ORGANIZATION DEVELOPMENT

Unit 1
UNIT I (10 Hours): Introduction: Concept of organization, function of organization,
Typology of organization, Virtual Organization, Organizational Development, Evolution:
Kurt Lewin, Robert, McGregor, Change: Introduction, meaning, need, implications.
Understanding personal change, components of personal change: Self-awareness, Self-
analysis, Self-efficacy, Self-esteem, Organizational roles – making organizational and
personal role effective

UNIT II (10 Hours): Change Theory: Organizational Change: Force Field Analysis,
Managerial approaches for implementing change. Change management: facilitating change,
dealing with individual and group resistances, intervention strategies. Organizational
Culture & Change: formal & informal components of organizational culture, functions,
creating & sustaining culture, designing strategy for cultural change.

UNIT III (10 Hours): Organizational Design: Organizational Design, Work Organization:
Analysing and Organising Work, Emerging Issues of Work Organisation and Quality of
Work Life Balance.

UNIT IV (10 Hours): Organizational Analysis: Organizational Analysis: Organisational

Diagnosis-Tools and Techniques, Questionnaire and Interview as Diagnostic Tools,
Workshops, Task-forces and Other Methods.

Suggested Readings: 1. Change & Knowledge Management -R.L. Nandeshwar, Bala

Krishna Jayasimha, Excel 2. Management of Organizational Change -K Harigopal,
Response Books 3. Managing Organizational Change -V Nilkant, S Ramnarayan Response
Books 4. Managing organizational change -Palmer, Dunford, Akin, Tata McGraw Hill 5.
Organization Change and Development- Kavith Singh, Excel Books.

Concept of Organization
Organizations make the foundation in all walks of life. It encompasses Government
offices, banks, schools, colleges, hospital, factories, shops, institutes, political parties and
so on. It plays an integral part in carrying out activities in each one of them. Organizing
the institute is a basic function of management. Organizations are basically social
systems.

• It refers to the process involving the identification and grouping of activities to be

performed as well as defining and establishing the authority-responsibility
relationship. This enables people to work together in the most enterprising manner
in achieving the organizational objectives.
• In general, organizing an institute involves decision making. It also means
planning for manpower, materials, machines and money required by an enterprise
for the attainment of its goals.
 • In its operational sense, the term organizing means defining responsibilities of
the employed people and the way their activities are to be related. The result of
organizing is the creation of a structure of duties and responsibilities for various
people in the organisation with different positions. It also involves grouping of
employees and assigning them definite work according to the similarity,
behaviour and interrelated nature of activities.

In brief, the organizing process results in the outcome called “organization”,

consisting of a group of people working together for the achievement of one or more
common objectives.

• Firstly, it is imperative to understand how organizations operate, to work in them

or manage them. Organizations combine science and people, technology and
humanity. Techniques alone will not produce the desirable results. It is essential
to have well-qualified people to design and implement rules and regulations. But
human behavior in an organization is very unpredictable because it stems out
from differential needs and value systems of people. Human behavior can be
partially judged and understood in the light of behavioral science, management
and other disciplines.
• There is no idealistic solution to organizational problems. Human relations at
work can be considerably augmented by an increasing awareness and
understanding. At the same time nurturing skills will also significantly enhance
human relations at the workplace.

Definition
To have a proper understanding of the term “Organization”, we will consider few
definitions by several authors.

• Money and Reiley: “Organization is the form of every human association for the
attainment of a common purpose”.

• Puffier and Sherwood: “Organization is the pattern of ways in which large

numbers of people have intimate face to face contact with all others, are engaged
in a variety of tasks, relate themselves to each other in conscious, systematic
establishment and accomplishment of mutually agreed purposes”.

The basic feature of any organization is the hierarchy of people working in it.
Therefore, it distinguishes between the supervisor and the subordinate. All the
organizations have an unwritten rule that the subordinate must follow the instructions
given by the supervisor.
Some of the significant factors which helps an organization to function properly
includes:

• use of authority, • benchmarking,

• delegation of certain powers to • reengineering,
subordinates, • job re-design and
• division of labour, • empowerment.
• efficient and effective
communication,

All these factors ensure the proper functioning of an organization. This is not only
applicable to manufacturing organizations but also to service and social organizations.

Need for Organization

We need organization to primarily execute the management functions. Study of
organization is necessarily because of the following reasons:

a. It provides an ideal setting for the study of human behavior. The study of organization
leads to man‟s essential discoveries that are vital for the continued well-being of the
institutes particularly and the society in general.
b. Knowledge of organization helps managers to effectively run the organization and
protect environmental needs. It also guides them to motivate subordinates, manage
conflicts and introduce behavioral changes.
c. Organisations leave a mark in all the important phases of man’s life. A person is born
in an organization (hospitals, clinics etc.); he is educated in organizations (schools,
colleges etc.) and works for a living in an organization (factories, office etc).

