HR Leadership: Engaged, Aligned and Accountable Defining the Future of Organization Development

Jeana Wirtenberg, Ph.D Jeana Wirtenberg & Associates, LLC, and The Institute for Sustainable Enterprise, Fairleigh Dickinson University*

* The survey was supported by the Institute for Sustainable Enterprise, Fairleigh Dickinson University ** The web survey design and administration was generously supported by Quantisoft, LLC. Acknowledgments for significant contributions go to the Research Team, Global Committee on the Future of OD: Malcolm Conway, IBM Consulting Solutions, Elliott Greene, Quantisoft; Lilian Abrams, Ph.D; Joan Slepian, Ph.D; and Jeff Wides, Ph.D

Agenda
Purpose and Objectives of the Presentation Overview of Phase I Research Phase II Research Business Leader Survey Methods and Sample

Results in For-Profit Sector

Implications for Human Resources, Organization Development, and Training and Development

Next Steps for Human Resources

Purpose and Objectives

Identify the most important factors driving business success from a people and organizational perspective, as reported by senior business leaders Gather information from business leaders to help define the future of Organization Development Understand the most likely sources of expertise and resources that senior business leaders will use to address those challenges (and to see where HR/OD professionals fit in) Determine potential OD clients awareness and perceptions about OD Identify the likelihood of future investments in OD resources

Phase I OD SWOT Survey Over 900 Responses

Survey sent to over 6000 members of OD Network, O.D. Institute, International Organization Development Association, NTL Institute and NJ OD Network to assess present weaknesses and strengths of the field.

Findings published in article by J. Wirtenberg, L. Abrams, & C. Ott, Assessing the Field of Organization Development, Journal of Applied Behavioral Science, December, 2004.

Top Three Strengths

Systemic Orientation/Change Management Techniques and Processes Teamwork/Leadership Development Values OD Brings to Practice

Top Four Areas For Improvement

Lack of Definition and Distinction of the Field of OD Lack of Quality Control of Practitioners Insufficient Business Acumen of Practitioners/Insufficient Emphasis on Customer Needs Insufficiently Clear ROI/Value of the Work
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Business Leader Survey

Methods: Survey conducted during the summer of 2005 Internet based survey sent to worldwide sample of Fortune 1000 business leaders:
CEOs, VPs, Directors of Fortune 1000 companies across all industries from a purchased list, mostly from U.S. with some Canada

Demographics of For Profit Respondents

Respondents are predominantly male, middle-aged, executives.
Respondent Gender

235 Total respondents:

120 For Profit and 115 Nonprofit

36%

Respondent Age
9% 5% 13%

64%

41%

Males

Females

32%

Respondent Level of Management

20 - 29

30 - 39

40 - 49

50 - 59

60+

9% 32%

59%

Middle Management

Executive Management

Other

Demographics - For Profit Respondents Annual Sales and Number of Employees

Companies ranged from small/medium size to very large, with a relatively wide and even distribution.

For Profit
30
30

For Profit

20

20

10

10

Percent

0 Under 25M 25-49M 50-99M 500-999M 1-4.99B 5-9.9B 10-24.99B 25+B 100-499M

Percent

0 Under 500 1,000-2,499 5,000-9,999 25,000-49,999 50,000+ 500-999 2,500-4,999 10,000-24,999

Annual Sales

Number of Employ ees

There was a good representation of companies across a wide spectrum of industries.

Demographics of For Profit Respondents Industry Focus

20

10

Industry Focus

For Profit

ns io uts ca ic no F eru e ic thm om serv /M cO eS o le itil l/Bi ila Te tn i o ti ca sU es u of ce l Pr rm a tai g ls e i nta a R Ph urpi ctos fa /H ue an r M ca l th ch t ea e H i-T n es cs H me cie nrvriv e erS le ovaS i Go d nc ao nF Fi n io s at ct u c od u n Ed r Piy to rg e eu m rib Etn su s on i C D i le ob m e t o ac Au s p ro Ae

