SHRM-CP
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Ch. 15

Organizational Effectiveness & Development

Overview

BASK definition: The overall structure and functionality of the organization. It involves measuring the long- and short-term effectiveness and growth of people and processes, and implementing necessary organizational change.

BASK key concepts:

  • Group dynamics (forming, storming, norming, performing; cohesion; conflict)
  • Organizational design structures (customer, functional, geographic, matrix, program)
  • Organizational analysis (performance analysis; McKinsey 7S)

Key Definitions

  • Organizational effectiveness: How successfully an organization carries out its strategic objectives and mission.
  • Organizational development (OD): Planned, organization-wide efforts, often using behavioral science, to improve effectiveness and health.

Organizational Design Structures

StructureGrouped by…ProsCons
FunctionalExpertise (finance, marketing, HR, operations)Deep specialization, efficiency, clear career pathsSilos, slow cross-functional coordination
Divisional: product / programProduct line or programFocus on products, accountability for resultsDuplicated functions, competition between divisions
Divisional: geographicRegion or countryResponsive to local markets and lawsDuplication, inconsistency
Divisional: customerCustomer segment (government, consumer, business)Customer focusDuplication
MatrixTwo dimensions at once (e.g., function and project). Employees report to two managers.Flexible, shares resources, cross-functionalDual reporting causes confusion, conflict and stress. Requires strong communication.
Flat (horizontal)Few management layers, wide spans of controlFast decisions, empowermentManagers overloaded, fewer promotion opportunities
Tall (hierarchical)Many layers, narrow spansClose supervision, clear advancementSlow, bureaucratic
Team-based / network / virtualSelf-managed teams; networks of partners and contractorsAgilityCoordination and control challenges

Design Terms

  • Span of control: The number of direct reports per manager.
  • Chain of command: The line of authority.
  • Centralization: Decisions are made at the top. Decentralization pushes decisions down.
  • Formalization: The degree of rules and procedures.
  • Mechanistic vs. organic structures:
    • Mechanistic structures are rigid, formal and centralized, which suits stable environments.
    • Organic structures are flexible, decentralized and team-based, which suits dynamic environments.

Organizational Analysis

  • Performance analysis: Compare actual and desired performance at the organization, process or individual level to find gaps and their causes.
  • McKinsey 7S model: Check the alignment of strategy, structure, systems, shared values, style, staff and skills.
  • Other diagnostic tools: Include SWOT, surveys, focus groups, process mapping and benchmarking.

OD Interventions

CategoryExamples
Human processTeam building, conflict resolution, process consultation, survey feedback
TechnostructuralRestructuring, job design, process reengineering, total quality management
Human resource managementPerformance management, rewards, career development, diversity programs
Strategic / transformationalCulture change, mergers, becoming a learning organization
  • Action research: A classic OD process: diagnose → gather data → give feedback to the client → plan action → implement → evaluate, repeating as needed.
  • Appreciative inquiry: Builds on what works well instead of focusing on problems. Its 4-D cycle is Discover, Dream, Design, Destiny (Deliver).

Group Dynamics

These are the forces within and between groups: group formation, identity, cohesion, structure, roles, norms, influence on behavior, and intragroup and intergroup conflict. Tuckman's stages, groupthink and social loafing are critical concepts in understanding group behaviors.

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