Function of Organisation
The functions of an organization are the systematic procedures and roles that work
together to achieve its goals. These functions include:

1. Defining roles: Employees need to understand their role, position, and

relationships with other employees.

2. Assigning accountability: The organizational structure determines how well an

employee performs.

3. Determining authority: A position's assignment implies the delegation of

authority needed for performance.

4. Coordination: The design of managerial operations is based on the division of

labor.
 5. Specialization: Some parts of a task are performed only by qualified people.

6. Controlling: This process involves regulating, guiding, and protecting an

organization. It helps ensure that the organization's goals are met.

7. Organizing: This involves determining the work to be done, assigning

responsible people, and building a reasonable organizational structure

Process of Organising
Organization‟ is chiefly the outcome of an organizing process. Organizing is the process
by which a supervisor establishes order in the system and creates a conducive
environment for effective teamwork. Organizing involves the following interrelated
steps:
a. Objectives: Objectives are the base of every organization and therefore, each
management essentially must identify certain objectives before starting any activity.
Organization 6 Introduction to Organization Behaviour
b. Activities: Recognizing and grouping several activities is an important process in an
organization. Individuals in a group can only put forward their efforts effectively if there
is a proper division of the major activities. Each job must be properly classified and
grouped.
c. Duty: Each individual needs to be allotted appropriate duties and responsibilities. After
classifying and grouping the activities into various categories of jobs, it should be
reasonably allotted to individuals according to their capabilities. Every individual should
be given a specific job to do according to his ability with adequate responsibility to do the
job allotted to him.
d. Relationship: Many individuals work in an organization. Thus, it is the responsibility
of management to build a strong base of relationships in the organization and maintain
authority as well.
e. Integration: All groups of activities along with the designated employees must be
properly integrated to ensure the smooth functioning of the organization. This can be
achieved through relationship of authority - horizontal, vertical or lateral. The team spirit
can be maintained through integrating different activities and processes within the team.

Typology of Organisation
Organisational typology is constructed to study the different types of organisations. It
relates to the different categories into which organisations can be classified. It involves a
scheme of categorization of organisations based on certain general characteristics.
Strictly speaking, organisational typology is a multidimensional classification because
modern organisations are complex social units having diverse characteristics.

It serves as a tool of differentiation. Each typology brings out certain unique

characteristics of the organisations studied. In actual life, two organisations may appear
to be similar on some points, but they may also differ on some other points. The typology
must be based upon some crucial points so that clear cut distinctions may be made among
different organisations.

Criteria of Effective Typology:

Organisational typologies should be built around certain well-defined criteria. The
following criteria have been suggested by Joseph Litterer for constructing typology of
organisations:

(i) The typology must be constructed along some important general variable or property
of organisation which permits unambiguous differentiation of organisations.

(ii) The variable must be an important organisational variable. There is no use of a

typology if it is based on an insignificant variable.

(iii) The variable chosen must lead to information or understanding important to the
users. This means, different variables may be used for constructing typologies, depending
upon the purpose of analysis.

Classification of Organisations

But such classifications are very simple and do not provide any analytical basis for the
study of organisations. Thus, these classifications are not very relevant. There are various
other schemes of classification based on analytical criteria.

A. Typology Based on functions:

Organisations have different functions and purposes. Talcott Parsons has identified four
basic functions.

Based on these functions, the four types of organisations are as follows:

1. Economic Organisations:
The basic aim of these organisations is earning profits by producing goods or services for
the society. From economists’ point of view, these organisations are concerned with
adding value. In this category, we include industrial, commercial and trading concerns.
The ownership of these organisations may be private, public or joint. The basic features
of these organisations are profiting maximisation, risk bearing and creation of utilities.
 2. Political Organisations:
The objective of political organisations is to provide service to the society. These
organisations are supposed to maintain peace and stability in the society. They collect
resources from the society, employ them judiciously and work towards the efficient
performance of the functions assigned to them. The examples of political organisations
are all government agencies and departments. The criteria for the measurement of success
of these organisations are the extent to which these have been successful in the attainment
of basic values cherished by the society.

3. Integrative Organisations:
Unlike the political organisations, where the main aim is to make the society for
effective, the aim of integrative organisations is to make the society more efficient.
Integrative organisations include organisations like courts, police departments, and other
social and protective organisations. These organizations are concerned with social control
and maintenance of law and justice in the society. They check disturbing influences in the
society and keep the things operating in a desired manner.

