Organisational Development and Restructuring
Organisational Development helps a company or institution to move from current state to a specific desired state (Hamlin, Keep and Ash 2000). The concepts of Organisational Development are primarily anchored to the idea of change, which is an inevitable part of development. One type of change that companies adapt is ‘downsizing’ that involves the restructuring of the organisation to align its people and focus on what works best by eliminating unnecessary parts or components (McLean 2006: 346).
Understanding the concept of ‘downsizing’ would first need a clarification of the process of Organisational Development (McLean 2006:346). The idea can be emphasized by analyzing a particular case about the restructuring of the organisation. In this paper, the case study ‘Downsizing and Corporate Restructuring’ conducted by Paul Oyer (2002) will be utilized to show the concept of Organisation development process through ‘downsizing’. Oyer (2002) studied a particular ‘unnamed’ financial service institution, which make use of geographical departmentalization as its organizational structure.
The organisational design used by the company has a divisional structure. Thus, although there are different divisions, each are still under the coordination and control of the parent corporation. The downsizing tactic used by the institution is workforce reduction, which generally, has short-term focus
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Oyer (2002) identified the possible reasons for downsizing of institution under healthy condition to be affected by the ‘state of economy and the signal sent by job loss. ’ Oyer (2002) believes that the institution that he studied tried to maximize its efficiency through periodical restructuring of some of its parts. Oyer (2002) identify ‘consolidating some operations, scaling back in some businesses or closing entire facilities’ as some of the restructuring made by the company.
As can be evaluated, the restructuring directly affects the Organisation Development process of the institution. Looking into the OD Process The organisational development facilitates change in the institution. The process of changed is planned and closely follow a general model which starts with entering and contracting, followed by diagnosing, planning and implementing change and finally evaluating and institutionalising change (Eid 2008). The magnitude of change described in the case study range from consolidation of some operations to extermination of an entire facility (Eid 2008).
Organisational Development is a process of a planned change that affects the whole organisation and is managed from top to bottom to be able to increase the efficacy of the organisation with the use of behavioural science and planned interventions. The Organisation Development that can be seen in the case study uses ‘performance approach since it emphasize on the ways to help improve and enhance performance (Eid 2008). ’ The Five-Stage Model for OD Process starts with the anticipation of change.
The subject of Oyer’s case study (2008) is a large financial service institution operating in different parts of the United States. According to Oyer the company is financially stable, thus, he concluded that the main reason for change results from ‘seeking more efficient operations or reallocating of assets rather than financial distress (Oyer 2008). ’ With this in mind the anticipation of change starts with the realization that a certain department/branch/asset is not anymore productive.
The management, particularly the top administrators might felt a need to restructure their system to enhance the institution’s productivity while minimizing expenses. The next stage of the OD process is the development of OD practitioner-client relationship. This is not demonstrated in the case-study since it does not focus on the OD process as a whole. Nevertheless, the presence of change in the institution denotes the presence of someone knowledgeable on Organisational Development. The third stage is the diagnostic stage wherein the problem is analysed with respect to probable causes and possible change strategy.
Oyer emphasized that the institution make used of ways to ‘grade’ the employee to be able to determine which one will stay and which one will go. This is considered as an individual-level diagnostic level wherein personal traits identify the significance of the person for the company, which undermines effectiveness. After identifying the need for relocation of sources, the different departments are examined based on productivity and utility for the company. Once the weakest link or the non-profitable department is identified, strategies are planned.
These strategies are weighed to make sure that the best outcome will result. The fourth stage, which is the action plans, strategies and techniques incorporates the actual laying offs or reduction of costs utilize by the institution. In the case study made by Oyer (2002) the intervention used aimed to increase, the effectiveness of the institution is ‘downsizing’. The last part of the OD process consists of self-renewal, monitor and stabilize (Eir 2008). This is the time when the OD practitioner starts to gradually disengage from the institution or the job.
Nonetheless, as pointed out in the case study, the institution or the firm under investigation engage in repeated restructuring of its organisation through ‘restructuring’, thus, disengagement might happen only if there is a new OD practitioner who will handle the OD process or the disengagement refers to a certain project or single OD process. Change Implementation The focus of this paper is to identify how restructuring affects the OD process. It can be deduced from the above discussion that the OD process involves intervention or the actual implementation of change.
One of such ‘change’ can be considered as ‘restructuring’. In the case study, the institution conducted technostructural intervention known as downsizing (Oyer 2002). Downsizing is a type of restructuring process that tries to reduce the cost/expenses of an institution by cutting down or reallocating assets or funds. Restructuring is basically a change of structure. Organisation structure and design is concerned about work specialisation, departmentalisation, chain of command, span of control, centralisation and decentralisation and formalisation (Eid, 2008).
