How does Organization Development fit in with the rest of what HR does? How should it be structured?

Question:  How does Organization Development fit in with the rest of what HR does?  How should it be structured?

Answer:  These questions come to us more frequently than ever before. They are provoked by a fast-changing global marketplace that is making many traditional organizational structures obsolete.

What should we do with Organization Development? First, let me offer a definition of what I think OD is. OD is a body of concepts and research that (1) explains the various human dynamics that are at work every day, and (2) defines principles of effectiveness that explain why organizations succeed or fail. In practice, OD is a set of tools, processes, and approaches that can help us diagnose the organization’s current state of health, strategically design some changes to deliver better results, and manage the processes of change from the status quo to the desired future state.

In the 2007 HR Competency Study, co-sponsored by The RBL Group and the University of Michigan Ross School of Business, more than 10,000 HR professionals and their business clients identified the competencies of Organization Designer, Strategy Architect, and Culture and Change Steward as being critical for the success of the business. These competencies also are needed to do HR’s work. Managing plans & benefits systems, compensation, talent management systems, and safety & hygiene (just to name a few) all require a periodic needs assessment, a diagnosis of how well the system meets those needs and the designing or modifying of the systems to be aligned with corporate requirements. In their role of supporting business units and corporate functions, I can’t imagine any HR Generalist being successful today without some foundational OD competencies. Small wonder that many clients come to us seeking to upgrade these competencies in their HR staff.

Every organization needs some people who have these competencies, including some business unit managers and functional leaders. In my opinion, however, HR is the place we should turn to when we need education, in depth consulting, or coaching on how to develop an organization to get better results.

The structural implications of all of the above? 
    o HR and OD functionally should be joined at the hip. Whether OD is a separate function within HR or a branch of another HR function (for example, Talent Management) depends on a lot of company-specific dynamics.
    o HR needs OD competencies to be widespread in its professional staff, with a few deep OD experts to assist business leaders on the most thorny company issues and to assist and coach HR Generalists and other OD consultants in the challenges they are facing.
    o The degree to which OD resources are centralized or decentralized should mirror the way the company is organized. Global, regional, local business units, functions, or administrative centers all need to develop the capacity to deliver better results. OD resources should be located strategically to help solve problems at their source and to take advantage of opportunities to build competitive advantage.
    o The organization should not rely ONLY on the HR/OD resources to provide the needed expertise. The most advanced companies I have seen also have some business leaders and managers who have strong OD skills themselves. This enables them to take the lead on many needed change efforts and/or to work seamlessly with their HR/OD resources on the processes of change and improvement.

Today’s global marketplace requires organizations to do more with less. As HR responds to this reality, it is more important than ever that more people in the organization have OD competencies. This makes the organization more flexible and adaptive to the challenges of change and is more cost effective than building up a large staff of internal consultants.