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Session 3. Organizational design and change

Session guide: Organizational design and change
Reading note: Organizational design and change




TRAINER - Plenary participatory lecture


At the end of this session, participants will be better able to understand and appreciate:

1. The effect on organization structure of changes in the external environment.
2. Interlocking systems of an organization.
3. The concept, attributes and process of organizational effectiveness.
4. Approaches, processes and techniques for OD.


Exhibit 1

Interlocking systems of an organization

Exhibit 2

Processes towards organizational effectiveness

Exhibit 3

Attributes of an effective organization

Exhibit 4

Approaches to OD

Exhibit 5

Processes of OD

Exhibit 6

Socio-technical systems approach for organization re-design

Exhibit 7

Techniques of OD


Reading note: Organizational design and change




Overhead projector and chalkboard

Session guide: Organizational design and change

Exhibit 1: Interlocking systems of an organization
Exhibit 2: Processes towards organizational effectiveness
Exhibit 3: Attributes of an effective organization
Exhibit 4: Approaches to organizational development
Exhibit 5: Processes of organizational development
Exhibit 6: Socio-technical systems approach to organization re-design
Exhibit 7: Techniques of organizational development

Initiate the discussion by asking participants how the external environment affects the working of their organizations. Obviously, no organization can exist in isolation from the external environment, which includes ecology, government policies, trade systems, technological environment and cultural beliefs. Changes in these could affect specific sub-units in the organization or may affect the organization as a whole.

Show EXHIBIT 1. Observe that the organization is composed of four interlocking systems. The first is the technical system which makes up the primary productive axis of the organization. The second is the social system, which refers to people in the organization and their activities. The third is the administrative system, referring to administrative policies, systems and procedures used in operating the organization. The fourth is the strategic system, which performs the steering function of the organization.

Ask participants to define organizational effectiveness and distinguish it from organizational efficiency. Effectiveness is the degree to which an organization achieves its goals. Efficiency relates to use of resources in achieving organizational goals. Organizational effectiveness is influenced by evaluation, adaptation, graduation and innovation (EXHIBIT 2).

What are the important attributes of an effective organization? Show EXHIBIT 3 and discuss each of these. The overall effect is to increase the effectiveness of the organization by incorporating changes in its structure.

The need for organizational development (OD) arises in the context of changes in technology, knowledge, product and services, and the social system. This involves changes in beliefs, attitudes, values and structure.

Now discuss different approaches to OD. Show EXHIBIT 4. Group dynamics is based on process consultation at small-group level, using group methods, sensitivity training and related approaches. The behaviour modification school rearranges rewards to reinforce selected target behaviour in employees. The systems approach considers the four interlocking components of the organization: the technical system, the social system, the administrative system and the strategic system. The socio-technical approach considers the environment, technical system and social system as determinants of organizational design, re-design or development. Finally the environment, which induces changes resulting in socio-technical arrangements in the organization.

OD involves various interventions to change the structure, processes, behaviour or values of individuals. This consists of eight elements. Show EXHIBIT 5 and briefly discuss these elements.

Briefly discuss the socio-technical system approach for organization re-design (EXHIBIT 6). Observe that while this creates a balance between the organization and its changing external environment, it is not the most appropriate approach when compared to traditional designs.

The techniques of OD can be traditional or modern. Show EXHIBIT 7. Traditional techniques consist of sensitivity training or a group approach, grid training and survey feedback. Sensitivity training induces sensitivity to group processes. Grid training is an instrumental approach to laboratory training and helps in group development as well as learning among group members. Grid training is completed in six stages (EXHIBIT 7). The survey feedback technique involves a study of the units of analysis or the organization as a whole. Using a questionnaire, it covers issues in leadership, organizational climate and satisfaction (EXHIBIT 7). There are four important modern organization development techniques. The process consultation approach attempts to help diagnose and solve important problems of organizations by taking into account the processes which take place within a group or between groups and consultants. The third-party approach is largely used to resolve inter-personal and inter-group conflicts. Team building aims at improving overall performance through task orientation. Observe that this will be discussed in detail in a subsequent session. Transactional analysis is used to analyse group dynamics and interpersonal communication.