Percent

Business Leader Survey Demographics of For Profit Respondents Company Life Cycle
Organizational life cycles were spread across all categories from those expanding, to those in their prime, early bureaucracy, declining, and revitalizing.
For Profit
40

30

20

10

Percent

0 New Venture Expans ion Prime Decli ning Revitali zation Early Bureaucracy

Company Lif e Cy cle

Demographics of For Profit Respondents Functional Area

There was a large distribution of functional areas, with the most common (mode) category: General Management .
For Profit
50 40

30

20

Percent

10 0

Functional Area

n ti o ca du /E ng r en ni he a i Ot opm Tr vl De & h rc ea s es l e era R Sa /Op g in ur gt ing ac et u f rk an Ma M lo no ch Te n io at al rm fo Leg In el nn g so i n t er nn n /P la e R P m H ce/ age n an na Fi al M er en

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Six Key Integrated Themes (KITs) from Phase I formed the foundation for the Core Questions in Phase II

Globalization, Multi-Cultural, and Whole System Perspective

Industry Consolidation, M/A, and Strategic Alignment Business and Product Life-Cycle Global Economy, Market and Shareholder Demands

Building Great Workplace, Productivity, and Performance Culture

Organizational Alignment Speed, Innovation, and Flexibility Capturing Elusive Customers Leveraging Technology and Worldwide Integration Leveraging and aligning technology with business strategies Speed, flexibility and Innovation Learning and Knowledge Management

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Six Key Integrated Themes (KITs) from Phase I formed the foundation for the Core Questions in Phase II

Corporate Social Responsibility is Increasing

Greater Accountability for Business ethics and Governance Corporate role in Human Rights and Widening Economic Gaps Accountability for the Use of Natural Resources

Building Leadership and Organizational Capabilities for the Future

Changing Work and Workforce Leadership Talent Identification, Development, and Retention Leadership Courage, Decision Making and Problem Solving

Regulatory Environment and New Organizational Forms

Business and Government Partnerships are creating both
Challenges and Opportunities In U.S., increasing Government Regulations pose Competitive Challenges New Organizational Models emerging across Traditional Sectors (Public-Private)

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Business Leader For Profit Survey Section 1 Questions

1. Aligning and executing strategies in a way that meets financial goals and are consistent with core values 2. Effectively addressing organizational culture during organizational realignments, industry consolidations and mergers and acquisitions (M&As) 3. Effectively applying organizational change principles to business and product life cycles 4. Aligning strategies, people, systems and processes organization-wide to enhance productivity and profitability 5. Developing and maintaining the commitment of the workforce to the goals of the organization for better overall performance results 6. Clarifying purpose and mission to inspire and engage the workforce 7. Attracting and retaining top talent 8. Leveraging and aligning existing information technology with business and people strategies 9. Facilitating adoption and use of new information technologies for competitive advantage

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Business Leader For Profit Survey Section 1 Questions (contd)

10. Using information technology to support learning and innovation 11. Enhancing reputation among communities where we work, with consumers and with employees and investors 12. Enhancing employees commitment by focusing on corporate citizenship in the community and contributions 13. Ensuring accountability for business ethics among employees at all levels 14. Building leadership capacity for now and the future 15. Solving organizational problems systemically as opposed to solving them on a piecemeal basis 16. Establishing collaborative relationships and partnerships among public, private and nonprofit sectors 17. Increasing speed to market and profit for critical products and services through shared commitments and organizational values

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Sample Questions for Importance and Effectiveness

Section 1: Business Success Factors: A series of statements about key areas of business success follows. For each statement there are two questions for you to answer: 1. What is the importance of this key area to your organization (i.e., that level of your company with which you are most closely associated, e.g., entire enterprise, business unit, etc.)? 2. How effective is your organization's performance in this key area? In answering each question, think about how it impacts your "bottom-line results".

