Introduction
Business and any company’s change processes involve a set of measures that are designed to improve performance. The transformation uses ways to support an organization’s mission, goals, and operations in a way that systematically impacts the company’s declining quality metrics. An organizational development and design (ODD) approach expands an organization’s understanding of its structure, changes perceptions of purpose and mission, and improves attitudes about performance metrics. ODD is a unique model for transforming an organization to achieve high performance.
History Overview
Organizational development and organization design are practices used to transform a company with a focus on high performance and sustainable development. ODD as a general phenomenon appeared only in the late ’90s because researchers first paid attention to different elements (Anderson, 2018). Organizational development emerged after much psychological research covering the impact of structure on employee behavior and motivation. Psychologists found that human resources are the backbone of an organization more than solid leader. Levine Kurt lay down the idea of researching a company’s ecosystem-based on dynamic waves in the team. His experiments provided clear examples of how proper planning can positively influence employees’ perceptions of work (Cummings et al., 2016).
Organizational design became the second stage of transformation: motivated and committed employees became more enthusiastically involved in learning the policies and structure of the metrics (Pertusa-Ortega et al., 2018). The organization’s hard elements originated under Fayol’ influence; he explained the need for separation of positions and authority. The competent management functions pushed leaders to reconsider the principles of feedback, making adjustments and deviations as a regular part of the business. Instead of being strictly confined within a framework, organizational design links employees and leaders.
ODD’ Characteristics: Models &Theories
Organizational models have become a way to combat market monopolization and develop healthy competition. Automation of business processes and pressure from competitors force companies to look for new ways to design workspaces to improve their operations. Various models and theories can achieve high performance based on the ODD approach. The purpose of organizational design models is to diagnose the current state, identify development prospects, and specify current goals and culture (Pertusa-Ortega et al., 2018).
McKinsey’s 7 model is an analytical complex model covering both hard and soft elements of business systems. Each piece is connected to the other, making it possible to develop several branches at once (Kocaoglu and Demir, 2019). A company can strengthen one of the seven components with a differentiated approach or conversely weaken the focus on the other. The model allows for assessing and reallocating resources from one element to another. The advantages of the model are its versatility and the ability to combine critical structures. However, the disadvantages are significant: the model does not address change management but only specifies the direction.
Among the transformational models, it is worth noting the Burke-Litwin technology, which demonstrates various change factors and ranks them in terms of importance. It can be represented conventionally in a diagram, where the most critical factors are at the top, and the least important are at the bottom (Satrevics, 2014). This technique reveals several groups of influencing factors: external factors, strategic factors (leadership and strategy), operational factors (structure, management, policy), and individual factors (motivation, values, and needs). The model states that all aspects are integrated and a change in one of them will eventually affect the whole system. The roots of organizational transformations can be found in the external environment (Pertusa-Ortega et al., 2018). Critical factors in organizational success are often influenced by changes outside the organization. The model’s advantages are the consideration of soft and hard elements, which allow one to analyze the relationship between strategies and individual skills. The disadvantages are not significant: at first, the model seems inaccessible and complex, but gradual implementation can make a miracle with the company’s status.
The agile organization model is company transformation practice that takes the traditional type to the next level and captures new market niches. At present, there are not enough brutal practices in company management because they significantly limit the ability of employees to transform the space (Anderson, 2018). Instead of releasing new products, traditional companies prefer to follow an understandable path that increasingly loses relevance. The model suggests four stages of transformation: breaking down boundaries, network disruptors, systems thinking, and changing conditions. The result is effective teamwork and a changed vision for the organization. The model’s advantages are making decisions on a specific issue and eliminating bureaucracy with the development of autonomous teams. The disadvantages of the flexible model can be described as a long time and the need to invest resources in retraining managers.
Among ODD theories, different ways of organizing a company that addresses one aspect of business are considered. Organizational design theories mainly include bureaucratic models, unitary and multidimensional forms, mechanistic and organic structures, heterarchies, and autonomies. While bureaucratic models and unitary states are considered outdated, the others show positive market dynamics. The application of the theory is due to the original structure of the organization, and often leaders resort to a combined method.
There is no specific theory of business incentives in organizational development, but two approaches can be distinguished: modernist-objective and symbolic interpretive perspectives. The modernist organizational theory focuses on objective data derived from reality. These include the physical characteristics of the workspace and the development of the relationship between technology and society. Modernists believe that real situations and an organization’s reactions to them are the driving force behind a business. Symbolic-interpretation theory focuses on using specific symbols and how they affect relationships within a company (Nicotera, 2020). It means that employees’ collective and individual experiences in a particular organization become the starting point for subsequent activities. This theory refers to the subjective perception of reality, composed of emotional and personal feelings in shaping business activities.
