Organizational development is a separate academic discipline for a reason. The scope of organizational development (OD) is vast & diverse. It seeks to study organisational change & performance (wikipedia). If you are managing an organisation, you know why do we say that scope of this area of study is vast & diverse.
Interestingly, the study of human relations gave birth to discipline of organizational development. Although primary focus of OD is change & performance of any organisation it has expanded its reach in recent years. Today it also covers organizational culture, knowledge management & much more.
For leaders, it is imperative to get a comprehensive understanding of OD & its benefits. In this article, we explore some such benefits.
i. Optimization of Operations
OD seeks to identify operations that require a change within an entity. This process helps the decision-makers come up with a management plan. A plan to analyse individual needs and the effects that the changes will yield. This plan also analyses the effects of the changes on the workforce and the best way of rolling out the changes to the entire organisation.
Increased profitability is one of the outcomes of organizational development. Optimising operations raises productivity and efficiency as a whole. And it also fosters innovation giving rise to increased profitability. Underlying idea of this optimisation is to help in the formulation of viable solutions to the problems that an entity faces. And do this through finding the most efficient and effective way of solving them.
ii. Improved Efficiency
Organizational development enables a company to continually improve its processes and offerings. By helping make strategic choices in all activities that the organisation does, OD helps improve efficiency. This tends to produce better outputs with the same or reduced levels of inputs.
iii. Improved Effectiveness
It is not just about increased efficiency. Doing those activities effectively is equally important as well. Increased communication, interaction and feedback is one of the outcomes of OD. This tends to bring out multi-faceted solutions the business’ needs. The process ensures that there is thorough research on the available options, and the selection of the best option is a result of careful consideration of its impact. Thus, there is always a high probability that the chosen option will meet its objectives.
iv. Positioning for Future Expansion
The future expansion of an entity requires its leaders to have a vision of the nature of future operations. Additionally, there is a need for communication of the future vision in a quest to get buy in from others in achieving the vision. OD helps in communicating a future vision thus pooling the required capability and potential necessary for the achievement of the vision.
A human resource professional that uses OD principles manages to identify business needs and create roles that provide a solution to the needs. The move helps in the attraction and retention of talents that align with a future vision of an entity. The professionals also identify any skill gap and work towards bridging it.
v. Exploration of Market Opportunities
New market opportunities require the assessment of existing org structure. The move seeks to analyse whether an entity has a structure flexible enough to suffice seizing the opportunities. It takes OD to assess whether there is a need for unique or more resources.
Sometimes new opportunities can stress the existing business processes. OD helps in the identification of the strength and weaknesses of processes. Through a portfolio review process, an entity can manage to come up with stage-gate mechanisms that will help in the fortification of its processes to accommodate new market opportunities.
vi. Capacity Building
Every entity faces industry and market changes that compel it to adopt OD processes. The move arms employees with the expertise that enables them to meet new market requirements. Thus, an entity has to enhance skills and competency and improve the work process through training its employees.
One of the goals of organizational development is to balance the strengths and weaknesses of an entity. The goal helps in the restructuring of the employment of resources, including human capital, that an entity holds making it possible for productive and efficient use of the resources. Even though there are are other ways of achieving the goal, OD employs a systematic and org-wide approach that improves the effectiveness of the applied strategy.
vii. Improved Operational Quality
The continuous improvement of operations through OD identifies errors and fixes them. The result is fault-free operations that give rise to quality products and services.
OD also gives rise to innovation as one of the outcomes. An entity manages to enhance its products and services through rewarding success and boosting the motivation and morale of its employees through innovation. The employees feel empowered and valued making them work to the best of their creativity level.
viii. Increased Value For Stakeholders
Every entity has its set of stakeholders, including suppliers, investors, and employees. OD gives rise to increased productivity that requires more raw materials and components that are inputs to the production process. The requirement benefits suppliers since it raises the production input demand.
Regarding investors, OD increases the profitability of an entity making it possible for the entity to raise the return on investment. The process also empowers employees thus adding their value through improving their skills. The employees achieve the increased potential for thriving in their career paths.
ix. Cost Reduction
OD gives rise to employee satisfaction. The process helps to reduce absenteeism and employee turnover thus reducing the costs related to recruitment and retention of employees. The outcome depicts a culture shift that focuses on continuous improvement that results in increased productivity with minimal operational costs.
x. Increased Competitiveness
An entity can manage to create a winning business after adopting OD. The process enables an entity to employ unique competencies and resources that help it to stand out from the rest in a market. The move equates to innovation that helps an entity to pioneer in capitalizing in an opportunity enabling the entity to solidify its revenue before others come on board.
OD connects an entity with external realities. Through understanding the demands that emanate from the dynamics of the external environment, an entity manages to formulate strategies that helps it grab opportunities, navigate through risks, and stay afloat in the market.
xi. Improved Process Integration
An entity manages to analyse work processes after adopting OD. The move helps in assessing the necessity, accuracy, and efficiency of the processes. The assessors can check for duplication of processes and whether combining the processes can improve efficiency.
xii. Ease of Embracing Changes
OD stands as a proactive approach that helps an entity to embrace change. It also helps an entity to leverage change for renewal. The change can either be internal or external.
Given that organizational development is an all-inclusive approach, it supports the active engagement of employees and other stakeholders. This aspect makes it possible for the stakeholders to be wary of forthcoming changes and understand the importance of those changes. Thus, the stakeholders become prepared for what to do when the changes take place.
xiii. Enhanced Process Sustainability
An entity manages and plans growth using OD. An analysis of sales projections and market demand helps an entity to forecast its growth. The analysis sometimes results in the identification of a certain trend in the market that calls for the formulation of a strategy that makes the best out of the trend. The change ensures that the operations of the entity remain relevant in the market, and it sometimes calls for adjustment of the original business plan.
The analysis also helps in resource allocation. If an entity makes changes to the original business plan, then it should allocate its resources in a manner that promotes and manages future growth. Planning does not stop when an entity aligns with market trends. There is a need for the adoption of a proactive approach that will result in the sustainability of the new operations through resource allocation.
xiv. Enhanced Business Continuity
Sometimes environmental challenges, such as economic disruptions, compel an entity to react quickly to prevent or minimize interruptions to its operations. OD can help an entity to make the move through a careful assessment of a challenge and adoption of a planned intervention. Thus, an entity manages to employ effective solutions that are within its resource potential.
xv. Creation Of Business Relationships
Collaboration at work is a vital component of OD. It seeks to form a team that supports the vision of an entity. The move gives rise to bonding between stakeholders that commit to the realization of the vision. The functions that make up OD call for constant communication of business needs, and the means of attaining the same thus the need of a team.
OD also fosters open communication. It enhances a free flow of information between players that contribute towards the achievement of a business vision. The opposite of the same entails closed communication that features an top-bottom approach. The approach hampers an active engagement of stakeholders thus limiting the achievement of effectiveness and efficiency of business operations.
In conclusion, every entity should know where to start when implementing organizational development. The process starts with the development of leadership capabilities. The move helps in empowering the leaders with behaviors that support productivity, motivation, and retention. Thus, the leadership manages to offer a direction towards the achievement of the set business objectives.