Exhibit 1: Interlocking systems of an organization





Exhibit 2: Processes towards organizational effectiveness





Exhibit 3: Attributes of an effective organization

· Change is an ongoing organizational process

· Structural designs are temporary

· Learning is built into the organization

· Lateral relationships become increasingly more important

· Linkages and close relationships are developed with elements in the external environment

· Decision making depends on lateral relationships and mutually satisfactory arrangements

· Management's role changes from control to leadership

· People-management practices are involvement oriented rather than control oriented

Exhibit 4: Approaches to organizational development






Exhibit 5: Processes of organizational development


Exhibit 6: Socio-technical systems approach to organization re-design

· Defining the scope of the system to be re-designed
· Determining the environmental demands
· Creating a vision statement
· Educating organizational members
· Creating the change structure
· Conducting socio-technical analysis
· Formulating re-design proposals
· Implementing recommended changes
· Evaluating changes

Exhibit 7: Techniques of organizational development



Laboratory-seminar training
Team development
Inter-group development
Organization goal setting
Goal attainment


Organizational climate



Initiate contact
Define the relationship
Select a setting and a method
Gather data and make a diagnosis
Reduce involvement and terminate




Reading note: Organizational design and change

Organizational effectiveness and efficiency
Organizational development
The OD process
Socio-technical systems approach for organization re-design
OD techniques

A research organization, like any other organization, has to function in consonance with its external environment, which includes other organizations, ecology, government policies, trade systems, technological environment, cultural beliefs and other factors. The effectiveness of the organization depends greatly on how well the social and technical systems are designed with respect to each other and also with respect to the demands of the external environment (Pasmore, 1988). There should be a 'fit' between various design elements and the external environment. If there is a change in the external environment, resources or technology, the organization has to respond through appropriate structural changes.

Organizational effectiveness and efficiency

The organization has to be both effective and efficient to be successful. Organizational effectiveness is a measure of the extent to which an organization realizes its goals. Organizational efficiency refers to the amount of resources an organization uses in order to produce a unit of output. Efficiency and effectiveness are highly dependent on the ability of the organization to adjust itself to rapid changes in its environment, resources or technology.


According to Albrecht (1983), there are four processes which may lead to organizational effectiveness:

· evaluation, referring to a periodical and methodical process of scrutinizing the complete functioning of the organization;

· adaptation, referring to a formal and disciplined planning process which facilitates policy decisions about OD;

· graduation, which refers to the systematic process by which the organization identifies and develops its future leaders and latent management talents; and

· innovation, referring to a policy which encourages the people in the organization to find better ways for accomplishing the goals assigned to them.

Considering the degree and type of differentiation and the integration mechanisms for coordination within and amongst departments, Lawrence and Lorsch (1967) observe that organizational efficiency is increased when the complexity of the environment is matched by the complexity of structures.


Significant attributes (Mohrman, 1989) which characterize an effective organization in today's environment include:

· Change is a continuing organizational process and not something that is intermittent.

· Designs are temporary.

· Learning is built into the organization.

· Lateral relationships become increasingly important, particularly in decision making, diluting the traditional focus on hierarchy. Decision making also depends on mutually satisfactory arrangements.

· Organizations create many linkages and close relationships with customers, users, suppliers, community groups and competitors.

· The function of management alters from one of control to that of leadership.

· Management practices for people in the organization are oriented towards involvement rather than control.

Organizational development

Burke (1982) defined organizational development (OD) as "a planned process of change in an organization's culture through the utilization of behaviourial science, technology, research and theory." It refers to the management of change and the development of human resources. It is a response to change (Bennis, 1969). OD is a complex educational strategy intended to change the beliefs, attitudes, values and structure of the organization so that the organization can better adapt to new technologies, markets and challenges.

