefit the environment and the company's reputation and bottom line.

Google has made efforts to transform its corporate culture to encourage continuous learning. As a result, new hires know they will continually pursue professional development opportunities such as workshops and training. 

This culture encourages employees to sign on enthusiastically for change and learn new things. Companies may spark significant change with a solid understanding of organizational growth and a clear objective. 

But change is never simple. Therefore, organizational development systematizes each process step, enabling improvement in organizations of all sizes and industries.

Certification in organizational development 

OD & design are becoming crucial game-changers in a company climate that is both more competitive and dynamic. 

Businesses must constantly coordinate strategy, culture, internal procedures, and cross-departmental communication to succeed in the marketplace. 

Although there are many paths to becoming an OD consultant, a bachelor's degree is typically required. Degrees in instructional design, human resources, or training and development are pertinent. Related work experience is also helpful, such as in HR.  

This is a complicated field that requires specialization. However, as an HR professional, you may employ organization development skills and strategies in your work to create a stronger, better, and more resilient organization.

A certification in organizational development that shows the individual knows the field signifies a strong candidate. HR professionals who want to learn how and when to use OD strategies in their work can enroll in programs like the AIHR's Organizational Development Certificate Program. 

The Organization Development Certificate Program (ODCP), which focuses on developing skills, and the Organization Development Certification programs offered by Illumeo and the Tata Institute of Social Sciences are further qualifications.


We've tried to provide a structural approach to the complex field of organizational growth. Unfortunately, organizational development is hampered by managers' confusion in this area. 

Human resources are fundamentally about people and how to use them to an organization's advantage. Here, HR experts have an advantage in their expertise in OD. 

Organizational development primarily focuses on helping a company implement its plan as effectively as possible. 

To increase effectiveness and productivity at work, OD practitioners align strategy, structure, people, rewards, measurements, and management procedures.

This is accomplished through utilizing and maximizing human resources. Therefore, it is clear that the HR department can improve with an understanding of OD.

The talent and leadership ideas, values, and competencies that shape the organization's culture can be articulated and codified by OD practitioners, who are also skilled in designing and implementing employee engagement techniques.

Researched and authored by Charbel Yammine | LinkedIn

Reviewed and edited by James Fazeli-Sinaki | LinkedIn

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