News & Press: HRmatters - online!

Organizational Diagnosis: What You Need to Know and Why Organizations Need Our Help

May 17, 2016   (0 Comments)
Posted by: HRMAM

by Katie Furgoch, MNP LLP


Part 1:  Organizational  diagnosis- what you need to know

Organizational diagnosis is a creative method for getting to know an organization at all levels- from the surface levels to the deepest hidden parts that aren’t visible to the eye. Performing organizational diagnosis is not so far off from a doctor trying to diagnose their patients. Some doctors diagnose differently by focusing on nutrition, food, and natural remedies, whereas others diagnose by using chemical medications, or even by trying a remedy, seeing whether it has positive effects, and then trying something new. This is very similar to what we have learned to do in the business sense to organizations. Different diagnostic models can be used in different situations depending on the wants, needs, and goals of our clients (patients).

Generally speaking, these models would be used by human resources or organizational development and change practitioners who either work internally in an organization, or have been hired as a contracted consultant to help figure out the root causes of issues an organization is facing and to provide recommendations to improve them. In either case, the diagnostic models provide a template or tool to break down the organization into components to understand it more in depth as well as to better visualize how all of the parts work together. From performing the diagnosis alone, it is often possible to begin to pick out issues that are present within an organization. In the cases I’ve come across, diagnosis allowed me to go from knowing almost nothing about the organizations to understanding the inputs to their organization which were derived from understanding their environment, getting a handle of the strategy or the organization and the goals of the key stakeholders, becoming familiar with the design components (structure, HR systems, technology, management processes), creating a clear picture of the organizational culture, and finally, understanding the organizational outputs and performance indicators based on the rest of the organizational components. Not only did I understand the organizations well after that diagnosis, but I was also able to see pieces of the organization that didn’t align. Because the diagnosis took a high level view of the organization but also required deeper level analysis for completeness, it became a relatively straight forward process to begin identifying inconsistencies and incongruences in relation to the organization’s values and goals.

Diagnostic models can be within open systems or closed systems. Open system models (see example above) suggest that all components within an organization are interrelated and that a change in one component will almost definitely have an effect on other components. Open systems resemble Lewin’s field theory which states that “the totality of coexisting facts which are conceived as mutually interdependent” (Lewin, p.240, 1951)  and Myrdal’s principle of cumulative effect which states that, with opposing elements, “a change in one brings about a change in the other, which in turn brings on more change. The changes may be subtle enough to appear stable in what is actually a constant state of adjustment. Most systems, however, comprise many interrelated elements, making them far more complex” (Hickman, p. 174, 2010). Additionally, open systems models consider the environment external to the organization and consider those effects on decisions and changes. In effect, the external environment surrounding an organization will have an effect on the inputs to an organization, the internal operations of an organization (strategies, HR systems, processes, etc.), and organizational outputs (products, advertisements, etc.). This promotes the idea that organizations are extremely complex interworkings of tasks, personalities, leadership, changes, and decision making. Although this complexity is almost too overwhelming to consider all at once, the open systems model supports the concept of the whole being stronger and more effective than each individual component on their own. The open systems model is interesting in that it supports a constant feedback loop throughout the process. We consider inputs (such as information, human capital), transformations (such as social and technological components), and outputs (such as products, services, and intellectual capital) all within the context of the external environment in which the organization operates. Throughout each of these categories, there is constant feedback which serves to carry the organization forward, or bring it back to rethink concepts, ideas, etc. that didn’t work and need to be improved. This is similar to the idea of encouraging trial and error- try a lot of stuff and keep what works (Collins & Porras, 2002). Communication can be considered an important component in this model to ensure effective and timely feedback.         

The open systems model is a favored model due to the fact that most people believe that the world is constantly evolving and changing at a pace that has become more rapid over the course of the last decade or two. In order to properly diagnose and support an organization which is constantly changing and having to adapt to their environment and changing customer demands, we must be able to use models of diagnosis which support this flexibility and adaptability. The closed systems model does not promote this type of flexibility and adaptability as it actually ignores the external environment completely and focuses overly on the internal components. In today’s day and age, ignoring external forces is a sign of a weak organization who is doomed for crisis or failure because they will not be adequately prepared to deal with changes as they come. Additionally, closed systems models support the concept of one right way of doing things. This limits the organization and its team member’s growth because it is not promoting any sort of development or fostering any organizational learning- which again is imperative in today’s ever changing world.

The organizational level diagnostic model is another type of diagnostic model that looks at an organization from an external or high level viewpoint. Similar models can be followed at a more detailed level which focus in on group level diagnosis and individual level diagnosis. The organizational level diagnosis follows the open systems model in that it considers all parts to be interrelated and that the environment plays a key role in the organization- especially in regards to the inputs. Using the open systems model in practice has allowed me to understand how valuable and useful this tool actually is. Our team’s process for using the diagnosis tool has typically been to first understand the organization we were working with as well as the industry. We perform research and interview members within the industry. We then create structured interview questions for some key members of the organization we would be assessing. Not only do we have lengthy conversations and interviews with multiple team members of different parts of the organization, but we also try to be present around the organization’s offices, yards, and employees to observe some of the organizational on goings. From there we go to documentation- it is a pretty simple and straight forward process to divide up the information we’ve heard, written down, and observed into the organizational diagnostic model. There are a few questions which have been helpful while working through the process of using this diagnostic model: Do the Design Components fit with the Inputs? Are the Design Components internally consistent? Do they fit and mutually support each other?