4. Pattern Maintenance Organisations:

Pattern maintenance organisations include educational institutions, research institutions,
religious and social institutions, clubs etc. These organisations are concerned with the
preservation of cultural values. They create value system, further the knowledge and
make suitable patterns of life. These are also concerned with the long term issues of
society’s values, patterns and knowledge, culture etc. Thus, these organisations are
engaged in promoting long term interests of the society.

B. Typology Based on Primary Beneficiary:

This typology also known as Cui Bono typology is the brainchild of Peter M. Blau and
Richard W. Scott. It is based on the primary beneficiary of the recipient of output of the
organisations. Many persons or institutions benefit from the operations of the
organisation. If there are no beneficiaries, it will mean an end of the life of the
organisation. Benefit does not necessarily mean a material benefit; rather it may be
defined as a positive change in some way or the other in the recipient.
Thus, when a beneficiary receives something from the organisation, he is being changed
in some way. He may be changed because of his direct relationship with the organisation
or because of some indirect relationship. For the purposes of typology only direct
beneficiaries are taken into considerations.

Four Types of Organisations Emerge Based on Primary Beneficiary Typology:

1. Mutual Benefit Associations:

The mutual benefit associations come into existence to serve the interests of their
members. The examples of these are trade unions, political parties, professional
associations etc. Here the primary beneficiary is the members of the association. These
organisations are loosely structured. Membership is usually voluntary. Majority of the
members are sleeping members i.e. they do not leave the organisation, but they may not
take any active interest in its activities.
As a result, control of the organisation passes into the hands of a selected few, who may
try to perpetuate their control over the organisation and may, in practice, pursue goals
which are not officially stated. This is a departure from the basic aim of this organisation
i.e. to decide the objectives democratically and to function taking into confidence all the
members. In reality, oligarchical control replaces the internal democratic character of the
organisation.

2. Business Organisations:
In business organisations, the primary beneficiaries are the owners of the business. Other
groups like employees, customers and society at large also benefit from these
organisations but still the basic aim is maximization of profits for the owners. Thus, the
basic problem of business organisations is that of operating efficiency i.e. achievement of
maximum gains at the minimum cost in order to ensure survival as well as growth in
competition with other organisations.
Though efficiency is a crucial problem in all the organisations, but in business
organisations this is of supreme importance, because the owners organize these activities
with profit motive. However, in the long run, profit earning cannot remain the only
concern for the business organisations because of the limits imposed on them externally
by the customers, workers, government and other pressure groups.
In long run, they are compelled to pursue social objectives also. Thus, the main
beneficiaries in these organisations are the owners but they have to take into account the
interests of various groups related with the organisations.

3. Service Organisations:
As is clear from the name, service organisations provide services to the society, thus,
clients are the primary beneficiaries. In service organisations like hospitals, educational
institutions, social work agencies, primary beneficiary is the part of the public in direct
contact with the organisation.

For instance, in case of hospitals its patients are the beneficiaries. In case of educational
institutions, students are the primary beneficiaries, So on and so forth. In these
organisations, clients are the beneficiaries, but they do not have any control over them.
They are vulnerable and subject to exploitation and dependent on the integrity of
professionals to whom they have come for help.

As such, it is the duty of those who control the organisations to see that proper means are
chosen for the organisational functioning. Thus, the professionals should neither lose
sight of their clients nor become captive of their clients while rendering services. The
decisions of the professionals should not be guided by their self interests, but by their
judgment of what will serve the clients’ interest best. In practice, however there is always
a clash between the professional ethics and personal goals of the professional.

4. Common Weal Organisations:

In common weal organisations, the basic feature is that the public at large is the primary
beneficiary. Examples of these organisations are police, armed forces, post offices, fire
service etc. These organisations provide such services to the society which is essential for
maintaining law and order, promoting social contacts between people or providing
security and protection to the people at large. The structural form of these organisations is
bureaucratic, governed by the efficiency criterion. As these organisations are meant to
provide effective services to the society, these must maintain efficient bureaucratic
mechanisms.
C. Typology Based on Compliance:
This typology is based on an internal dimension of the organisation which is control or
compliance through the use of power. The dictionary meaning of compliance means ‘one
person directing another to do something’. Because of organisational relationships among
individuals, behaviours of individuals are subject to control by someone in the
organisation generally their superiors.
In actual practice, degree of compliance varies from individual to individual depending
upon the authority of the superior, personal influence or power of the superior and the
expected advantage to the subordinate complying with the superior’s orders. Moreover,
the behaviour of the individual is not affected merely by using power or authority by
other person, but his own involvement in the organisation also shapes his behaviour.
Thus, actual behaviour is affected by two factors: power and involvement.

