Practicing Organization Development (A guide for Consultants) - Part 15 pdf

cafeterias, supervise workplace security, and generally oversee “employee wel-
fare.” It is no mistake that, in some British organizations, the HR director is
called the “welfare officer.” It is the legacy of this past.
In the 1950s and 1960s, modern human resource management was born. Fol-
lowing a difficult recession in the late 1950s, economists and management
thinkers alike began discussing the importance of the human side of the enter-
prise. These thinkers emphasized that organizations should do more to unleash
employee potential and should focus their humanistic efforts, made popular
with the human relations school of management thought, toward improving
productivity. It was an appealing philosophy that still impacts many organiza-
tions to this day.
The role of human resource management should be to create a work climate
in organizations where individuals can realize their potential. The important focus
of this role should be to strike a balance between organizational needs for pro-
ductivity and profits and individual needs for increased autonomy. It was at this
time that such terms as human resource management and human resource devel-
opment were first coined to declare a new role for the old “personnel” function.
But more recent thinking about HR has reflected different schools of thought.
One view is that HR should shift its focus to become more strategic in its thrust,
relegating highly transactional efforts (such as processing forms or record-keeping)
to outsourcing agents or downloading them onto managers or employees to carry
out. Another view is that HR should shift its focus to become more oriented to
human performance improvement or performance consulting, which helps operat-
ing managers to troubleshoot and solve “people problems” that exceed their skills.
A third view is that HR should shift its focus to help managers and workers to man-
age change, and that role links closely to OD.
One study of HR managers revealed their own opinions about how their roles
are changing. According to the study results (Lipiec, 2001), HR managers per-
ceive that their successors will increasingly focus on the following:
• Personnel management and managers’ competencies (training, path of
careers): 43.5 percent

• Organization development ( managing change, organizational culture):
41.8 percent
• Employment policy: 33 percent
• Employee cooperation: 21 percent
• Personnel administration (pay, recruiting, work evaluation): 14 percent
• Social relations: 9 percent
From these results it seems clear that HR managers in the study perceived
that HR will have to focus more attention on building an organization’s
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competitive advantage through focusing on human capital and on facilitating orga-
nizational change. HR will thus become more strategically focused in the future,
seeking to align people with organizational direction and competitive advantage.
WHAT IS ORGANIZATION DEVELOPMENT?
Organization development (OD) means “a system-wide application of behavioral
science knowledge to the planned development, improvement, and reinforcement
of the strategies, structures, and processes that lead to organization effectiveness”
(Cummings & Worley, 2001, p. 1). Its purpose is to bring about progressive change
in organizational or group settings. Unlike some other approaches to change man-
agement, it is distinctive in its appreciation for—and emphasis on—human val-
ues and the participation of those affected by the change as well.
OD is differentiated from change management by Chris Worley (2005, per-
sonal communication) as follows:
• “Change management is agnostic to diagnosis. It doesn’t care if the
change is the right one or not. It just implements.”
• “OD is concerned about transferring knowledge and skill. In short, it is
concerned that the client system learns. That’s the only value difference
that I think is justifiable. I fear that saying OD is more ‘humanistic’ ori-
ented is a slippery slope.”
WHAT DO PRACTITIONERS IN THE OD FIELD TRADITIONALLY

DO, AND HOW ARE THEIR ROLES CHANGING?
Competency studies of OD have described the kind of person an OD practitioner
must be to be successful. These studies are described in this book in Chapter
Five. But it is worth emphasizing that OD practitioners are themselves the
instruments of change. Being an effective OD practitioner is thus as much about
“being” the right kind of person as it is about demonstrating specific occupa-
tional knowledge and skills.
WHY ARE THE TWO FIELDS CONVERGING, AND
WHAT ARE THE IMPLICATIONS OF THAT CONVERGENCE?
Few organizations operate in a stable, competitive environment. What is needed
is a more systematic and strategic orientation to aligning people, and their cre-
ative abilities, to the organization’s competitive objectives. That means OD must
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be integrated into HR practice. At the same time, many “levers” available to an
organization’s leaders to effect change in organizations reside in HR, including
recruitment, selection, reward, feedback and appraisal systems, career pathing
approaches, and much more. For that reason, those who set out to effect change
must be masterful in their applications of HR.
The implications of convergence mean that OD practitioners must become
more familiar with all aspects of HR, from strategic to tactical, and how they
can be applied to improve productivity and organizational work climate. At the
same time, HR practitioners should become more familiar with OD and its total
system and humanistic approach to effecting change with people in organiza-
tional or group settings. While this whole book is about OD, it may be appro-
priate to present some of the HRD approaches here to familiarize the OD
practitioner with the thinking in the HR field. Some of the frameworks across
the world are reviewed to provide appropriate background for the OD practi-
tioner and to indicate how OD has already been tied to HRD.
Pareek and Rao’s Framework