Changes in one of these structure and/or design have an impact to the company as a whole. The resources allocated in one level of one of the key elements of organisation structure reduce the availability of resources to another level and element. Thus, a non-productive sector is commonly eliminated to invest more assets to the productive ones. The contingencies that affects the institutions structural design are the environment, the organisation’s size, the strategy of the organisation and technology (Cumming and Worley; 2008).
The structural design of an institution is important in the implementation of the downsizing process. The structural design determines where restructuring is needed a and how I can be best implemented. Downsizing begins with the clarification of the organisaion’s strategy followed by the assessment of the downsizing options. It will be followed by choosing the appropriate option and implementing the necessary changes. The downsizing process addresses the needs of those who retained their position and of those who are laid off.
It ends with a follow up through growth plans (Cummings and Worley: 2008). As mentioned above the downsizing tactic discussed in Oyer’s case study is a short-term tactic involving workforce reduction through layoffs (2008). Discussion of Integration The Organisation Development process and the Downsizing process are both course of action that imposed change to benefit a specific company or institution. Organisation Development is a general term used to describe the process of implement change in an organisation (French and Bell 1999).
It tries to align the people involved in the organisation to facilitate better communication and a more effective and profitable output. In the case study, Organisation Development process starts with recognition of the need for change. There are departments that are not anymore profitable or simply unnecessary. On the other hand, the restructuring process starts with the identification of the organizational strategy. It must be noted that downsizing is not a strategy in itself, rather it is a process. The strategy that the case study identified involves consolidation of minor operations and/or closing down of facilities.
Nonetheless, the company has already created a ‘well-established process for staff reductions’ that includes ‘outplacement assistance and severance payment’ (Oyer 2002). The next stage in the OD process concerns the establishment of relationship between client/s and OD practitioner/s. On the other hand, the downsizing process involves assessment of options and choosing the best strategy. From the first two processes, it can be depicted that the OD Process generally involves the client’s decision and opinion while the downsizing process does not show concern or specific participation of the client in the process.
The third step in the OD process concerns a diagnostic stage wherein a discussion happens between the client/s and the OD practitioner regarding the condition of the company specifically identifying what type of changes shall be done. The third step of the downsizing process involves the actual implementation of the chosen downsizing strategy. Such implementation of change is the fourth step in the OD process and is more particularly referred to as an intervention. The downsizing process tries to look into the welfare of those that will leave the company and those that will stay.
The last step in the downsizing process requires a growth plan. The OD process conducts a similar approach of monitoring. Nevertheless, the OD process mentioned disengagement of the practitioner while the downsizing process stressed on the process of creating a follow through. The integration of restructuring to the Organisation Development process can be found in the advent of implementing change. As analyzed above, both the OD process and the downsizing, process emphasized the implementation of change.
Nevertheless, the OD process requires a practitioner-client relationship which is absent in restructuring. Restructuring can be seen as a process, which can work under Organisation Development process, but the Organisation Development process is not a part of Restructuring. The relationship between restructuring and Organisation Development process in the case study reflects the fact that Organisational Development focus on generating information and establishing relation while restructuring tries to distance itself from the client and look solely towards the good of the company.
Conclusion The case study conducted by Oyer (2002) display the interaction between Organisation Development process and restructuring. The case study deals with the effect of restructuring to the workers, before and after they were laid off. The case study provides ample ideas and concrete example of restructuring while also exhibiting the process of Organisation Development implicitly. Change is something that is inevitable. It is at the same time observable and can be anticipated. Therefore planning for change in the context of business management is essential and important.
Change of the organization structure and design is implemented in the Organisation Development Process. On the other hand, Restructuring is the process of implementing the change conceptualized in the OD process. Going back to the case study as example one will realize that restructuring and OD process resembles the same methodology but differs with their scope. The OD Process identify whether a specific branch or operation is not anymore beneficial or that something else needs more investment.
The restructuring process tries to specifically work on the implementing the change identified in the OD process. Therefore, the OD Process is a general approach to guide an organisation towards change while Restructuring is a localized approach and has limited concern (only the areas where downsizing happened). Works Cited Cummings, T. G. and Worley, C. G. (2005) Organisation development and change, 9th edition. South –Western College Pub. Eid, M. (2008). ’ Organisation development’. Retrieved on Decempber 13, 2008 from http://newe-learning. bue. edu.
eg/moodle/course/view. php? id=300 French, WL, & Bell, C. R, Jr (1999) Organization development: behavioural science interventions for organization improvement, 6th edition. Englewood Cliffs, NJ: Prentice Hall. Hamlin, B. , Keep, J . and Ash, K. (2000) Organizational change and development.. Financial Times Press. McLean, G. N. (2006) Organization development. Berrett-Koehler Publishers. Oyer, P. (2002, December) ‘Downsizing and corporate restructuring’ Stanford University.. Retrieved on December 12, 2008, from http://faculty-gsb. stanford. edu/oyer/wp/whostays. pdf