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What Is Organizational Development and Why Is It Important?

Organizational development and document management turn employees into superstars

You may already apply some of the principles of organizational development (OD) informally at your company today. OD originated through the work of MIT psychologist Kurt Lewin who was among the first to apply social psychology and group dynamics to the world of work. It aims to build a company culture that values resilience and adaptability through system-wide planned change using behavioral science and human development principles.

Sometimes, OD efforts are based in the human resources department. But since it's a holistic approach, it’s just as likely that corporate strategy, an internal cross-functional team or an external management consultant will take the lead. 

In this blog post, you will learn more about organizational development and find out how an OD initiative can increase employee engagement and transform your company culture.

The key components of organizational development

White puzzle pieces on a blue background represents components of organizational development

At its core OD’s objective is to eliminate weaknesses, increase performance and competitiveness and strengthen employee loyalty. It’s different from other operational and workflow improvements because it follows standard protocols that are clearly communicated to all employees. After careful planning, new strategies are put into action. Then they’re checked to see how well they work, improved and monitored over time. 

OD is: 

  • A medium- to long-term strategy that requires commitment and collaboration from the whole company.  
  • Based on behavioral science that takes into account how and why organizations change.  
  • Process-oriented with an emphasis on the changes themselves, not on reaching the end state. 
  • A continuous process rather than a temporary fix.  
Companies that undertake an OD initiative should: 

  • Provide company leaders with training on how to empower employees to take actions that inspire change. 
  • Communicate clearly throughout the organization about the planned changes, their benefits, and who will be affected. Answer any questions the people involved may have and clarify misunderstandings. 
  • Empower and promote actions that inspire change. Including encouraging employees to get involved and supporting managers by providing daily and weekly updates. 
  • Involve everyone as much as they can. Small, easy wins can turn into bigger ones quickly, and working with a larger number of people increases the chances of a positive result. 
Companies often begin to implement OD due to the impact of external factors like loss of market share, new customer needs or social change. At the outset, data on organizational structure, working atmosphere, work processes, communication and managerial behavior is gathered and analyzed. The insight gained is used to plan and implement change. At this stage, it's important to make sure both the company and the employees benefit equally from these changes to ensure everyone accepts them.  

The role of a document management system in business transformation

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Sharing information at every level of a company is important to make the most of everyone's skills and develop solutions together. That’s where a document management system (DMS) plays an important role. A DMS breaks down barriers and eliminates information silos making it easy for employees to access what they need. Using the right tools will make collaboration easier and better for everyone. 

A DMS enables companies to create, store, categorize, manage, and track their important data digitally. As part of a digital transformation, an effective DMS lets employees organize files to: 

  • Make sure everyone can easily and quickly access the documents they need. 
  • Keep security and confidentiality top priorities by using modern safeguards like access controls and encryption. 
  • Streamline tasks by automating repetitive manual work.
  • Create efficient processes that don't rely on paper and are environmentally friendly. 

By using DMS, companies can streamline their operations and have greater control over their information. Simply put, a reliable and full-featured DMS is essential for businesses to successfully create and implement digital processes and workflows.  

When starting to automate your office, the first step is to find out which current processes cause problems and need to be updated or re-engineered. Digital workflows are flexible and can be adapted to the way your company does business. Sometimes, workflows can start automatically if certain deadlines are missed or the status of your document changes. For example, when an invoice moves from pending to approved for payment. A workflow management system comes in to monitor tasks and send notifications, so that everyone involved can keep track of what's happening.  

Workflows that involve many recurring tasks are often the best ones to start with because they are easier to define and automate. This can make your office run more smoothly and free up more time for important work.  

How a DMS supports innovation

Man jumping from cliff to cliff to show how document management increases innovation

A DMS enables every employee, whether they work in a central office, remotely or in a distributed team, to see how things are going in real-time. This central point for accessing information encourages collaboration.  