In 1975, Larsen and Toubro, a prominent engineering company in India,
appointed two consultants from the Indian Institute of Management, Ahmed-
abad, to study the performance appraisal system and make recommendations
for improvement in it. The two consultants—Udai Pareek and T.V. Rao—stud-
ied the system through interviews, observation, and analysis of secondary data
and suggested a new system. They recommended that “performance appraisal,
potential appraisal, feedback and counseling, career development and career
planning, and training and development get distinct attention as unique parts
of an integrated system they called the ‘Human Resources Development Sys-
tem’” (Pareek & Rao, 1998, p. 24). This system was proposed as a separate sys-
tem with strong linkages with the HR system. Pareek and Rao (1977), in their
second report of the human resources system in L&T, recommended that the
personnel function be transformed into a human resources function (HRF) and
suggested a trifurcated function: personnel administration, HRD, and worker
affairs. Adding organization development also to the HRD function, the con-
sultants recommended that, since OD is being added and it is a new function
requiring new skills, it is necessary to strengthen that component part of HRD.
They recommended that the company appoint an OD manager with two offi-
cers to do research and generate data needed for OD interventions (Pareek &
Rao, 1977).
The consultants differentiated HRD from other components of HRF. Struc-
turally HRD was to be a subsystem of HRF and integrated with the other two
subsystems (personnel administration and worker affairs) to be administered
by the director-level person (for example, a vice president of personnel and
HRD) through task forces and subsystem linkages. Intersystem linkages were
outlined between various HRD subsystems to create an integrated system.
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Pareek and Rao also outlined a philosophy for the new HR system and fourteen
principles to be kept in mind in designing the system. These principles dealt

with both the purpose of HRD systems and the process of their implementation.
These principles included:
• HRD systems should help the company to increase enabling capabilities.
The capabilities outlined in their report included development of human
resources in all aspects, organizational health, improvements in problem-
solving capabilities, diagnostic skills, and the capabilities to support all
the other systems in the company.
• HRD systems should help individuals to recognize their potential and
help them to contribute their best toward the various organizational
roles they were expected to perform.
• HRD systems should help maximize individual autonomy through
increased responsibility.
• HRD systems should facilitate decentralization through delegation and
shared responsibility.
• HRD systems should facilitate participative decision making.
• HRD systems should attempt to balance the current organizational
culture with changing culture.
• There should be a balance between differentiation and integration.
• There should be a balance between specializations of the function,
supported by other functions within the organization.
• HRD systems should ensure responsibility for the function.
• HRD systems should build upon feedback and reinforcement
mechanisms.
• HRD systems should maintain balance quantification and qualitative
decisions.
• There should be a balance between external and internal help.
• HRD systems should plan the evolution of the function.
• There should be a continuous review and renewal of the function.
In sum, the integrated HRD systems approach of Pareek and Rao (1975) is
characterized by the following elements: (1) a separate and differentiated