Amitai Etzioni has identified three types of power which are commonly used.

These are as explained below:

(i) Coercive Power:
Coercive power rests upon the application or threat of application of physical sanctions or
punishments. This type of power is a sign of autocratic managerial style as in the case of
prisons or remand homes.
(ii) Utilitarian Power:
Utilitarian power involves use of material rewards to influence the behaviour of the
subordinates. This type of power is a positive style of leadership. As the rewards are
offered for good performance, the subordinates readily comply with the orders of their
superiors.
(iii) Normative Power:
Normative power rests on the allocation of symbolic rewards. It involves use of symbols
of prestige and esteem. In anticipation of the rewards, the subordinates obey their bosses.
Besides power the second factor influencing the behaviour of the subordinates is his
involvement in the organisation. For any organisation, an individual may be strongly
attached, indifferent or strongly repelled and thus, be placed on the continuum of
involvement.

For the purposes of analysis, this continuum of involvement can be broken in three
parts:
(i) Alienative Involvement:
In the alienative involvement, the individual would prefer not to be connected with the
organisation.
(ii) Calculative Involvement:
In calculative involvement, the individual may be attracted by the organisation because of
certain benefits from being associated with the organisation. Alternately, he may be
mildly repelled by the organisation, but associates with the organisation because of other
benefits of association.

(iii) Moral Involvement:

In moral involvement, the organisation is important to the individual because of socio-
psychological reasons and to be a member of it is valuable to him.
According to Etzioni, the three types of power and three kinds of individual
involvement taken together gives nine types of compliance relationships as shown in
the following figure:

Organization Development
Organisation is the core concept of organisational development. Organisation can be
defined as two or more people working together toward one or more shared goal(s).

Weisbord presents a six-step model for understanding organisations:

1) Purposes: The organisation members are clear about the organisation’s mission and
purpose and goal agreements, whether people support the organisation’ purpose.
2) Structure: How do we divide up the work? The question is whether there is an
adequate fit between the purpose and the internal structure.
3) Relationship: Between individuals, between units or departments that perform
different tasks, and between the people and requirements of their job.
4) Rewards: The consultant should diagnose the similarities between what the
organization formally rewards or punished for doing.
5) Leadership: Is to watch for blips among the other boxes and maintain balance among
them
6) Helpful mechanism: Is a helpful organization that must attend to in order to survive
which as planning, control, budgeting, and other information systems that help
organisation member accomplish. Development in this context is the notion that an
organisation may become more effective over time at achieving its goals.

OD differs from traditional consulting because client involvement is encouraged

throughout the entire process. The ways in which people communicate and work together
are addressed concurrently with technical or procedural issues that need resolution.
Organisational development (OD) can play a vital part in harnessing the collective talent
of an organisation, bringing about change and improving performance.

Need of OD
To use Burke’s words: “The primary reason for using OD is a need to improve some or
all of the system that constitutes the total organization.” Such a planned process demands
careful assessment or diagnosis of what is needed to increase overall effectiveness, along
with tailor-made changes or interventions, the goals of which are to satisfy those felt
needs.

the focus is on how the individual relates to his or her own work group and how his or
her group interfaces with other groups in the organization.

1. It involves taking planned steps to create an environment that will enable the staff to
understand and deliver the organisation’s objectives. These steps include developing
appropriate skills, behaviours and attitudes, culture and a style of leadership that will
enable the organisation to achieve optimum performance.

2. A clear sense of direction, strong leadership and a focus on people management issues
including the management of performance and the promotion of learning, development,
creativity and innovation are essential.

3. For organisational development to deliver significant performance improvement, there

is a need to develop staff with the right skills to help champion OD throughout the
organisation and encourage wide participation and ownership of the continuous
improvement process among staff and other stakeholders.

4. For organisational development to deliver significant performance improvement, there

is a need to develop staff with the right skills to help champion OD throughout the
organisation and encourage wide participation and ownership of the continuous
improvement process among staff and other stakeholders.

The term organisational development is often used interchangeably with organisational

effectiveness, especially when used as the name of a department within an organisation.
An organisation is the machinery of management and this machinery system is operated
and maintained by the personnel of the organisation. An organisation must adapt itself to
the changes taking place in its environment or else, it will not remain effective enough to
achieve the corporation’s goal of profitability. Organisational development is a shared
approach of its members and it values a participative- democratic style of working. It is
an ongoing interactive process and it focuses on intact work teams.
Organisation Development (OD) is the process of improving organisations. The process
is carefully planned and implemented to benefit the organisation, its employees and its
stakeholders.

