The planned change process generally starts when one or more key managers or administrators somehowsense that their organization, department, or group could be improved or has problems that could bealleviated through organization development. The organization might be successful yet have the room forimprovement. It might be facing impending environmental conditions that necessitate a change in how itoperates. The organization could be experiencing particular problems, such as poor product quality, highrates of absenteeism or dysfunctional conflicts among departments. Conversely, the problems might appearmore diffuse and consist simply of feelings that the organization
should be “more innovative,” “morecompetitive,” or “more effective.”Entering and contracting are the initial steps in the OD process. They involve defining in a preliminarymanner the organization’s problems or opportunities for development and establishing a collaborativerelationship between the OD practitioner and members of the client system about how to work on thoseissues. Entering and contracting set the initial parameters for carrying out the subsequent phases of OD:diagnosing the organization, planning and implementing changes, and evaluating and institutionalizingthem. They help to define what issues will be addressed by those activities, which will carry them out, andhow they will be accomplished.Entering and contracting can vary in complexity and formality depending on the situation. In those caseswhere the manager of a work group or department serves as his or her own OD practitioner, entering andcontracting typically involve the manager and group members meeting to discuss what issues to work onand how they will jointly accomplish that. Here, entering and contracting are relatively simple and informal.They involve all relevant members directly in the process without a great number of formal procedures. Insituations where manager and administrators are considering the use of professional OD practitioners,either from inside or from outside the organization, entering and contracting tend to be more complex andformal. OD practitioners may need to collect preliminary information to help define the problematic ordevelopment issues. They may need to meet with representatives of the client organization rather than withthe total membership; they may need to formalize their respective roles and how the change process willunfold.Let’s first discuss the activities and content-oriented issues involved in entering into and contracting for anOD initiative. Major attention here will be directed at complex processes involving OD professionals andclient organizations. Similar entering and contracting issues, however, need to be addressed in even thesimplest OD efforts where managers serve as OD practitioners for their own work units. Unless there isclarity and agreement about what issues to work on, who will address them, and how that will beaccomplished, subsequent stages of the OD process are likely to be confusing and ineffective.Entering into an OD Relationship:
An OD process generally starts when a member of an organization or unit contacts an OD practitionerabout potential help in addressing an organizational issue. The organization member may be a manager,staff specialist, or some other key participant, and the practitioner may be an OD professional from insideor outside of the organization. Determining whether the two parties should enter into an OD relationshiptypically involves clarifying the nature of the organization’s current functioning and the issue(s) to beaddressed, the relevant client system for that issue, and the appropriateness of the particular ODpractitioner. In helping assess these issues, the OD practitioner may need to collect preliminary data aboutthe organization. Similarly, the organization may need to gather information about the practitioner’scompetence and experience. This knowledge will help both parties determine whether they should proceedto develop a contract for working together.The activities involved in entering an OD relationship are: clarifying the organizational issue, determiningthe representatives of the client organization, and selecting the appropriate OD practitioner.