HRD department with full time HRD staff; (2) six HRD subsystems including
OD; (3) inter-linkages between the various subsystems; (4) fourteen design
principles; and (5) linkages to other subsystems of the human resource func-
tion. After L&T accepted these recommendations in full and started imple-
menting them, the State Bank of India—the single largest Indian Bank and
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its Associates—decided to use the integrated HRD systems approach and
decided to create a new HRD department. Since then, many organizations in
India have established HRD departments.
Other Frameworks of HR
As HRD has come to prominence in the last decade, other frameworks and mod-
els have come into existence. Some of these are briefly reviewed here.
The Strategic HR Framework Approach. This framework, formulated by Ulrich
and Lake (1990), aims to leverage and/or align HR practices to build critical
organizational capabilities that enable an organization to achieve its goals. This
framework offers specific tools and paths to identify how a firm can leverage its
HR practices. Business strategy, organizational capabilities, and HR practices
are the three important elements in this framework. Dave Ulrich (1997) pre-
sented a framework for HR professionals in terms of four key roles: (1) man-
agement of strategic human resources; (2) management of firm infrastructure;
(3) management of employee contributions; and (4) management of transfor-
mation and change. The activities for managing strategic human resources
include aligning HR and business strategy, organizational diagnosis, reengi-
neering organization processes, shared services, listening and responding to
employees, providing resources to employees, managing transformation and
change, and ensuring capacity for change.
To manage the firm’s infrastructure, HR professionals must be heavily
involved with examining HR processes for improvement, reducing unnecessary
costs in HR efforts, and finding new ways to do old HR activities better. That

requires HR professionals to design and deliver efficient HR processes for
staffing, training, appraising, rewarding, promoting, and otherwise managing
the flow of employees through the organization. To manage employee contri-
butions requires HR professionals to listen and respond to workers and find
ways to provide employees with resources that meet their changing demands.
To manage transformation and change requires HR practitioners to identify and
frame problems, build relationships of trust, resolve issues, set directions, and
create and fulfill action plans.
The Integrative Framework. The integrative framework offered by Yeung and
Berman (1997) identifies three paths through which HR practices can contribute
to business performance: (1) by building organizational capabilities; (2) by
improving employee satisfaction; and (3) by shaping customer and share holder
satisfaction. Yeung and Berman (1997) argue for dynamic changes in HR mea-
sures to refocus the priorities and resources of the HR function. They argue that
HR measures should be business driven rather than HR driven; impact driven
rather than activity driven; forward looking and innovative rather than back-
ward looking; and instead of focusing on individual HR practices should focus
on the entire HR system, taking into account synergies existing among all HR
practices.
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Human Capital Appraisal Approach. This approach outlined by Friedman,
James, and David (1998) of Accenture, formerly Anderson Consulting, is based
on the belief that there are five stages in the management of human capital:
(1) the clarification stage; (2) the assessment stage; (3) the design stage; (4) the
implementation stage; and, finally, (5) the monitoring stage. There are also five
areas of human capital management: (1) recruitment, retention, and retirement;
(2) rewards and performance management; (3) career development, succession
planning, and training; (4) organizational structure; and (5) human capital
enablers. A 5 by 5 matrix using these five stages and five areas could be used

to evaluate and manage the human capital well. For example, during the clari-
fication stage the managers examine their human capital programs to fit into
their strategy and overall culture. They may also examine how each area fits
into the strategy.
HRD Score Card Approach. A recent approach formulated by Rao (1999)
envisages that HR interventions designed for the greatest business impact
should be of high quality (or mature) in terms of HRD systems, competencies,
culture (including styles), and business linkages. An HRD audit is used to assess
the maturity level and the appropriateness of each subsystem of HR, including
the appropriateness of the HR structures and the level of competencies of HR
staff, line managers, top management; the HRD culture (defined in terms of
openness, collaboration, trust, autonomy, proactivity, authenticity, confronta-
tion, and experimentation); the congruence of the top management and HR staff
styles with HRD culture; and the extent to which all the systems and practices
result in employee satisfaction and customer satisfaction.
P-CMM Approach. Curtis and his team (Curtis, William, & Sally, 1995) devel-
oped the People Capability Maturity Model (P-CMM) to provide guidance in
improving the ability of software organizations to attract, develop, motivate,
organize, and retain the talent needed for continuous improvement of software
development capability.
The strategic objectives of P-CMM are as follows:
• Improving the capability of software organizations by increasing the
capability of the workforce;
• Ensuring that the software development capability is an attribute of an
organization rather than that of a few individuals;
• Aligning the motivation of individuals with that of the organization; and
• Retaining human assets (that is, people with critical knowledge and
skills within the organization).
A fundamental premise of the maturity framework is that a practice cannot
be improved if it cannot be repeated. Organizations act sporadically in