Within any diagnosis, culture plays a tremendous role due to the fact that it “is a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration,… to be taught to new members as the correct way to perceive, think, and feel in relation to those problems” (Schein, p. 18, 2010). Culture defines a group and their identity which becomes a foundation and stabilizing force. The concept of culture implies structural stability, depth, breadth, and patterning or integration (Schein, 2010). Culture is created by people, their beliefs, values, and behaviors who grow to share common values through time and shared history. The strength of the culture created by a group depends on the length of time the culture has existed, the consistency and stability of members who are part of the culture, and the level of emotional attachment and feelings attached to the shared history and past experiences (Schein, 2010).  Culture is a key factor in the intervention process because, as research shows, for change initiatives to be successful culture needs to be considered and there will ultimately need to be a culture change involved. Studies show that “the most frequently cited reason given for failure was a neglect of the organization’s culture…many efforts to improve organizational performance fail because the fundamental culture of the organization – values, ways of thinking, managerial styles, paradigms, approaches to problem solving – remain the same” (Cameron & Quinn, pp. 1-2, 12, 2011) Therefore, in order for any changes to improve organizational performance, organizations will likely need to endure cultural changes.

Typically, organizational diagnoses can be done when leadership has identified issues that they would like to fix, or when things are going well within an organization but they want to continue to further improve their performance. In either situation there exist two “major sets of problems that all groups, no matter what their size, must deal with: (1) Survival, growth, and adaptation in their environment; and (2) Internal integration that permits daily functioning and the ability to adapt and learn” (Schein, p. 18, 2010). 

 

Part 2: The world of organizational change and development- why businesses today need our help

Growth requires adaptation and adaptive leadership. Adaptation involves changes. Effective changes require establishing a sense of urgency, creating a strong team of change agents, developing a vision and strategy (through careful and well thought out planning), communicating the change vision to the organization, empowering team members to help and participate in change initiatives, generating short term wins, celebrating success and producing more change, and finally, anchoring the changes in to the culture to avoid reverting back to the status quo (Kotter, 2012).

There are many factors which contribute to an organization’s ability to successfully maneuver through a transformation or turnaround situation and be able to sustain it. In order for a cultural transformation to take place, organizations must begin their journey of change beginning with creating a sense of urgency amongst their team. As teams move forward in the change process, culture must be taken in to consideration, If culture is not considered in the diagnostic or intervention process, it is likely that development or change initiatives will fail. Culture is the underlying values of the organization and its people. It is the way they do things. By ignoring or failing to recognize the core of the organization, those embarking on change initiatives are setting themselves up for failure. There can be many ways to get to know and understand organizational culture- none of which beat actually being there and experiencing it first-hand. Additionally, picking the right people to talk to, and having thought of effective questions to ask beforehand better prepare you for getting accurate and quality information. Finally, we must be aware that a shared view of culture may not exist between different members of organizations. It is therefore important that practitioners consider obtaining information from multiple sources and consider that in their diagnosis and interventions. Perhaps there is a misalignment of values which is creating some of the issues- we wouldn’t know unless we analyzed the culture.

Organizational interventions within the human resources department can also significantly help the change process without taking on a large scale change strategy. Organizational interventions can be thought of as small changes or tweaks to policies, programs, processes, technology, HR systems, strategies, etc. which can in turn have a tremendous impact on organizational performance. The idea with interventions is that they are small, relatively simple, and relatively cheap in comparison to large scale, long term transformations. Organizations are not always convinced, don’t always have the time, or do not have the resources to attribute to large transformations. Interventions are a good tool to clarify goals, strategies and visions, create shorter term wins which work towards these goals, and possibly test initiatives out in one department or geographical area prior to exposing an entire national or global organization to change. Success of interventions on this scale could mean repeat consulting engagements, increased organizational performance, and increased leadership and team member buy in for further interventions or larger scale change initiatives.

“Whether formal or informal, interventions should do two things: reach people at an emotional level (invoking altruism, pride, and how they feel about work itself) and tap rational self-interest (providing money, position, and external recognition for those who come on board)” (Katzenbach et al., p. 116, 2012). Human resource interventions include activities such as: goal setting, performance reviews, reward systems, informal or formal coaching/mentoring programs, manager or leader development programs and opportunities, career planning and progression programs, plans for managing workforce diversity, and programs for managing and improving employee stress and wellness. Implementing programs such as these or making changes to existing programs only make sense when organizations have a clear idea of their core values, vision, mission, and goals. Without revisiting these first to ensure alignment, current relevance, and applicability in the organizations current environment, interventions will not be effective. Once these things have been determined, solidified, and agreed upon by key stakeholders, interventions can be created which again, align with those values and goals. If interventions do not match the goals of the organization, team members will be confused, get frustrated, resist change, and/or performance will not improve as hoped. Interventions which make people feel good about being a part of the organization, make them excited for what is to come, and most importantly answer the question “what is in it for me?” are more likely to be supported by team members within the organization.