A variety of forces cause changes in the modern organization (Hellriegel, Slocum and Woodman, 1983). Some of these are:

· technological change;
· the knowledge explosion;
· product and service obsolescence; and
· social change.

Environment, resources and technology perform a decisive role in determining organizational policies. If any one of these determinants changes, the policies need to be re-examined to determine if a different organizational design would be better suited.

Approaches to OD

The major schools of thought in OD are considered in the following paragraphs.

Group Dynamics

This is a historical and traditional method of OD based on the assumption that OD activities are process consultation (Albrecht, 1983). In this approach, an expert works at a small-group level, using group methods, sensitivity training and other related approaches.

The Behaviour Modification School

The 'be-mod' school of OD (based on the various works of Skinner) attempts to rearrange the reward system in the organization so as to strengthen selected 'target' behaviour on the part of employees.

The Systems Approach

This approach aims at enhancing the overall effectiveness of the organization. The system can be defined as having:

· some components that comprise it;
· functions and processes performed by various components;
· relationship among the components that make them a system; and
· an organizational principle, which gives the system a purpose.

This approach is based on the assumption that an organization is composed of four interlocking systems (Albrecht, 1983), namely:

· a technical system, referring to the elements, activities and relationships that make up the primary productive axis of the organization. It includes physical facilities, machinery, special equipment, work processes, work methods, work procedures, work-oriented information and various means of handling;

· a social system, referring to the people in the organization and the activities in which they are engaged. It includes the intra-group roles and relationships, the form of power hierarchy, values and norms for behaviour in the organization, and the reward and punishment processes;

· an administrative system, which refers to the policies, procedures, instructions, reports, etc., which are required to operate the organization. It also includes those who operate the technical and administrative systems; and

· a strategic system, which is the steering function of the organization. Its components include the management team from the chief executive down to the lowest supervisor, the chain of command, reporting relationships, and the power values of the leaders of the organization. It also includes plans, the planning process and the procedures used in governing the organization and adapting it to changing needs.

The systems approach has four sequential stages: assessment, problem solving, implementation and evaluation.

The Socio-Technical Approach

The socio-technical approach views an organization (Pasmore, 1988) as made up of people (a social system and a technical system) producing goods or services valued by customers (who are part of the external environment).

The social system uses tools, techniques, and knowledge. The technical system produces goods and services which are valued by customers in the external environment.

The Environment Approach

The environment is an agent of change. Environmental changes are the primary incitement and stimulus for organizational betterment. The socio-technical arrangements in the organization must change according to changes in the environment. The environment can change in both predictable and unpredictable ways. The external environment can be relatively stable or rapidly changing.

Thus, the environment, the technical system and the social system are three basic elements which play a crucial role in any organization's design, re-design or development. The efficiency and effectiveness of the organization depend upon the equilibrium between the needs of these determinant elements.

The OD process

The OD process entails various activities at different levels in the organization. Through these activities, interventions are made in the ongoing organization to change the structure, processes, behaviour or values of individuals and groups. Golembiewski, Prochl and Sink (1981) categorized these interventions under eight headings:

· Process Analysis Activities, referring to applications of behaviourial science perspectives to fathom complete and dynamic situations;

· Skill-building Activities, involving various designs for eliciting behaviours in congruence with OD values. This includes giving and receiving feedback, listening, and settling conflicts;

· Diagnostic Activities, including process analysis to generate data through interviews, psychological instruments or opinion surveys;

· Coaching or Counselling Activities to help in resolving conflicts through third-party consultation;

· Team Building Activities, enhancing the efficiency and effectiveness of task groups;

· Inter-group Activities, attempting to create effective and satisfying linkages between two or more task groups or departments in the organization;

· Techno-Structural Activities, aiming at building need-fulfilling roles, jobs and structures; and

· System-Building or System-Renewal Activities, seeking exhaustive changes in a large organization's climate and values using combinations of the various OD interventions listed above.