their least mature state. The P-CMM describes an evolutionary improvement
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path from an ad hoc approach to a more systematic and sustained approach.
It helps an organization move from inconsistently performed practices to a
mature, disciplined, and continuously improvement-oriented approach that
emphasizes the development of the knowledge, skills, and motivation of the
workforce.
It is intended to help the software organizations to (1) characterize the matu-
rity of their workforce practices; (2) guide a program of continuous workforce
development; (3) set priorities for immediate actions; (4) integrate workforce devel-
opment with process improvement; and (5) establish a culture of software
engineering excellence. It is designed to guide software organizations in selecting
immediate improvement actions based on the current maturity of their workforce
practices. The P-CMM focuses on improving practices related to the work envi-
ronment, communication, staffing, managing performance, training, compen-
sation, competency development, career development, team building, and
culture development. The P-CMM is based on the assumption that organiza-
tions establish and improve their people management practices through the fol-
lowing five stages of maturity: initial, repeatable, defined, managed, and
optimizing. Each maturity level comprises several key process areas (KPAs)
that identify clusters of related workforce practices. When performed collec-
tively, the practices of a key process area achieve a set of goals considered
important for enhancing workforce capability.
According to Curtis, William, and Sally (1995):
“In maturing from the initial to the repeatable level, the organization installs the
discipline of performing basic practices for managing its workforce. In maturing
to the defined level, these practices are tailored to enhance the particular knowl-
edge, skills, and work methods that best support the organization’s business. The
core competencies of the organization are identified; the workforce activities are

aligned to the development of these competencies. In maturing to the managed
level, the organization uses data to evaluate how effective its workforce practices
are and to reduce variation in their execution. The organization quantitatively
manages organizational growth in workforce capabilities, and when appropriate,
establishes competency-based teams. In maturing to the optimizing level, the
organization looks continuously for innovative ways to improve its overall talent.
The organization is actively involved in applying and continuously improving
methods for developing individual and organizational competence.”
All these approaches share much in common. All of them:
1. Are systems-driven approaches that emphasize HRD systems or
subsystems or tools;
2. Attempt to link HR practices with business goals;
3. Recognize the importance of HR professionals; and
4. Recognize the importance of HRD.
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The integrated systems approach of Pareek and Rao envisages a separate
HRD department for effective design and implementation of HRD systems. It
uses strategy as a starting point (as in Ulrich & Lake, 1990) and therefore
focuses on all the systems to achieve business goals and employee satisfaction.
It aims at synergy—as in the integrated approach of Yeung and Berman. It also
proposes the phased evolution of HRD function (similar to the P-CMM
approach) and includes most elements of the human capital approach.
These frameworks indicate that HRD is essentially a change-focused process.
They also provide credence to the argument that the HR or HRD manager must
be essentially a skilled change manager. OD skills therefore are needed to be a
successful practitioner of HRD. They indicate that OD and OD skills are essen-
tially embedded into HR practice.
HOW COULD PRACTITIONERS IN HR AND OD
WORK TOGETHER TO REALIZE BENEFITS OF SYNERGY

BY USING AN HRD AUDIT?
OD is sometimes thought of as part of the HR function. HR managers are
expected to be change agents. They are also expected to undertake OD inter-
ventions besides managing systems, such as recruitment, induction, perfor-
mance management, career planning, training, rewards management, feedback
and coaching, work redesign, and others. But one common point of reference
that brings HR and OD together is human resource development, a systematic
approach to develop people in organizational settings. (Of course, HRD has been
renamed Workplace Learning and Performance [WLP] in many circles around
the world today. That reflects new thinking about what was once called HRD.)
In the early years of HR, HRD facilitators were frequently trained in process
skills and functioned as OD consultants. As the HR function evolved fully and
became stabilized, issues began to emerge about variations in the performance
of the function. Some organizations assigned it a limited role and failed to use
it for organizational improvements. On one hand the scope and opportunity for
HRD to make an impact increased in terms of creating a learning culture and
learning organizations. On the other hand, sometimes ill-prepared HRD man-
agers do not use appropriate process skills. To evaluate the impact of HRD and
establish accountability for HR efforts, the HRD audit emerged. Typically con-
ducted by a group of auditors or consultants, an HRD audit can be viewed as
an OD intervention in its own right.
In the subsequent sections of this chapter, details of the HRD audit and the
way it has emerged are presented. This is followed by a brief description of the
results of an HRD audit and the linkages between an HRD audit and OD.
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Why an HRD Audit?
To get the best from HR, alignment must exist between HR’s functions, strate-
gies, structures, systems, and styles and those of the business. HR should be
aligned both with the short-term and long-term organizational efforts. The HRD