It can be argued that cultural interventions should be the first intervention we seek to implement instead of the last. If culture is ignored throughout change or throughout many interventions, it becomes such a big problem and blocker to success that many change leaders feel as though the only way to continue to move forward is to take the organization through a complete cultural transformation- which can be timely, costly, and painful. “Cultural intervention can and should be an early priority- a way to clarify what your company is capable of even as you refine your strategy. Targeted and integrated cultural interventions, designed around changing a few critical behaviors at a time, can also energize and engage your most talented people and enable them to collaborate more effectively and efficiently” (Katzenbach et al., p. 117, 2012).

Performing organizational diagnoses on organizations can help us identify the human resources components of the organizations. From there, we are able to assess whether those human resource systems “fit” with the organization’s culture (or desired culture), strategy, and goals. When we come across elements of the human resource systems that don’t fit, we are able to suggest interventions that would provide organizational alignment as well as offer employees added benefit in terms of both tangible and intangible rewards. Tangible rewards included fair payment systems, reward systems that match the work they do, regular feedback, improved performance review systems, availability of training (technical, leadership, cultural, diversity), and opportunities for career development. Intangible rewards included coaching/mentoring support, organizational pride, flexible work arrangements to suit family and health needs as well as to decrease stress.

For example, we can consider an analysis of NASA’s attempt to implement open innovation (sharing ideas and problem solving with other organizations around the globe) in response to budget cuts. Their human resource systems can be defined as follows: unstructured work (many projects on the go at once), there are no processes that determine how or what to study within the projects, there are clear hierarchies and processes (which enables success in a field that needs such high expertise and provides a method of how to do tasks based on who wants to work on what, whose skill set works, etc.), a culture of not firing people, lots of contractors around the office (who were the first to be let go during cutbacks), team members treated well, low compensation ceilings but culture doesn’t impact that (people want to be there so they accept lower salary caps), employees think of NASA as a top employer because it allows people to be innovative and contribute to a new idea or something that hasn't been done before. In this case, the organization wasn’t buying in to open innovation which was a project designed to continue to achieve NASA quality results through collaboration outside of NASA due to changes in the external environment (cutbacks). Interventions such as training sessions, feedback opportunities, rewards for participating in open innovation were introduced, and a checklist was created to make open innovation usable to NASA. “Appropriate interventions, such as working to align vision statements to the reality of day to day operations can be used to reconcile and realize positive outcomes involving dilemmas” (Glover & Friedman, 2015). All of these interventions taken by the change agents in the NASA case eventually worked to reconcile the dilemmas of decreased resources, survival anxiety, decreased motivation, and resistance to change. 

References

Cameron, K. & Quinn, R. (2011). Diagnosing and Changing Organizational Culture. San Francisco, CA: John Wiley & Sons, Inc.

Collins, J. & Porras, J. (2002). Built to Last. New York, NY: HarperCollins Publishers.

Glover, J. & Friedman, H. (2015). Transcultural Competence. Washington, DC: American Psychological Association.

Hickman, G. (2010). Leading Change in Multiple Contexts. Thousand Oaks, CA: SAGE Publications, Inc.

Katzenbach, J. et al. (July-August, 2012). Culture Change That Sticks. Harvard Business Review R1207k, pp.110-117.

Kotter, J. (2012). Leading Change. Boston, MT: Harvard Business Review Press. 

Lewin, K. (1951). Field Theory in Social Science: Selected Theoretical Papers. New York: Harper.

Scheepers, C. et al. (June, 2014) Nedbank: Transformational leadership in sustainable turnaround. London, ON, Canada: Ivey Publishing, Ivey Business School, W14219.

Schein, E. (2010). Organizational Culture and Leadership. San Francisco, CA: John Wiley & Sons, Inc.

Trompenaars, F. &Woolliams, P. (2003). Business Across Cultures. West Sussex, UK: Capstone Publishing, Ltd.

Tushman, M. et al. (November, 2014) Houston, We Have a Problem: NASA and Open Innovation (A). Harvard Business School, 9-414-044.

Tushman, M. et al. (November, 2014) Houston, We Have a Solution: NASA and Open Innovation (B). Harvard Business School, 9-414-057.


 


Chartered Professionals in Human Resources Manitoba (CPHR Manitoba)
1810-275 Portage Avenue / Winnipeg, Manitoba / R3B 2B3
tel. 204.943.2836 / fax. 204.943.1109 / email. hello@cphrmb.ca

For additional information please visit: CPHR.CA

People Leading Business.™