Comparison of Classical and Systematic Approach
There are different views on the approach to business, which vary in the principles of creating the organization and its activities. Taylorism is a direction of management that argues for the need to maintain differentiation and division of labor. However, each component requires a standard of operation based on scientific methods. The bureaucratic business model was proposed by Weber, who derived regulating responsibilities according to a hierarchy. Fayol recommended a division of labor, as did Taylor, but the responsibility always rested with the leader of the department or company. In addition, Fayol did not recognize decentralization, arguing for the need for unity of purpose and the leader.
The classical approach to strategy emphasizes rationality and analysis. Under this approach, the process must be formal explicit, and its goal must be specific actions to maximize profits. The classical approach to strategy in business emerged in the 1960s, facilitated by the work of American business historian Chandler and theorist Ansoff. The classical approach is based on recognizing profit as the primary goal of any organization, and companies use rational planning to solve their problems and achieve their goals. It attaches great importance to the willingness and ability of executives to shape strategies to maximize profits through long-term planning.
The systems approach allows us to consider the organization as a system consisting of interrelated elements. Initially, it was used in the exact sciences and engineering, and as applied to management, it began to be used in the late 1950s, which was a significant success of the school of management science. The systems approach assumes that each of the elements that make up the system has its own goals. However, the essence of the systems approach is to ensure an increase in the organization’s efficiency as a whole.
The systems approach is closely aligned with ODD’s humanistic stimuli, as it embeds employee happiness and satisfaction into the overall company system. Instead of managing on teams and rigid discipline, ODD uses the principles of motivation and ethics to achieve performance (Cornelis et al., 2019). Psychological research over the past century has contributed significantly to the understanding of group dynamics and T-group learning, stimulating the organization’s development. Criticism of these practices was usually based on the impossibility of reconstructing consciousness into positive thinking and the incompleteness of Lewin’s field theory (Cummings et al., 2016).
Travel Group: PESTLE & SWOT analysis
Analyzing the organizational structure for compliance with the functions performed in business processes is necessary for building a comprehensive process model of the enterprise. It is depicted, as a rule, in the form of a graphical scheme showing hierarchical subordination of personnel. TG has a typical hierarchical structure: the head office is subordinate to subsidiaries with specific brands. Travel UK is a newly formed structure with legal departments: business support, development, and client work. Due to the rules and processes that guide the department managers, the systems function successfully. The operation of union legislation in the UK also contributes to the successful organizational regulation.
The SWOT analysis is the essential classic tool of business analysis, and all subsequent methods of analysis are either refined or based on data from it. As part of strategy development, it is the second fundamental element after the formation of the vision and mission of the company (Songhurst, 2017). The condition of a company depends on how successfully it can respond to various influences from the outside. Therefore, SWOT analysis allows evaluating the influencing factors and projecting future strategic and marketing plans. The analysis shows that the strengths are a clear sustainability strategy and monthly advisory committees concerning TG. The weakness is probably the lack of due attention to unexpected crises.
The PESTLE-analysis is one of the primary methods of analyzing the external environment of an organization, preceding the SWOT analysis. It is used to identify market trends general industry dynamics. Its results are essential for evaluating potential threats and opportunities of the company’s environment (Dalirazar and Sabzi, 2020). Travel Group is interested in the company’s technological development: it is visible in the use of modern systems to reduce CO2 emissions and toxic agents. The political savvy is unstable: on the one hand, the company respects the opinion of the union; on the other hand, it can create a weakness in the regulation of human resources. For example, the hiring policy implies different conditions for employees before and after the merger, increasing the dependence on internal quality indicators. TG cares about socio-cultural performance: a focus on employee engagement in the overall strategy. It is a good indicator, and the company profits considerably when it presents this policy in the market. The economic factors of TG are only expressed in terms of environmental concerns: reducing water consumption.