The client organisation may be an entire company, public agency, nonprofit organisation,
volunteer group or a smaller part of a larger organisation. The change process supports
improvement of the organisation or group.

The client and consultant work together to gather data, define issues and determine a
suitable course of action. The organisation is assessed to create an understanding of the
current situation and to identify opportunities for change that will meet business
objectives.

Scope of OD

Organisational development (OD) can play a vital part in harnessing the collective talent
of an organisation, bringing about change and improving performance.

• OD differs from traditional consulting because client involvement is encouraged

throughout the entire process. The ways in which people communicate and work
together are addressed concurrently with technical or procedural issues that need
resolution.
• It involves taking planned steps to create an environment that will enable the staff
to understand and deliver thr organisation’s objectives. These steps include
developing appropriate skills, behaviours and attitudes, culture and a style of
leadership that will enable the organisation to achieve optimum performance.
• A clear sense of direction, strong leadership and a focus on people management
issues including the management of performance and the promotion of learning,
development, creativity and innovation are essential.
• The term organisational development is often used interchangeably with
organisational effectiveness, especially when used as the name of a department
within an organisation.
• An organisation must adapt itself to the changes taking place in its environment or
else it will not remain effective enough to achieve the corporation’s goal of
profitability.
• Organisational development is a shared approach of its members, and it values a
participative- democratic style of working. It is an ongoing interactive process,
and it focuses on intact work teams.
• The key concern of behavioral science practitioners involved in OD work is, of
course, to create the kind of organizational climate wherein:
individuals meet their own needs and, at the same time,
optimize the realization of organizational goals.
 Team building, learning how to diagnose needs, working through task and
interpersonal issues, creating structural and functional changes to facilitate
effectiveness are some examples that may be part of an OD effort.

• These three approaches to organizational growth complementary to the other.

Often one phase evolves rather naturally into another. However, the evaluation
has a definite sequence. Generally, the pattern follows one of management
training→management development→organization development. For example,
before effective intergroup work (part of an OD sequence) is done, it is of great
importance that team building within each group be conducted. The choice of
learning approach employed—management training, management development or
organization development—depends, therefore, on the specific kind of change
desired in the organization. Whether the change be directed at reducing individual
differences, legitimizing individual differences, or enhancing group/intergroup
collaboration, performance is the key issue.

History of OD
Conceptually, organization development is different from both management training and
management development. The latter two kinds of learning may, however, be part of an
OD effort. Burke (1971) stated that “although persons may be involved in events that are
properly labeled as OD technology (some of the examples mentioned above), such
activities are not considered organizational development if they are not part of a planned
effort at changing the organization’s culture.”

For many years, the following definition was perhaps the standard definition for
organisational development. The following definition was developed in 1969 at a time
when an organisation was much like a stable machine comprised of interlocking parts.

“Organisational development is an effort planned, organisation-wide, and managed from

the top, to increase organisation effectiveness and health through planned interventions in
the organisation’s ‘processes,’ using behavioural-science knowledge” (Beckhard, 1969).

New Definitions of Organisational Development

“Organisational development is a system-wide application of behavioural science

knowledge to the planned development and reinforcement of organisational
strategies, structures, and processes for improving an organisation’s
effectiveness.”(Cummings and Worley)

“Cummings and Worley (2002) defined organisational development as “a system

wide application of behavioural science knowledge to the planned development,
improvement, and reinforcement of the strategies, structures and processes that
lead to organisation effectiveness”.

This definition emphasises several features that differentiate organisational

development from other approaches to organisational change and improvement,
such as management consulting, technological innovation, operations management,
and training and development.

We have already discussed about the old and new definitions of organisational
development. Now we will discuss five important factors that need to be highlighted
while defining organisational development.

These factors are as follows:

i) It is planned change effort: An organisational development programme involves

a systematic diagnosis of the organisation, the development of a strategic plan
for improvement, and the mobilisation of resources to carry out the effort.
ii) It involves the total system: It is related to the change system of the organisation
such as a culture change and the changes in the rewards system. There may be
tactical efforts which work with subparts of the organisation but the system to
be change is total, relatively autonomous organisation. Definition and
Introduction to Organisational Development Introduction
iii) It is managed from the top: The top management of the system has a personal
investment in the program and its outcomes. They actively participate in the
management of the effort.
iv) It is designed to increased organisation effectiveness and health: The total
organisation, the significant subparts, and individuals, manage their work
against goals and plans for achievement of these goals. Miles et al. (1966)
define the healthy organisation in three board areas- those concerned with task
accomplishment, those concerned with internal integration, and those
involving mutual adaptation of the organisation and its environment.
v) Organisational development achieves its goals through planned interventions
using behaviour science knowledge: A strategy is developed of intervening
or moving into the existing organisation and helping its present ways of work,
norms, and values, and look at alternative ways of working, or relating, or
rewarding. The interventions used draw on the knowledge and technology of
the behavioural sciences about such processes as individual motivation power,
communications, perception, culture norms, problem- solving, goal setting,
interpersonal relationships, intergroup relationships and conflict management.