Socio-technical systems approach for organization re-design

Socio-technical systems design is better suited to meet the requirements of a changing external environment in comparison with traditional designs. It endeavours to re-design the organization's structure, processes and functions to create a balance between the organization and its changing external environment. It could involve the following steps (Foster, 1967; Cummings, 1976; Pasmore, 1988):

· defining the scope of the system to be re-designed;
· defining the environmental demands;
· evolving a vision statement;
· enlightening organizational members;
· developing the change structure;
· conducting socio-technical analysis;
· preparing re-design proposals;
· implementing recommended changes; and
· evaluating the changes or re-design.

OD techniques

Techniques used for OD are considered below.

Sensitivity training

This has many applications and is still used widely, even though new techniques have emerged (Lewin, 1981). Sensitivity training (Benny, Bradford and Lippitt, 1964) basically aims at:

· growth in effective membership;
· developing ability to learn;
· stimulating to give help; and
· developing insights to be sensitive to group processes.

These process variables - in a systems sense - interact and are interdependent.

Grid Training

Grid training is an outgrowth of the managerial grid approach to leadership (Blacke and Mouton, 1978). It is an instrumental approach to laboratory training. Sensitivity training is supplemented with self-administered instruments (Benny, Bradford and Lippitt, 1964). The analysis of these instruments helps in group development and in the learning of group members. This technique is widely used and has proved effective.

Grid training for OD is completed in six phases. They are:

· laboratory-seminar training, which aims at acquainting participants with concepts and material used in grid training;

· a team development phase, involving the coming together of members from the same department to chart out as to how they will attain a 9 x 9 position on the grid;

· inter-group development aims at overall OD. During this phase, conflict situations between groups are identified and analysed;

· organization goal setting is based on participative management, where participants contribute to and agree upon important goals for the organization;

· goal attainment aims at achieving goals which were set during the phase of organizational goal setting; and

· stabilization involves the evaluation of the overall programme and making suggestions for changes if appropriate.

Survey Feedback

Survey feedback is based on the study (survey) of the unit of analysis (such as work group, a department or a whole organization) by using questionnaires (Taylor and Bowers, 1972). The resulting data are then used to identify and analyse problems and propose a suitable action plan to overcome them. A typical survey questionnaire would generate information on leadership, organizational climate and satisfaction (Table 1).

Table 1. Typical factors covered in a survey research questionnaire


Managerial support

Managerial goal emphasis

Managerial work facilitation

Peer support

Peer goal emphasis

Peer work facilitation

Peer interaction facilitation

Organizational climate

Communication within the organization


Decision making

Control within the organization

Coordination between departments

General management


Satisfaction with the organization

Satisfaction with the supervisor

Satisfaction with the job

Satisfaction with pay

Satisfaction with the work group

Modern OD techniques

In addition to the traditional OD techniques like sensitivity training, grid training and survey feedback, there are four modern techniques which can be used at inter-personal and inter-group levels.

Process consultation approach

This attempts to efficiently help diagnose and solve important problems of organizations. It refers to the processes which take place within a group or between groups and the consultant. The consultant aims at helping the client to perceive, understand and act upon process events which occur in the client's environment. Schein (1969) has proposed six major steps to be followed by the consultant. They are:

· Initiating contact The consultant is approached by the client to solve an organizational problem which could not be solved by normal procedures.

· Defining the relationship This refers to clarifying the expectations of both client and consultant through a contract between them about services, time and fees.

· Selecting a setting and a method This refers to the place and method of doing the exercise.

· Gathering data and making a diagnosis This is implemented through using questionnaires, interviews, observations, etc.

· Intervention This involves agenda setting, feedback, coaching and structural interventions, individually or in combination.

· Reducing involvement and terminating This is the mutual agreement to cease the consultation.

Third Party

The third-party peace-making technique attempts to settle inter-personal and inter-group conflicts using modern concepts and methods of conflict management. This technique analyses the processes involved, discerns the problem on the basis of the analysis, and suitably manages the conflict situation.