Performance Gap = Importance - Effectiveness

Question Importance
Very Unimportant 1 2 3 Very Important 4 5 Dont Know

Effectiveness
Very Ineffective 1 2 3 Very Effective 4 5 Dont Know

1. Aligning and executing strategies in a way that meets financial goals and are consistent with core values. Comments: 2. Effectively addressing organizational culture during organizational realignments, industry consolidations and mergers and acquisitions (M&As). Comments:

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For Profit Business Success Factors: Performance Gaps

Gap 1.03 1.35 1.02 1.26 1. Aligning and executing strategies in a way that meets financial goals and are consistent with core values 2. Effectively addressing organizational culture during organizational realignments, industry consolidations and mergers and acquisitions (M&As) 3. Effectively applying organizational change principles to business and product life cycles 4. Aligning strategies, people, systems and processes organization-wide to enhance productivity and profitability 5. Developing and maintaining the commitment of the workforce to the goals of the organization for better overall performance results 6. Clarifying purpose and mission to inspire and engage the workforce 7. Attracting and retaining top talent 8. Leveraging and aligning existing information technology with business and people strategies 9. Facilitating adoption and use of new information technologies for competitive advantage 10. Using information technology to support learning and innovation 11. Enhancing reputation among communities where we work, with consumers and with employees and investors 12. Enhancing employees commitment by focusing on corporate citizenship in the community and contributions 13. Ensuring accountability for business ethics among employees at all levels 14. Building leadership capacity for now and the future 15. Solving organizational problems systemically as opposed to solving them on a piecemeal basis 16. Establishing collaborative relationships and partnerships among public, private and nonprofit sectors 16 17. Increasing speed to market and profit for critical products and services through shared commitments and organizational values

1.12
1.07 1.27 0.92 0.78 0.72 0.67 0.34 0.63 1.45 1.27 0.58 0.93

Business Success Factors: Key Findings

For Profit Importance & Effectiveness
4.20 HL HH 13

Strength

1 11

Effectiveness

5 3.55 12 16 10 9 17 2 3 LL 2.90 3.80 15 4.35 LH 4.90 14 8 6 4 7

High Priority/ Opportunity

Urgent/ Opportunity

Weakness

Importance

Gap of 1.35

Gap of 1.45

Note: Items were pre-selected as important based on Phase I research and Key Integrated Themes.
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Business Leader For Profit Survey Key Results Urgent

Items:

2. Effectively addressing organizational culture during organizational realignments, industry consolidations and mergers and acquisitions (M&As)

Importance = 4.52 Effectiveness = 3.17 Gap = 1.35

14. Building leadership capacity for now and the future Importance = 4.63 Effectiveness = 3.18 Gap = 1.45
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Urgent
Verbatim themes and illustrative quotes Effectively addressing organizational culture during organizational realignments, industry consolidations and mergers and acquisitions (M&As) (item #2)
These events are windows of opportunity, but the role and processes of culture disruption and change are not taken seriously Challenge of execution of M&As and realignments too little, too late OD should be playing a key role in this, but it does not

I consider these events to be windows of opportunity to revisit and renew a commitment to organizational culture Usually the weakest link in the people/process/technology triangle of keys to success Organization talks about the importance of aligning cultures during reorganizations/restructuring however they do not design OD interventions that assist in the alignment. They expect people impacted by the change to adapt.
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Urgent
Verbatim themes and illustrative quotes

Building leadership capacity for now and the future (item #14)
Challenges cited around developing leadership capacity include: Internal philosophies and practices around growing your own Defining, recognizing and rewarding leadership attributes Perceived Lack of Time Retirement Little or no succession planning in their organization

Have seen no evidence of trying to build future leadership capability Need more work on succession strategy We focus on managing the business instead of leading people and teams
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Business Leader For Profit Survey Key Results

High Priority
Items:

1. Aligning and executing strategies in a way that meets financial goals and are consistent with core values
Importance = 4.80; Effectiveness = 3.77; Gap = 1.03 4. Aligning strategies, people, systems and processes organization-wide to enhance productivity and profitability Importance = 4.64; Effectiveness = 3.38; Gap = 1.26 5. Developing and maintaining the commitment of the workforce to the goals of the organization for better overall performance results Importance = 4.78; Effectiveness = 3.66; Gap = 1.12

6. Clarifying purpose and mission to inspire and engage the workforce

Importance = 4.56; Effectiveness = 3.50; Gap = 1.07

7.