Clarifying the Organizational Issue:
When seeking help from OD practitioners, organizations typically start with a presenting problem—theissue that has caused them to consider an OD process. It may be specific (decreased market share,increased absenteeism) or general (“we’re growing too fast,” “we need to prepare for rapid changes”). Thepresenting problem often has an implied or stated solution. For example, managers may believe thatbecause members of their teams are in conflict, team building is the obvious answer. They may even statethe presenting problem in the form of a solution: “We need some team building.”In many cases, however, the presenting problem is only a symptom of an underlying problem. For example,conflict among members of a team may result from several deeper causes, including ineffective rewardsystems, personality differences, inappropriate structure, and poor leadership. The issue facing the
Determining the OD Team Members:
A second activity in entering an OD relationship is to define who are the team members involved inaddressing the organizational issue. Generally such organization members are involved who can directlyimpact the change issue, whether it is solving a particular problem or improving an already successfulorganization or department. Unless these members are identified and included in the entering andcontracting process, they may withhold their support for and commitment to the OD process. In trying toimprove the productivity of a unionized manufacturing plant, for example, it will be necessary to includeunion official as well as managers and staff personnel. It is not unusual for an OD project to fail becausethe team members were inappropriately defined.Determining the team members can vary in complexity depending on the situation. In those cases wherethe organizational issue can be addressed in a specific organization unit, members of that unit must beincluded in the entering and contracting process. For example, if a manager asked for help improving thedecision-making process of his or her team, the manager and team members would be the part of the ODprocess. Unless they are actively involved in choosing an OD practitioner and defining the subsequentchange process, there is little likelihood that OD will improve team decision making.Determining the team members is more complex when the organizational issue cannot readily be addressedin a single unit. Here, it may be necessary to include members from multiple units, from differenthierarchical levels, and even from outside of the organization. For example, the manager of a productiondepartment may seek help in resolving conflict between his or her unit and other departments in theorganization. The requirement of team members would extend beyond the boundaries of the productiondepartment because that department alone cannot resolve the issue. The team might include members fromall departments involved in the conflict as well as the executive to whom all of the departments report. Ifthat interdepartmental conflict also involved key suppliers and customers from outside of the firm, theteam might include members of those groups.In such complex situations, OD practitioners need to gather additional information about the organizationto determine the relevant team members, generally as part of the preliminary data collection that typicallyoccurs when clarifying the issue to be addressed. When examining company records or interviewingpersonnel, practitioners can seek to identify the key members and organizational units that need to beinvolved. For example, they can ask organization members such question as who can directly impact theorganizational issue. Who has a vested interest in it? Who has the power to approve or reject the ODeffort? Answers to those questions can help determine who is the relevant team for the entering andcontracting stage, although the members may change during the later stages of the OD process as new dataare gathered and changes occur. If so, participants may have to return to and modify this initial stage of theOD effort.
Selecting an OD Practitioner:
The last activity involved in entering an OD relationship is selecting an OD practitioner who has theexpertise and experience to work with members on the organizational issue. Unfortunately, little systematicadvice is available on how to choose a competent OD professional, whether from inside or outside of theorganization.Perhaps the best criteria for selecting, evaluating, and developing OD practitioners are those suggested bythe late Gordon Lippitt, a pioneering practitioner in the field. Lippitt listed areas that managers shouldconsider before selecting a practitioner, including the ability of the consultant to form sound interpersonalrelationships, the degree of focus on the problem, the skills of the practitioner relative to the problem, theextent that the consultant clearly informs the client as to his or her role and contribution, and whether thepractitioner belongs to a professional association. References from other clients are highly important. A
client may not like the consultant’s work, but it is critical to know the reasons for both pleasure anddispleasure. One important consideration is whether the consultant approaches the organization withopenness and an insistence on diagnosis or whether the practitioner appears to have a fixed program that isapplicable to almost any organization.Certainly, OD consulting is as much a person specialization as it is a task specialization. The ODprofessional needs not only a repertoire of technical skills but also the personality and interpersonalcompetence to use himself or herself as an instrument of change. Regardless of technical training, theconsultant must be able to maintain a boundary position, coordinating among various units anddepartments and mixing disciplines, theories, technology, and research findings in an organic rather than amechanical way. The practitioner is potentially the most important OD technology available.Thus, in selecting an OD practitioner, perhaps the most important issue is the fundamental question, howeffective has the person been in the past, with what kinds of organizations, using what kinds of techniques?In other words, references must be checked. Interpersonal relationships are tremendously important, buteven con artists have excellent interpersonal relationships and skills.The burden of choosing an effective OD practitioner should not rest entirely with the client organization.Consultants also bear a heavy responsibility for seeking an appropriate match between their skills andknowledge and what the organization or department needs. Few managers are sophisticated enough todetect or to understand subtle differences in expertise among OD professionals, and they often do notunderstand the difference between intervention specialties. Thus, practitioners should help educatepotential clients, being explicit about their strengths and weaknesses and about their range of competence.If OD professionals realize that a good match does not exist, they should inform managers and help themfind more suitable help.