audit is an attempt to assess alignment and improve it.
Having an HRD department does not guarantee effective HRD. Effective HRD
in an organization requires that:
• The top management of the organization recognizes the strategic advan-
tage and the critical value addition provided by people;
• The role of HRD be clear;
• Line managers understand, accept, and internalize their own role in
developing people;
• A learning culture has been established and maintained in the
organization;
• Appropriate HRD systems are identified to suit the needs, requirements,
and strategies of the corporation and are effectively implemented;
• HRD systems are periodically reviewed and aligned and realigned with
the organization’s goals;
• Supportive HR policies are formulated and implemented;
• The HRD function is staffed with competent people;
• The styles, beliefs, and values of the top management are aligned to
promote a good learning and competency-building culture; and
• The HRD function and its approaches to implementing its strategies are
periodically reviewed.
It is to achieve the last objective that the HRD audit can be most effectively
used. The HRD audit is a comprehensive evaluation of the current human
resource development strategies, structure, systems, styles, and skills in the con-
text of an organization’s business plans. The HRD audit attempts to find out the
future HRD needs of the company after assessing the current HRD activities and
inputs available.
Concepts That Guide HRD Audits
Several fundamental concepts guide any HRD audit. They are worth reviewing.
First, an HRD audit is comprehensive. An HRD audit starts with a thorough
investigation of an organization’s business plans and corporate strategies. While

an HRD audit can be carried out in organizations that lack well-formulated plans,
it is most effective when the organization possesses an effective strategic plan.
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Second, the HRD audit starts with attempts to answer the following questions:
• Where does the company want to be ten years from now, three years from
now, and one year from now? Answers to this question must be provided
by top management. If strategic planning documents exist, they should
be reviewed. On the basis of the answers to these questions, the consul-
tants finalize the subsequent audit strategies and methodology. The
consultants also make an effort to identify what core competencies the
organization will need to realize its strategic plans. The consultants also
attempt to identify what competencies will be needed at various levels—
such as workman level, supervisor level, junior management level,
middle management level, and top management level—and in such
functions as finance, production, and marketing. The listing of all these
core competencies and skills needed for the future is the starting point
of the HRD audit. The HRD audit normally attempts to assess what com-
petencies exist in the organization as well as what gaps exist for realizing
the strategic objectives.
• What is the current skill base of HRD staff in the company in relation to
various roles and role requirements? To respond to this question, the
qualifications of HRD staff as well as their job descriptions and the
training programs they have attended are examined. HRD staff are also
interviewed to identify the skill gaps in the organization. Training needs
and performance appraisal forms provide further insights into HRD staff
capabilities. Department heads and other employees provide insights
into their competencies and other skill requirements.
• What are the HRD subsystems available today to help the organization
build its competency base for the present, immediate future, and long-

term goals? The auditors attempt to identify various HRD subsystems
that are available to ensure the availability, utilization, and development
of skills and other competencies in the company. These HRD subsys-
tems are evaluated and the framework is presented as part of the HRD
audit. All HRD tools existing in the organization are listed and studied in
detail.
• What is the current level of effectiveness of these systems in developing
people and ensuring that human competencies are available in adequate
levels in the company? The focus of this question is to assess the effec-
tiveness of each system. For example, what is the (relative) effectiveness
of the performance appraisal system? That question is answered by dis-
cussing it with employees. The auditors examine appraisal forms, look
at the linkages between appraisal and training, conduct surveys to
assess how much coaching and other components of appraisals are
being used and also conduct workshops as necessary to assess the
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