What Is Organisational Development? (Goals And Benefits)

By Indeed Editorial Team

Published 8 August 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Organisational development or OD helps improve operational effectiveness, strengthen a company's workforce and provide structure to it. This helps the human resources (HR) department to look for solutions to potential workplace issues and develop various OD interventions. If you have an interest in working in the HR department, learning everything about organisational development can help you support change and improve how an organisation functions. In this article, we answer ‘What is organisational development?', identify the goals of OD, highlight what OD does and review some examples of OD intervention.

What Is Organisational Development?

The answer to the question, ‘What is organisational development?' is that it is a process that improves an employee experience while ensuring the company's growth. It helps organisations build their capacity to change and achieve greater efficiency by developing, reinforcing strategies and improving structures and processes. Organisational development incorporates behavioural science that merges the belief of social science, psychology, human resource management, change management and organisational behaviour. It helps a company improve its capabilities by changing attitudes, beliefs and values.

When a company successfully aligns its structure, strategy and management process, they increase performance and effectiveness. Some critical elements of OD are:

Help achieve greater effectiveness and build capacity to change

OD helps in organisational effectiveness. Depending on the business type and size, the outcomes of OD might vary. Some common outcomes might include increased customer satisfaction, financial performance, capacity to adapt to new changes and policies and enhanced employee engagement. Often, the purpose of OD is to build a competitive advantage.

Related: What Is Organisational Behaviour? (Examples And Advantages)

Develop, reinforce and improve business processes and strategies

Organisational development applies to changes in strategies, processes and business structure. This makes the organisation a system-based approach, focusing on the entire organisational development. With OD, the HR department aims to develop, reinforce and improve business processes and strategies that might affect the entire organisation.

Related: What Is Organisational Change? (Benefits, Types And Reasons)

What Are The Goals Of Organisational Development?

Here are a few important goals of organisational development:

Improves employee's productivity and efficiency

OD helps the human resources department maximise employees' productivity and efficiency by placing them in positions that encourage and support their contribution. It aligns employees with the organisation's goals and teaches the company's values through training and feedback. Once employees feel empowered, they feel motivated to give their best performance and are likely to take ownership of their work.

Related: 10 Tips For Working Effectively And Improving Productivity

Creates a culture that supports innovation and support

OD encourages a culture that embraces and supports innovation and change. With OD, the HR department conducts competitive analysis, understands customer behaviour and focuses on market research. This helps employees come up with innovative products and services. It also fosters a culture of continuous improvement and encourages new processes. OD ensures new employees know they need to learn continuously to keep pace with changing business dynamics and grow professionally.

Promotes loyalty and commitment

When an organisation gives employees responsibilities based on their skill set, it improves their morale and commitment to the company. Regular training and education help employees understand their roles and identify areas for improvement. Providing challenges to employees and encouraging them to take responsibility creates a culture where employees feel valued.

Related: Business Ethics Examples (And How To Improve Them)

Ensures better communication

One of the primary advantages of OD is that it improves better communication in the workplace. The principles of OD encourage open communication across every level and create a culture where everyone can share their feedback. This ensures that employees become aligned with the organisation's goals, mission and visions and better understand the organisation's objective. An organisation that teaches a communication culture is better at embracing change within the company and taking the business forward.

Provides continuous improvement

OD principles help create a constant cycle to improve business processes and procedures. When organisations implement OD principles, they focus on constant improvement and try to provide better products and services. An organisation that focuses on continuous improvement is better adept at fulfilling customer and client requirements and constantly evolving according to the changing market demands.

Improves the hiring process

OD helps an organisation in hiring, training and retaining qualified employees. Typically, organisations gain a competitive advantage when they attract qualified talent for their business. When organisations hire skilled employees, it adds to product value and they are better at providing unique services.

Related: 15 Recruitment Objectives To Improve Your Hiring Process

Creates a friendly environment in the organisation

One of the essential objectives of OD is to create a friendly and stress-free environment for the smooth and proper functioning of the organisation. When an organisation offers an employee-friendly environment, employees feel motivated to excel in their roles and work efficiently to complete their duties. An organisation with a lower stress level is likely to have higher profitability.

Related: What Is A Business Environment? (Benefits And Examples)

Encourages employees to participate in the planning process

OD encourages employees to participate in the planning process based on their skills. This ensures that employee meets their goals and that the company achieves the organisational goals. Also, when employees are a part of the planning process, they feel responsible, which drives them to give their best possible performance.

What Does Organisational Development Do?

Organisational development follows a process that improves the performance, production or results of the organisation and its employees. Here are some benefits of OD:

Focus change on an area

OD identifies areas that might require a change. It analyses the areas requiring a change, identifies potential solutions and makes projections for the result. For instance, an organisational assessment might show that employees' productivity reduces by 50% after the second tea break. OD intervention might move primary responsibilities to the morning and increase productivity by 25%.

Focus on collaboration

Another essential benefit of OD is that it fosters collaboration and improves communication, result and growth. The OD determines areas of improvement or change and notifies the concerned department so that they can respond accordingly. For instance, an industry or market assessment might show a new player entering the market. The HR department and OD inform the marketing department about the promotions and convince stakeholders why it might be essential to hire fresh talent for the organisation.

Help identify the interventions

Interventions help the HR and OD identify duplicate processes and combine them to ensure higher efficiency. These interventions can help employees perform their jobs, foster collaboration and learn about the company's goals and mission. Some interventions might include team building, performance management, wellness interventions and sensitivity training.

Involve employees in the decision-making process

OD encourages management to seek employee feedback and communicate them clearly to ensure that employees understand job expectations. It helps an organisation understand the requirement of employees and provide the resources to perform their duties. For example, the OD might send a monthly, quarterly or half-yearly survey to employees to understand what motivates employees to excel in their work and reach their professional goals.

Related: What Is Decision Making? Definition, Types And Tips

Examples Of Organisational Development Interventions

Here are a few examples of organisational development interventions:

  • Team building: One of the most popular OD interventions is team building, which refers to the activities that help a group improve the way they complete tasks. Some examples of team-building activities include team sports and volunteering activities.

  • Organisational design: The organisational structure of the organisation decides how it is likely to operate. This primarily involves understanding and rethinking how employees complete their work, prepare the organisation and restructure it around the new business processes.

  • Total quality management: Total quality management is a continuous process of improvement, six-sigma and lean. To achieve customer satisfaction, involving employees in the continuous improvement of products, workplace culture and processes is essential.

  • Performance management: Good performance management primarily focuses on techniques such as performance appraisal, goal setting and reward systems. This OD intervention creates a culture where employees work hard to achieve a desired level of performance.

  • Wellness interventions: Employee wellness interventions include employee assistance and stress management programme. This OD intervention helps address social factors an employee might face and ensures work-life balance.

  • Continuous change: Continuous change is an OD intervention helps an organisation to improve gradually by ensuring small and incremental changes. This OD intervention emphasises learning from mistakes and failures rather than punishing employees for mistakes committed.

  • Transorganisational change: Transorganisational change primarily focuses on change interventions that move beyond a single organisation. This primarily includes mergers, acquisitions and strategic networking.

  • Talent development: Another critical OD intervention in talent development that focuses on talent management practices, such as career planning, coaching and mentoring and management and leadership development.

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