Developing a Contract:
The activities of entering an OD relationship are a necessary prelude to developing an OD contract. Theydefine the major focus for contracting, including the relevant parties. Contracting is a natural extension ofthe entering process and clarifies how the OD process will proceed. It typically establishes the expectationsof the parties, the time and resources that will be expended, and the ground rules under which the partieswill operate.The goal of contracting is to make a good decision about how to carry out the OD process. It can berelatively informal and involve only a verbal agreement between the client and OD practitioner. A teamleader with OD skills, for example, may voice his or her concerns to members about how the team isfunctioning.After some discussion, they might agree to devote one hour of future meeting time to diagnosing the teamwith the help of the leader. Here, entering and contracting are done together informally. In other cases,contracting can be more protracted and result in a formal document. That typically occurs whenorganizations employ outside OD practitioners. Government agencies, for example, generally haveprocurement regulations that apply to contracting with outside consultants.Regardless of the level of formality, all OD processes require some form of explicit contracting that resultin either a verbal or a written agreement. Such contracting clarifies the client’s and the practitioner’sexpectations about how the OD process will take place. Unless there is mutual understanding andagreement about the process, there is considerable risk that someone’s expectations will be unfilled. Thatcan lead to reduced commitment and support, to misplaced action, or to premature termination of theprocess.The contracting step in OD generally addresses three key areas: what each party expects to gain from theOD process, the time and resources that will be devoted to it, and the ground rules for working together.
Mutual Expectations:
This part of the contracting process focuses on the expectations of the client and the OD practitioner. Theclient states the services and outcomes to be provided by the OD practitioner and describes what theorganization expects from the process and the consultant. Clients usually can describe the desiredoutcomes, such as decreased turnover or higher job satisfaction. Encouraging them to state their wants inthe form of outcomes, working relationships, and personal accomplishments can facilitate the developmentof a good contract.The OD practitioner also should state what he or she expects to gain from the OD process. This caninclude opportunities to try new interventions, report the results to other potential clients, and receiveappropriate compensation or recognition.
Time and Resources:
To accomplish change, the organization and the OD practitioner must commit time and resources to theeffort. Each must be clear about how much energy and how many resources will be dedicated to thechange process. Failure to make explicit the necessary requirements of a change process can quickly ruin anOD effort. For example, a client may clearly state that the assignment involves diagnosing the causes ofpoor productivity in a work group. However, the client may expect the practitioner to complete theassignment without talking to the workers. Typically, clients want to know how much time will benecessary to complete the assignment, which needs to be involved, how much it will cost, and so on.Resources can be divided into two parts. Essential requirements are things that are absolutely necessary ifthe change process is to be successful. From the practitioner’s perspective, they can include access to keypeople or information, enough time to do the job, and commitment from certain people. Theorganization’s essential requirements might include a speedy diagnosis or assurances that the project will beconducted at the lowest price. Being clear about the constraints on carrying out the assignment willfacilitate the contracting process and improve the chances for success. Desirable requirements are thosethings that would be nice to have but are not absolutely necessary, such as access to special resources andwritten rather than verbal reports.
Ground Rules:
The final part of the contracting process involves specifying how the client and the OD practitioner willwork together. The parameters established may include such issues as confidentiality, if and how the ODpractitioner will become involved in personal or interpersonal issues, how to terminate the relationship, andwhether the practitioner is supposed to make expert recommendations or help the manager make decisions.For internal consultants, organizational politics make it especially important to clarify issues of how tohandle sensitive information and how to deliver bad news.” Such process issues are as important as theneeded substantive changes. Failure to address the concerns may mean that the client or the practitionerhas inappropriate assumptions about how the process will unfold.