Team building

Team building has been considered the most popular OD technique in recent years, so much so that it has replaced sensitivity training. It aims at improving overall performance, tends to be more task-oriented, and can be used with family groups (members from the same unit) as well as special groups (such as task forces, committees and inter-departmental groups).

There are five major elements involved in team building (French and Bell, 1978):

· problem solving, decision making, role clarification and goal setting for accomplishing the assigned tasks;

· building and maintaining effective inter-personal relationships;

· understanding and managing group processes and culture;

· role analysis techniques for role clarification and definition; and

· role negotiation techniques.

Transactional Analysis

Transactional analysis is widely used by management practitioners to analyse group dynamics and inter-personal communications. It deals with aspects of identity, maturation, insight and awareness (Berne, 1964). As a tool for OD, it attempts to help people understand their egos - both their own and those of others - to allow them to interact in a more meaningful manner with one another (Huse, 1975). It attempts to identify peoples' dominant ego states and help people understand and analyse their transactions with others. It is quite effective if applied in the early stage of the diagnostic phase.


Albrecht, K. 1983. Organization Development. Englewood Cliffs, NJ: Prentice-Hall.

Benny, K.D. 1964. History of the T-Group in the laboratory setting. pp. 80-135, in: Bradford, L.P., Gibb, J.R., & Benny, K.D. (eds) T-Group Theory and Laboratory Methods. New York, NY: John Wiley.

Benny, K., Bradford, L.P., & Lippitt. 1964. The Laboratory Method. pp. 15-44, in: Bradford, L.P., Gibb, J.R., & Benny, K.D. (eds) T-Group Theory and Laboratory Methods. New York, NY: John Wiley.

Bennis, W. 1969. Organization Development: Its Nature, Origins, and Prospects. Reading, MA: Addison-Wesley.

Berne, E. 1966. Principles of Group Treatment. New York, NY: Oxford University Press.

Blake, R.R., & Mouton, J.S. 1978. The New Managerial Grid. Houston, TX: Gulf Publishing.

Bowen, D.D., & Nath, R. 1978. Transactional analysis in OD: Applications within the NTL model. Academy of Management Review, 3 (1): 79-80.

Burke, W.W. 1982. Organization Development. Boston, MA: Little Brown.

Cummings, T.G., & Huse, E.F. 1975. Organization Development and Change. St. Paul, MN: West.

Cummings, T. 1976. Socio-technical systems: an intervention strategy. in: Burke, W. Current Issues and Strategies in Organization Development. New York, NY: Human Science Press.

Foster, M. 1967. Developing an analytical model for socio-technical analysis. Tavistock Institute, London, Document nos. HRC 7 and HRC 15.

French, W.L., & Bell, C.H. 1978. Organization Development. Englewood Cliffs, NJ: Prentice-Hall.

Golembiewski, R.T., Prochi, C., & Sink, D. 1981. Success of OD applications in the public sector: toting up the score for a decade, more or less. Public Administration Review, 41: 679-682.

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Lawrence, P.R., & Lorsch, J.W. Organization and Environment. Boston, MA: Harvard University.

Leavitt, H.J. 1964. Applied organizational changes in industry: structural, technical, and human approaches. pp. 55-70, in: Cooper, W.W., Leavitt, H.J., & Shelley, M.W. (eds) New Perspectives in Organization Research. New York, NY: John Wiley.

Lewin, K. 1981. Field Theory in Social Science. New York, NY: Harper and Row.

Mohrman, A.M., & Mohrman, S.A. Changing the Organization through Time: A New Paradigm in Large-Scale Organizational Change. London: Jossey-Bass.

Pasmore, W.A. 1988. Designing Effective Organizations. New York, NY: John Wiley.

Schein, E.H. 1969. Process Consultations: Its Role in Organization Development. Reading, MA: Addison-Wesley.

Taylor, J., & Bowers, D.G. 1972. Survey of Organizations: A Machine-Scored Standardized Questionnaire Instrument. Ann Arbor, MI: Univ. Michigan.

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