Attracting and retaining top talent

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Importance = 4.74; Effectiveness = 3.46; Gap = 1.27

High Priority
Verbatim themes and illustrative quotes Aligning and executing strategies in a way that meets financial goals and are consistent with core values (item #1)
Critical importance of alignment between strategies, values, tactics to deliver bottom line business results, and delivering shareholder value Measuring effectiveness (metrics) and project management (scheduling) are keys to success in aligning and implementing strategies Tension between strategic alignment and tactical execution is often resolved in favor of tactical execution

This is a key area of focus to improve Our primary strength is in being consistent with our core values. Getting the proper balance is a struggle, have gone through cycles where the numbers rule and then when core values rule. How to measure effectiveness is a huge barrier especially for interventions that do not tie easily to the bottom line or ROI.
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High Priority
Verbatim themes and illustrative quotes Aligning strategies, people, systems and processes organization-wide to enhance productivity and profitability (item #4)
Leadership sees this alignment as important; however, it is not always given high priority. Complexity of processes, business needs, size, and business models makes this increasingly difficult to accomplish

Productivity is a direct function of process and the effective alignment of vision, strategy and people. Personally this is very important to me, but at my company support varies as to how much time to spend on alignment. No longer clear path. Profitability depends more on new, undefined business models with no track record in an environment where customers are competitors and old rules have turned upside down. As we have grown, this has become more difficult to accomplish
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High Priority
Verbatim themes and illustrative quotes Developing and maintaining the commitment of the workforce to the goals of the organization for better overall performance results profitability (item #5)
Developing and maintaining commitment to the goals of the organization is vitally important Systems and processes must be in place to support engagement and commitment

A great strategy that is poorly executed fails. To execute companies have to have alignment and the engagement of its workforce. Engagement is a multiplier good and bad to the execution component. The company cant only expect employees to commit to high performing results until it demonstrates the commitment to employees growth both professionally and personally.
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High Priority
Verbatim themes and illustrative quotes

Clarifying purpose and mission to inspire and engage the workforce (item #6)
Inspiring and engaging the entire organization around its mission is critical Mission and purpose statements are often ambiguous and unclear they only make sense to the upper levels of the organization and mean little to the lower levels

It is a critical Leadership responsibility Depends on the level of the organization most effective at upper levels The mission statement was written by a senior team with no input from the hoi polloi and then groomed by an agency. We see it on our external website, but thats about the extent of it.

25

High Priority
Verbatim themes and illustrative quotes Attracting and retaining top talent (item #7)
Attracting and retaining talent is important in most areas Attracting talent is often viewed as being more important than retaining it, particularly in the recent economy

We are very good at this in the areas of the company we deem to be critical or strategic to our success (i.e., R&D, Sales) and we are less effective at this in the areas that are more tactical in nature High turnover rate as a direct result of sacrificing employees for shareholder value Dissatisfaction has existed for last 5 years and was waiting for the job supply to catch up. Turnover will increase over next 1-3 years. We give lip service to valuing people, but our corporate culture and structure does not put this value into practice.
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To whom do you/would you most likely turn for support in each of the following areas? Urgent areas: Positioning industry consolidation, M&A, and strategic alignment for success from a cultural perspective?
Business leaders turn to line management first, consulting firms second, HR third, and OD fourth when positioning industry consolidation, M&A, and strategic alignment for success from a cultural perspective.
For Profit
40

30

20

10

Percent

0 Internal OD External OD HR Line Magm't Cons ulting Firm

Position f or Success f rom Cultural Perspectiv e

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To whom do you/would you most likely turn for support in each of the following areas? Urgent areas: Building leadership capacity for now and the future
Business leaders turn to HR first, and line management second for identifying, attracting, developing and retaining leadership talent. Business leaders turn to line management to foster leadership courage, decision making and problem solving