Application 1: Contracting at Charity Medical Center
Charity Medical Center (CMC), a five hundred-bed acute-care hospital, was part of the Jefferson HospitalCorporation (JHC). JHC, which operated several long-term and acute-care facilities and was sponsored by alarge religious organization, had recently been formed and was trying to establish accounting and finance,materials management, and human resources systems to manage and coordinate the different facilities. Ofparticular concern to CMC, however, was a market share that had been declining steadily for six months.Senior management recognized that other hospitals in the area were newer, had better facilities, were more“user friendly,” and had captured the interest of referring physicians. In the context of JHC’s changes,CMC invited several consultants, including an external OD practitioner named John Murray, to makepresentations on how a total quality management process might be implemented in the hospital.John conducted an initial interview with CMC’s vice president of patient-care services, Joan Grace. Joannoted that the hospital’s primary advantage was its designation as a level-one trauma center. CMC offeredpeople needing emergency care for major trauma their best chance for survival. “Unfortunately,” Joan said,“the reputation of the hospital is that once we save a patient’s life, we tend to forget they are here.”Perceptions of patient-care quality were low and influenced by the age and decor of the physical plant.CMC had been one of the original facilities in the metropolitan area. Finally, Joan suggested that thehospital had lost a substantial amount of money last year and considerable pressure was coming from JHCto turn things around.John thanked Joan for her time and asked for additional materials that might help him better understandthe hospital. Joan provided a corporate mission statement, a recent strategic planning document, anorganization chart, and an analysis of recent performance. John also sought permission to interview othermembers of the hospital and the corporate office to get as much information as possible for hispresentation to the hospital’s senior management. He interviewed the hospital president, observed one ofthe nursing units, and spoke with the human resources vice president from the corporate office.The interviews and documents provided important information. First, the documents revealed that CMCwas not one hospital but two. A small, 150-bed hospital located in the suburbs also reported to thepresident of CMC, and several members of the hospital’s staff held managerial positions at both hospitals.Second, last year’s strategic plan included a budget for initiating a patient-care quality improvement process.Budget responsibility for the project was assigned to Joan Grace’s department. Third, the mission statementwas a standard expression of values and was heavily influenced by the religious group’s beliefs. Fourth, theperformance reports confirmed both poor financial results and decreasing market share.John’s interviews and observations pointed out several additional pieces of information. First, the corporateorganization, JHC, truly was in a state of flux. There were clear goals and objectives for each of the
hospitals, but patient, physician, and employee satisfaction measures, human resources policies, financialpractices, and material logistics were still being established. Second, the management and nursing staffheads at CMC were extremely busy—usually attending meetings for most of the day. In fact, Joan’ssecretary kept a notebook dedicated to tracking who was meeting where and when. Third, a largeconsulting firm had just been awarded a contract to do “job redesign” work in two departments of thehospital. And fourth, most of the nursing units operated under traditional and somewhat outdated nursingmanagement principles.In developing his presentation, John thought about several issues. For example, the relevant client wouldbe difficult to identify. Joan Grace was clearly responsible for the project and its success, but the president,referring physicians, the suburban hospital, and the corporate office were important stakeholders in a TQMprocess and needed a voice if it was to succeed. In addition, the presenting problem was a decline in marketshare. The job redesign contract awarded to the other consulting firm seemed disconnected from the TQMeffort, and both efforts seemed disconnected from the market share problem. John wondered how thehospital viewed the relationships among total quality management, job design, and market share. He alsoquestioned whether he was the appropriate consultant for CMC. The firm doing the job redesign used apackaged approach to change that conflicted with John’s OD-based philosophy.Using the information gathered and his reflections on the project, John gave his presentation to seniormanagement about implementing a total quality management process at CMC. His presentation included ahistory of the quality movement and how it had been applied to other health-care organizations. Severalexamples of the gains made in patient satisfaction, clinical outcomes (such as decreased infection rates), andphysician satisfaction were incorporated. He noted that implementing a quality process was a majororganizational change, requiring a thorough diagnosis of the hospital, a considerable commitment ofresources, and a high level of involvement by senior management. Without such involvement, it was notreasonable to expect the kinds of results he had described, John also suggested that total qualitymanagement was capable of addressing certain problems but was not designed to address directly suchbroader performance issues as market share.Finally, John described his track record at implementing quality improvement process in health-careorganizations. He shared several references with the group members and encouraged them to talk withformer clients regarding his style and impact. John also noted that he had been referred to CMC by thereligious organization that sponsored the hospital system and that it was aware of his work in anothermedical facility.John Murray’s presentation to the senior management team at CMC, based on the information outlined inApplication 4.1, was well received, and patient-care vice president Joan Grace asked John to meet with herto discuss how the change process