The benefits include:  

  • Increased productivity: Employees get more done in less time.
  • Happier staff: Teams that use digital tools tend to be more satisfied with their jobs. They can focus on using their skills and expertise on value-added projects.  
  • Maintaining a competitive edge: Streamlined processes made up of simple, meaningful steps maximize a company’s ability to adapt to changing economic conditions. 
  • Reduced costs: Saves time and money over the long term by supporting flexible processes that can be adapted as your business grows.   

What business strategies are used in OD?  

SWOT diagram is one of the methodologies used in organizational development

Organizational development uses several techniques for diagnosing problems, idea development and facilitation. The aim is to identify the need for cultural change and evolve cross-departmental solutions.  

These strategies include:  

  • SWOT analysis: Strengths (S, strength), weaknesses (W, weaknesses), opportunities (O, opportunities) and risks (T, threats) of the company are analyzed. The insights gained can form the basis for organizational design and development.  
  • A digital readiness check: This can determine whether the organization, its IT department and everyone else who is involved are up to the challenges of digitalization.  
  • Small group activities: May include exercises like Moving Motivators which encourage employees to get in touch with what makes them excited about going to work. An article in Inc. magazine identifies achievement, affiliation and power as 3 common motivators. In addition, Inspiration Cards may be used as conversation starters that help employees and managers generate productive discussions in management meetings, strategy sessions, coaching, team development and performance reviews. 
  • Large group sessions: May include Open Space meetings that bring  employees, who usually don't have a chance to talk to each other, together. Their purpose is to generate as many ideas as possible within a short timeframe.
  • Development of a change matrix: The matrix documents the needs for change that have been identified in terms of company culture, hiring requirements and other factors so that progress can be tracked.    

What challenges may come up during the organizational development process?  

Red arrows jumping over red cylinders show overcoming obstacles

  • Resistance to change: Employees have usually become accustomed to current processes, tools and working conditions and can be skeptical. Transparent and open communication is the key to ensuring this does not lead to conflicts or increased employee turnover. The solution is to build understanding among employees about the need for change, without reducing their trust in the company.  
  • Inaccurate estimate of resources needed: OD is an integrated approach that takes cultural, personnel, strategic and technological factors into account. These interventions require staff time and money. It’s important to start resource planning early, so your efforts aren’t blocked by budget constraints.  
  • Insufficient training: It is helpful to involve external experts or to rely on targeted training and workshops to make sure that employees understand new processes.
  • Lack of ongoing evaluation: The result can be that employees aren't aware of initial improvements so that the OD project does not gain momentum.  

What benefits can be achieved with OD? 

White hot air balloons and yellow rocket taking off

  • More creative thinking: Increased innovation results from creating a supportive culture that values career development and individual achievement. 
  • Improved employee engagement: When employees are involved in the decision-making process and their ideas are heard, their motivation and performance improve, and they are more likely to collaborate with others.  
  • Enhanced customer satisfaction: Happy and highly motivated employees contribute to a positive perception of the company. They will have the energy to focus on meeting customer needs, so your company can align products and services accordingly.  
  • Better cost control: By aligning every initiative with strategic goals, companies can reduce unnecessary investments and make better use of their resources, which increases cost efficiency.
  • Increased profitability: When employees feel motivated and understand a company's business goals, business growth naturally follows

How do companies measure organizational development’s results?  

3 measuring tapes

Evaluating the results of an organizational development project is not always easy. It depends on several factors, such as the complexity and size of the project and the type of measures implemented. What matters here is regular review and optimization to ensure long-term success.  

These are some of the commonly used metrics:  

  • Qualitative feedback from employees, managers and other stakeholders through surveys, feedback discussions or workshops.  
  • Quantitative indicators such as reduced absenteeism, increased productivity and decreased turnover.  
  • Cost-benefit analysis to help determine the return on investment.  
  • Comparison with industry standards to learn from best practices.  

Organizational development can be integral to the success of companies in today's demanding business environment. It is a mechanism for sharing knowledge and expertise to improve an organization’s problem-solving capabilities and set it up to better manage future change. By continuously improving company culture, business processes, and career development opportunities, companies can meet employees’ changing expectations, stay ahead of the competition and make sure they always have the right capabilities to thrive. 

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