Critical founders who shaped the OD field

While the social movements provided an important backdrop for the emergence of the
field, there were also a great number of individuals who played a significant role in
building up the knowledge base through both their academic work and their consultancy
work. It is impossible to name everyone, but the following people and their graduate
students have played a critical role in shaping and pioneering the field of OD:
● Kurt Lewin (critical founder of OD): Lewin gave the field some of its most essential
theoretical roots – action research theory, group theories and change theories. Schein
commented that there is little question that Lewin is the intellectual father of
contemporary theories of applied behavioural science, action research and planned
change. He was the first to write about group dynamics and the importance of the group
in shaping the behaviour of its members. Also, his commitment to extending democratic
values in society through his work created a most pervasive impact on Organization
Development.

● Ron Lippitt: Lippitt was on Lewin’s original staff at the Research Center for Group
Dynamics at MIT and was also a member of the first T group trainers in 1946. In 1947,
he was one of the founders of the National Training Laboratory in Group Development,
which started holding a three-week session in Bethel, Maine. The summer event evolved
into the birth of the NTL Institute for Applied Behavioural Science. Together with Lee
Bradford, he invented flip chart paper in 1946 as a convenient way to record, retrieve and
display data in OD activities and in training.

● Edgar Schein: Schein, a professor at the MIT Sloan School of Management, made a
notable mark on the field in many areas including career development, group process
consultation and organizational culture. His career anchoring concepts and tools are
forerunners in helping organizations to think of combining unconditional motivation and
an organizational way of managing staff career structure. He is generally credited with
inventing the term ‘corporate culture’. Schein showed us that process consultation is an
essential philosophy underlying OD, not just a tool. WHAT IS OD? 15

● Douglas McGregor: McGregor is mostly known for his classic work, The Human Side
of Enterprise, which has had a great impact on managers since its publication in 1960. He
was one of the first professor-consultants and one of the first behavioural scientists
working with corporations to help implement the application of T group skills in complex
organizations.

● Rensis Likert: Likert showed the importance of holding up a mirror for the
organization to reflect how its members think about themselves and how to strengthen
their relationships. His early work on this gave rise to the use of organization surveys.
Later on, his research provided overwhelming data on the superiority of a democratic
leadership style in which the leader is group oriented, goal oriented and shares decision
making with the work group. This leadership style was contrasted with an authoritarian,
one-on-one leadership style (1961, 1967).

● Bob Tannenbaum: Tannenbaum received his PhD in Industrial Relations from the
School of Business at the University of Chicago. He is known for being the first
researcher to conduct the earliest ‘team-building’ activities in 1952–53 at the US Naval
Ordnance Test Station at China Lake, California. Subsequently, he published many
articles on such team-building work. He and Art Shedline started the first non-degree
training programme on OD at UCLA.

● Chris Argyris: Argyris was one of the first (following Bob Tannenbaum) to conduct
team-building sessions in 1957. He has made extensive contributions to theory and
research on laboratory training, OD and organizational learning. One of his several books
on OD, Intervention Theory and Method (1970), is a classic in the field. He asserted that
it is important to gather valid information and give clients choice to secure commitment
(1957).

● Richard Beckhard: Beckhard was a major figure in the emergence and extension of
the field of OD. He started from a career in the theatre. He was interested in improving
the effectiveness of communications in large meetings, and his first major job after his
career change was to stage the 1950 White House Conference on Children and Youth,
which involved 6,000 people. He started to pay attention to how to stage a large
convention and enable participative discussion. He developed one of the first major non-
degree training programmes in OD – the NTL’s Programme for Specialists in
Organizational Training and Development (PSOTD).

● Herbert Shepard: Shepard completed his doctorate at MIT and then went to join the
employee relations department of Esso Standard Oil as a research associate. He was to
have a major impact on the emergence of OD through his extensive practice in the
corporate world as well as his involvement with the NTL work. In 1960, he founded the
first doctoral programme devoted to training OD specialists at the Case Institute of
Technology. His continuous experiments in OD at major 16 A PRACTITIONER’S
GUIDE FOR ORGANIZATION DEVELOPMENT Esso refineries resulted in significant
learning for ODPs; two particular lessons that emerged from his work are: a) the
requirement for top management’s active involvement in the leadership of the
programme; and b) the importance of the need for on-the-job application.