The structure employed by TG is generally good management practice: clear hierarchical principles governing legal relationships give a clear and understandable picture of responsibility. The company uses three decisive criteria to evaluate performance, indicating a high level of management. As previously mentioned, the issue of unions is quite controversial and is a weakness of the company. It is probably necessary to review the corporate structure and make uniform rules despite the merger. The company’s mission and goals are directed and clear, so they will not lose their relevance in the future. Another hierarchical principle can likely be used for the company – for example, mechanistic or autonomous theories. They can work because they specialize in developing centralized management and responsibility
Cultural Theory: Merger & Sustainability
The accumulated experience in international business and empirical studies has shown the importance of considering the cultural aspect. Culture should be understood as a way of life and the worldview system inherent in a particular people (Panda and Gupta, 2018). This definition encompasses all aspects of people’s lives, identifying a specific culture with a specific country. On the other hand, culture is a set of values and norms of a given society, and this definition is the most important for business. Corporate culture is based on the beliefs and rules considered valid in a company. It is manifested in how the organization conducts business and how it treats its employees and customers/
Merger theory is a business tool that allows companies to move from one plane to another and grow. A necessary consequence of a merger is an initial reduction in price, which is typical when structures are first announced to merge. Another indicator is the reallocation of resources to subsiding industries. There are three types of mergers: horizontal, vertical, and conglomerate. Horizontal mergers are companies from the same industry or category with roughly the same performance and productivity. Horizontal mergers are necessary to reduce costs and expand products. In some cases, it is possible to decrease competition by redistributing market activity. For vertical mergers, a typical situation is when a large company buys out a firm in its industry, capturing the market at the start of product sales (Salop, 2018). In TG’s case, this was probably used because the company increased its demand by creating centralized offices and maintaining its hiring conditions. Conglomerate mergers are characterized by combining unrelated companies to reduce the risks of entering the market. As a result, the union created can become an effective sales management target in certain intervals.
Kurt Lewin introduces the concept of quasi-need, which implies an intention that appears in a specific situation and conditions a person’s activity and seeks to discharge. Each object has its valence for a person – a kind of energy charge that causes a specific tension in a person, requiring discharge. His theory applies to TG because it regulates the parameters of human qualities evaluation and their value (Cummings et al., 2016).
Philip Kottler paid attention to the coordination parameters of marketing plans: he developed the concept of 4P – product, price, promotion, and place. The marketing mix is a set of controllable marketing variables, the aggregate of which a firm uses to elicit the desired response from the target market. TG description according to it: the product is tourist services, the price is the cost of the company and air transportation, the promotion is based on the theory of sustainable development, and the place depends on the localization of centers.
The organization explicitly mentions another important business concept: sustainability, essential to its improvement. The company strives to meet the needs of employees and customers by constantly improving the process of interaction and development. TG also contributes to environmental sustainability and the preservation of resources by addressing climate issues. The ethical aspect of TG consists of the attitude towards employees and customers, which is achieved by comfortably organizing the structure.
Analytical Tools in ODD
Besides SWOT analysis, the vital organizational design tool is RACI – the system of definition of roles. RACI methodology is a convenient and precise tool for designing and planning changes, namely the participation of different roles in the procedures and tasks of the process. The RACI matrix allows one to organize the relationships between the structural components of the system and improve the process (Sitar and Watts, 2021).
Among the tools of assessment of organizational development for TG-type companies, it is necessary to use measurement as a part of the change process. The companies connected with people should use various quantitative system measurements that allow obtaining objective, reliable information (Wilson and Zamberlan, 2015). One of the goals of TG is employee engagement, and this tool will be helpful for a fresh look with new performance indicators.
At first glance, a seemingly strange theory of chance is also a powerful ODD tool. It relates to the nature of systems functioning under uncertainty, which forces an organization to account for random events. Since many events occur independently, it is impossible to control every variation. However, understanding the overall environment (environmental and economic) will be a valuable part of the company’s mission.
A company like TG, which depends on external and internal events, needs to consider system transformation. A change in the marketing department will entail a change in commercial operations, and the transformation of the human resources department is inextricably linked to the union activities of the subsidiaries (Pertusa-Ortega et al., 2018). TG should improve internal communication and relate these changes to possible external impacts. Although the organization is focused on the three metrics, this is not enough to create a sustainability framework. Perhaps the company needs new ways of organizing to improve its structure.
Conclusion
Thus, ODD is a set of activities required to create a stable and developed organization. The emergence of ODD and its elements is associated with the development of psychological management studies and competent management as a business theory. ODD consists of theories and models that consider different organizational structure approaches. Compared to the classical approach, the systems approach is relatively new and more effective because it allows you to assess the whole picture. SWOT and PESTLE analysis are powerful tools to determine the state of a business and choose the direction of its improvement. TG was formed through a vertical merger because it expanded the market and retained its employment conditions. The ODD analytical tools help assess the company’s condition: the RACI is necessary for role regulation, and the randomness theory is helpful for error prevention.
Reference List
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