For Profit
60
80

For Profit

50
60

40

30

40

20
20

Percent

10 0 Internal OD External OD HR Line Magm't Cons ulting Firm

Percent

0 Internal OD External OD HR Line Magm't Cons ulting Firm

Identif y /Attracting/Dev elop/Retain Leadership Talent

Foster Leadership Courage/Decision Making/Problem Solv ing

28

To whom do you/would you most likely turn for support in each of the following areas? High Priority Areas: Building a Performance Culture Leaders turn to Line Management first, HR second, and OD third, for: Enhancing workplace, productivity and performance culture Fostering employee engagement and commitment

For Profit
60
70 60 50

For Profit

50

40
40

30
30

20

20

Percent

Percent

10 0 Internal OD External OD HR Line Magm't Cons ulting Firm

10 0 Internal OD External OD HR Line Magm't Cons ulting Firm

Foster Employ ee Engagement/Commitment

Enhance Workplace, Productiv ity and Perf ormance Culture

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Do you have a distinct OD Department? If yes, to whom does it report? Only 36% of all for profit respondents have a distinct OD department Of those who did, 76% reported into HR, 16% into other staff and 9% into line management.

For Profit
70 80 60 60

For Profit

50

40 40 30

20

20

Percent

10 0 no yes

Percent

0 HR Other Staff Line Dept.

Hav e Distinct Organizational Dev elopment Department

To Whom Does OD Department Report

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How likely is it that your organization will invest/continue to invest in OD resources (people and money), either in-house or outsourced, over the next three years?
63% of respondents indicated they were either very likely (40%) or somewhat likely (23%) to invest in OD over the next three years.

Do you expect that your investments in OD resources over the next three years will be less, about the same or more than during 2004?
39% of respondents indicated their investments in OD would be more, 54% about the same and 7% less than in 2004.
For Profit
60

For Profit
50
50

40
40

30
30

20
20

Percent

0 Very Unlikely Neither L or UL Very Likely Somewhat UnL Somewhat Likely

Percent

10

10

0 Less About the Same More

OD Inv estment in Next 3 Y ears Compared to 2004

Likely to Inv est in OD ov er Next 3 Y ears

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Summary of Findings and Implications for Human Resources and Organization Development
Business Leaders across a wide swath of industries see opportunity for HR and OD related work There is considerable room to improve the perceived effectiveness of organizations in areas that business leaders consider very important. A high percentage of business leaders are likely to invest in OD over the next three years, with about half planning to invest about the same, and more than another third planning to invest more. However, OD as a distinct field or function is barely even on the radar screen for much of the work that OD could/should be helping with. Business leaders usually go elsewhere, at least initially, for the support they need and want (especially line management, HR, and consulting firms) OD needs to work with line management to support them, transfer their knowledge, and exhibit a high degree of flexibility to make it happen Findings call for further inquiry as to ODs fundamental identity, marketing, branding, and positioning with executives and line managers
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Next Steps
Leverage findings with Human Resources taking the lead in organizations to gather important strategic actionable information and insight from their senior and mid-level managers, identifying organizational effectiveness opportunities that will contribute to meeting or exceeding profit and growth targets.

Focus is on identifying key business challenges in a Strategic Organizational Assessment Review Survey (SOARS) and benchmark analysis to include focus on: Attracting and Retaining high-performing people Strengthening Human Capital performance Increasing Organizational Effectiveness

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Next Steps
Based on research and feedback to date, key issues for companies to review include: Attracting and Retaining high-performing people
Strengthening the employer of choice reputation Targeted, high-impact development Developing productive, performance-based work environments

Strengthening Human Capital Performance

Building leadership capacity for now and the future Executing more effectively Facilitating innovation and smart risk-taking Leveraging and integrating new technologies to support the business Increasing flexibility in managing capacity utilization to meet changing market conditions

Increasing Organizational Effectiveness

Strengthening the culture of collaboration and change Supporting organizational globalization and multiculturalism Adapting to new and ever-changing forms of regulation Meeting increasing expectations for socially responsible and sustainable business practices Addressing organizational culture during organizational realignments
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Your thoughts?

Questions and Comments?

Thank you!!!

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