● Robert Blake: During the Second World War, Blake served in the Psychological
Research Unit of the Army Air Force and concluded that looking at the system rather
than the individuals within the system on an isolated individual basis is a much more
robust approach in identifying how best to help. Later, he spent 16 months in Tavistock
and was deeply influenced by family group therapy. Upon returning to the United States,
he took up an appointment at Harvard but joined the NTL programmes at Bethel to staff
T groups for six years and was significant in shaping the changes in T groups.
 Virtual Organization

Virtual Organization is a flexible network of separate entities which forms a

collaboration by connecting companies, institutions or individuals delivering a product
or service based on a common business perception. In virtual organization, there is no
need of the people to come together at same place at a time to deliver the product or
service. Branding is the most important factor in the virtual organization in strongly
positioning the site on the internet.

How it emerged?

This new form of organization, i.e., ‘virtual organization’ emerged in 1990 and is also
known as digital organization, network organization or modular organization. Simply
speaking, a virtual organization is a network of cooperation made possible by what is
called ICT, i.e. Information and Communication Technology, which is flexible and
comes to meet the dynamics of the market.

Alternatively speaking, the virtual organization is a social network in which all the
horizontal and vertical boundaries are removed. In this sense, it is a boundary less
organization.

It consists of individual’s working out of physically dispersed workplaces, or even

individuals working from mobile devices and not tied to any workspace. The ICT is the
backbone of virtual organization.

It is the ICT that coordinates the activities, combines the workers’ skills and resources
with an objective to achieve the common goal set by a virtual organization. Managers in
these organizations coordinate and control external relations with the help of computer
network links. The virtual form of organization is increasing in India also. Nike, Reebok,
Puma, Dell Computers, HLL, etc., are the prominent companies working virtually. While
considering the issue of flexibility, organizations may have several options like flexi-
time, part-time work, job-sharing, and home-based working.

• The term Virtual organization is used to describe a network of independent firms

that join, often temporarily, to produce a service or product. Virtual organization
is often associated with terms as virtual office, virtual terms and virtual
leadership. The goal of virtual organization is to provide innovative, high-quality
products and services instantaneously in response to customer demands.
• Virtual organizations are distributed “business processes”. The processes may be
owned by one or more organizations acting in partnership, for a specific project,
resources are assembled to perform a business process on behalf of the project
owner, and then disassembled on the completion of the contract.
• Virtual organization is a geographically distributed organization whose members
are bonded by a long-term common interest or goal.
• A virtual organization is an organization existing as a corporate, not for profit,
educational or otherwise productive entity that otherwise does not have a central
geographical location and exist through telecommunication tools.

Example 1: A small software company wants to bid for a new contract, which is
beyond its scope. This company forms a VO with other similar small companies and
by doing that it is suddenly able to compare with larger Corporations to gain the
contract.

Example 2, say a small to midsize business owner just created a new tool to do an old
job. They can manufacture it but to bring their innovation to market they might hire a
team of contractors and vendors that includes a logistics consultant, ecommerce
developer, product designer, brand designer and more.

Another example might be a marketing manager spots a sudden market opportunity.

To jump on the opportunity, they assemble a team of contractors that includes web
designers, social media experts, digital advertising specialists and more.
In either example we can assume that teams are spread out over time zones and
working remotely. The principles of the virtual organization can help the business
succeed under these conditions.

Characteristics/ Features of Virtual Organization

Virtual organizations can be large or small, long or short lived. Other characteristics of
virtual organizations are:

1. Flat organization 4. Power flexibility: VO members can

2. Dynamic: VOs have a capability to switch from one project to another.
unite quickly. 5. Multi-disciplinary (virtual) teams:
3. Informal communication Resources, services and people that
comprises a VO can be single or multi-
institutional homogeneous or 13. Principle of Synergy (many to one):
heterogeneous. VO exhibits unifying property because it
6. Vague organizational boundaries is constituted from different
7. Goal orientation: VO exists for a organizational entities that create an
specific purpose. effect of single organization. Combined
8. Customer orientation: VO does forces of differing core competencies
quickly deliver products/services that are 14.Principle of Divergence (one to
innovative and customized. many): A single organization can exhibit
9. Homework multiplication property by participating
10. Absence of apparent structure: in many VOs at the same time.
Membership and structure of a VO 15. Target a specific market opportunity
evolve over time. Interdependent relationships for more
11. Sharing of information: Heavy use of lateral problem solving
telecommunications and digital tech Permeable boundaries for more lateral
12. Staffed by knowledge workers. problem solving

This list of the characteristics of virtual organization is not an exhaustive one but
illustrative only. One can add more characteristics to this list.