might go forward. At the meeting, John thanked Joan for theopportunity to work with CMC and suggested that the next year or two represented a challenging time forthe hospital’s management. He identified several knotty issues that needed to be discussed before workcould begin. Most important the hospital’s rush to implement a total quality management process wasadmirable, but he was worried that it lacked an appropriate base of knowledge. Although performance andmarket share were the big issues facing the hospital, the relationship between those problems and a qualityprogram was not clear. In addition, even if a TQM process made sense, managers and nursing heads werefrustrated by their inability to influence change because of their busy meeting schedules. A qualityimprovement process might solve some of those problems but certainly not all of them.Joan acknowledged that both performance and frustration with change were problems that needed to beaddressed. She explained that the hospital wanted help to improve the quality of patient care and toincrease patient, employee, and physician satisfaction with the hospital. Improvements in those areas wereexpected to produce important gains in hospital performance. Joan asked John if he could generate aproposal that addressed those issues as well as managerial frustration with the inability to make necessarychanges.John agreed to put a proposal in writing but suggested that it would be helpful to discuss first what shouldbe included in it. John thought that discussing several issues now would improve the chances of gettingstarted quickly. He outlined several issues that the proposal would cover. First, the hospital shouldthoroughly diagnose the reasons for market-share decline, the current level of patient-care quality, andmanagerial frustration with making changes. That diagnosis would require access to the corporate officer’sat JHC to discuss their relationships with CMC. In addition, several managers and employees of thehospital, as well as some physicians needed to be interviewed. Second, the proposed job redesign effortbeing conducted by the other consulting firm should be postponed. Finally, CMC management shouldmeet for two days to examine the information generated by the diagnosis and to make a joint decisionabout whether a total quality management process made sense.Joan looked uncomfortable. John’s requirement seemed unreasonable given that the hospital simply wantedto improve patient-care quality and stakeholder satisfaction. For example, getting the senior administrators
to commit to two days away from the hospital would be difficult. Everyone was busy, and finding a timewhen they could all meet for that long was nearly impossible. In addition, there was a sense of urgency inthe hospital to begin the process right away. Collecting information seemed like a waste of time. Finally,and perhaps most important postponing the job redesign effort was a sensitive issue. The project hadstrong political support, and the other consultants had provided a clear ten-step process and timetable forthe work design changes.John told Joan that he appreciated her concerns and her willingness to confront these issues. He explainedthat his requests were necessary if the prospect was to be successful and that he had thought carefully aboutthem. Collecting the diagnostic information was, in fact, the first step in any quality management process.The very basis of a TQM effort was data-based decision making. To begin a quality process without validinformation violated fundamental principles of the approach. More important to proceed without thatinformation could very well mean that the wrong change would be implemented. John suggested, forinstance, that the market share problem could result from the way CMC was treating the physicians. If thatwere true, a quality program would be inappropriate and costly. Instead, a program to improve therelationships with physicians might provide a better return on CMC’s investment.The two-day meeting was therefore very important. Once appropriate data were collected, the seniormanagers could decide, based on fact, what exactly should be done to address hospital performance;employee, patient and physician satisfaction; and managerial frustration. John explained that a qualitymanagement process, if necessary, required attention to CMC’s structure, measurement, and rewardsystems as well as its culture. The two-day meeting of the senior management team would permit a fullexplanation of the TQM process a description of the necessary resources, and a discussion of thecommitment necessary to implement it. Following that meeting, he could provide a more explicit outline ofthe change process.Finally, John acknowledged that the politically sensitive nature of the job redesign program made resolvingthis issue more difficult. He explained his belief that any redesign effort that did not take into account apotential TQM process likely would have to be redone. He argued that to proceed blindly with a jobredesign effort might result in money spent for nothing.Joan believed that John could have access to the consulting firm doing job redesign but that there was littlechance of postponing the program for very long. Again acknowledging the political support for theprogram, John offered to coordinate with the other consultants but strongly urged Joan to postponeinitiating the project until after the two-day management meeting. Joan said she understood his concernsbut stated that she could not make that decision without talking with the senior management team.John accepted that and asked if his other requests now made better sense. Joan replied that a two-daymeeting did seem important and worth the effort. In addition, access to the corporate officers, employees,managers, and physicians was a reasonable request and could be arranged. Responding to John’s exampleof a physician relations program, Joan informed him that although CMC had such a program, it was notvery effective because managers had become too busy to pay attention to it.At this point, Joan had to go to another meeting. They adjourned with the understanding that Joan wouldspeak with the other managers and get back to John. A week later, Joan called and agreed to John’srequests. She asked him to submit a written proposal covering the issues discussed as soon as possible.