Key Principles in the Virtual Organization Framework

• Collaboration, trust and empowerment.
• Ensure technology works so that teams stay connected
• Stay adaptable
• Identify the key strengths each unit contributes
• Clearly define each unit’s role and obligations
• Aim for complementary skills rather than overlapping or redundant skills
• Ensure teams are well trained or certified
• Foster team culture

Advantages/Benefits of Virtual Organization

• VOs can make it possible to satisfy constantly changing customer and market
requirements in a competitive manner.
• An ability to participate in Bos can increase the service range a company can offer
its customers.
• Participation in VOs increases the total number of end-customers a company can
reach indirectly via its partners.
• It became possible to provide services precisely tailored to a specific customer
need.

Disadvantages/ Drawbacks of Virtual Organization

• High Cost: The main costs are related to investments and subsequently high
operational costs, including training and maintenance.
• Legal Problems: VOs are established fast and efficiently to respond to market
opportunities or tackle specific projects. This can result in complex legal
problems as the boundaries between the organizations becomes vague or fluid.
 • Trust and respect issues: Trust and respect are one of the most important factors
for a successful VO. This applies both for knowledge sharing and the group
dynamics for collaboration.
• Cultural Issues: Co-operation in Vos may involve working across culture. This is
a big challenge to many managers and requires them to transfer their business
policies and culture to work with dispersed business teams spanning organization
geography, and cultures.

Types of Virtual Organization

There are various types of approaches in implementing virtual organization which are as
follows:

1. Mobile Working: This type of virtual organization specifies to the mobile employees
working in an environment in which mobile devices such as cell phones, laptops, e-
mail wireless devices, pagers and laptops are required.
2. Virtual Teams: Virtual teams are usually developed by the employees of the same
organization and may have the employees from external organization. Employees
cooperates through e-mails, groupware, the intranet and video conferencing from
geographically dispersed locations. They perform parallel responsibilities along with
their fundamental responsibilities in the organization.
3. Telecommuting: Employees in this type of organization works from a place other
than the normal workplace, which could either be their home or some other place. For
managing and contacting the head office, telecommuters used the tools such as
computers and telecommunications equipment.
4. Hot Desking: In these type of virtual organizations, fixed desks assigned to all or few
employees is removed. When they arrive, they are accredited a computer workstation
through which they can access their documents, files, applications and e-mails. This
type of arrangement is suitable for the companies in which members spend a huge
amount of time on the customer workplaces.
5. Hoteling: This type of organization is like the hot desking. Hot desk in this system is
provided by the client or customers to the virtual organization employees.
6. Telecentres: These types of virtual organizations are placed for the employees
generally not available in the telecommuter’s home. It is mostly placed in the
associations outside of the major cities and provide space and equipment there.

Traditional Org Chart

In a traditional organization you can expect to find a centralized hierarchical leadership
structure with a CEO or president at the top, a layer of executive management below the
CEO, then perhaps senior vice presidents, vice presidents and so on. This layered
leadership structure has been seen as an effective way to manage a large enterprise,
particularly in manufacturing and other industrial enterprises. However, with customer
demands changing at an increasingly rapid pace this traditional structure is seen by some
as being precariously rigid. The growing popularity of lean manufacturing principles and
agile development combined with increased global connectivity have changed the way
corporate structures can take shape.

The Flat Org Chart

As early as the 1970s, a digital boom combined with changing demands and expanding
global markets caused many organizations to rethink their traditional structures. In order
to become more agile and be able to process information through the organization faster,
org charts began to flatten. This means more power was dispersed downward, spreading
decision making power and giving more autonomy to a wider number of employees. This
means that teams are dispersed organizationally and regionally. From this disbursement,
the concept emerged in the 1990s to build cross-functional alliances and joint ventures to
be more agile and bring innovations to market faster.

Lessons from Virtual Organizations that Matter to Anyone

The principles of a virtual organization structure can help almost any executive, manager
or project leader create new ways of problem solving to deliver a product or service. This
has never been truer than in today’s widely dispersed business world.

Predictions have been made that about 70% of the workforce will be working remotely
by 2025 according to Vox research.

“What is now an incentive or perk will soon become a necessity, especially as aging
boomers and millennials alike both try to square their desire to travel with the need to
make money,” Vox said. “If remote work is the product of demand for a better work-life
balance, the future could tip in favor of the life side of that equation.”
It’s clear that with such a rapid shift to the home office, new ways of organizing a
business are in order.