Lecture 3 – Diagnosis: overview

Lecture 3 – Diagnosis: overview • what is diagnosis? • why is it important? • the open systems approach to diagnosis • characteristics common to Open Systems diagnostic models • organisation level diagnosis

Module Learning Objectives Addressed • Explain the importance of diagnosis in the overall organisational change process • Understand principles that facilitate effective diagnosis • Understand the 3 levels of diagnostic analysis that can be performed (as per the Open Systems Model)

What is diagnosis? • An orderly or reliable way of gathering data to identify how the organisation is functioning currently • Diagnosis is typically used to identify problems & opportunities • The collection of data informs the choice of intervention. Put another way, diagnosis precedes intervention • Note: there are various diagnostic instruments (designed to highlight a particular part of the change process e.g.. is the entity ready for change?), or the organisation’s function (e.g.. its structure), but our interest is in the whole of organisation • Whole of organisation diagnosis implicates diagnostic models

Importance of diagnostic models (Burke , in Palmer, Dunford & Akin 2006) • Managers carry around in their heads implicit models of how things work. The problem with implicit models is that they’re based on personal experience – therefore not generalisable. • In any organisation, literally thousands of things are going on at any time. Models reduce this complexity to a user-friendly, more manageable number of categories • This categorising allows more effective identification of organisation parts that warrant close attention • It allows us to see how system parts are interconnected • It provides us with a ‘common language’ with which to discuss organisational characteristics

Diagnostic models: clarification • There are scores of models available • Each model is a simplification of reality. • Each model emphasises different parts of organisation life • Each reflects its creator’s views (& biases). Also means in most cases the model has been exposed to scrutiny by peers & attracted at least some support • Diagnostic models are not change strategies. They provide pictures of how things are • Change strategies follow on from diagnosis

Open Systems Diagnostic model Various assumptions inherent in systems thinking … • Systems are comprised of numerous subsystems … all interacting … but in combination working as a functioning unit. • Open systems interact with their environments. Environmental factors influence org. behaviour (e.g.. via laws, availability of labour etc.), but organisations also influence environment (e.g.. medical labs. with development of new treatments for illnesses) • Various elements of open systems are common, regardless of level of inquiry/application

Characteristics common to open systems diagnostic models Inputs; acquired from the organisation’s environment Transformations; what happens in the organisation whereby the inputs are converted to outputs Outputs; products or services that are transformed by the organisation/system and sent to the environment • Boundaries; permeable & often indistinct borders of the organisation • Feedback; information fed back into the organisation, whereby this information influences or changes the functioning of the system • Equifinality; whereby similar outcomes or results may be possible using different initial conditions and in many different ways • Alignment; or ‘fit’. Diagnosis is described as the search for misfit among the various parts & subsystems of the organisation

Open Systems Model • Source Waddell, Cumming and Worley (2011) Organisation Change -Development & transformation 4th edn. Cengage Learning , South Melbourne Australia

Organisation-LevelDiagnostic Model Outputs Inputs Design Components General Environment Industry Structure Organisation performance Productivity Stakeholder satisfaction Strategy Organisation design • Source Waddell, Cumming and Worley (2007) Organisation Development & Change. Nelson, South Melbourne Australia

Organisation level diagnosis 1. Inputs Two key inputs viz. general environment & industry structure. Both dynamic … change over time 1. 1 General environment • Combination of various forces that individually or collectively can influence whether or not organisational objectives are achieved • Environment includes social, techno., economic, ecological, political events/influences

Organisation level diagnosis 1. Inputs…continued 1.2 Industry Structure (task environment) • Five key forces/influences • Suppliers, • buyers/customers, • threats of entry (new competitors), • threats of substitutes, • rivalry among competitors • Other writers include movement in the labour market, in which skills shortages for example can hinder efforts to expand or meet tight deadlines

Organisation level diagnosis 2. Design components or strategic orientation phase (the transformation part of the Open Systems model) There are 5 components to this part of the model 2.1 Strategy … includes • The organisation’s mission (e.g.. long term purpose, range of offerings, markets etc.) • Its goals & objectives (specific statements that identify priorities, and the bases for organising work activities) • Strategic intent (the above specifies which goals … here the focus is on how) • Functional policies (putting policies into action, including procedures & rules)

Organisation level diagnosis 2. Design components or strategic orientation phase (the transformation part of the Open Systems model) 2.2 Technology … includes • Ways by which inputs are converted to goods and services • Includes focus on production methods, work flows, equipment • Note how parts of the techno. system in the organisation may require high interdependence (e.g. when different depts. combine to develop or bring out a new product). Your diagnosis would need to uncover these interdependencies.

Organisation level diagnosis 2. Strategic Orientation(the transformation part of the Open systems model) …continued 2.3 structural system • How the work to be done is broken down into departments, cost centres or sub-units, from which jobs and tasks can be allocated • Two ways of identifying how this work is broken down • Identify its formal structure (functional, divisional, network, matrix?) • Examine its level of differentiation & integration • Diagnosis involving investigation of differentiation (would involve the degree of difference in design between different departments or subunits) & integration (the way in which an organisation co-ordinates work from its various departments/subunits)

Organisation level diagnosis 2. Strategic Orientation(the transformation part of the Open systems model) …continued 2.4 Measurement systems • Methods of collecting and interpreting data and disseminating info with reference to performance of groups & individuals • Used to uncover and control deviations from specified goals • Monitoring is implicit in this operation • Accuracy in measurement and timely info. help to legitimise findings

Organisation level diagnosis 2. Strategic Orientation(the transformation part of the Open systems model) …continued 2.5 Human resource systems • Strategy and technologies used inform the organisation about which skills and knowledge types are needed • The locus for attending to the suite of functional HR activities and developing required skills and knowledge (recruit. & selection, training & development, performance appraisal, remuneration) • Note that rewards must align with measurement systems (assumes individual & group performances can be measured in an objective way)

Organisation level diagnosis 2. Strategic Orientation(the transformation part of the Open systems model) …continued The below component is described by Waddell et al as an ‘intermediate output’ but for our purposes it fits ok with other transformations … things that happen to inputs 2.6 Organisational/corporate culture • Shared assumptions, beliefs, values, norms, • Powerful influences on thoughts and actions/behaviour • Is the prevailing culture strong? Does it endorse high performance? • A non-supportive culture can undermine the best otherwise-integrated system

Organisation level diagnosis Outputs • Represented by 3 categories 1. Organisational performance, • Financial measures e.g. profits, ROI, earnings per share 2. Productivity, • Measures used to assess efficiencies e.g. reject rates per 100 units made 3. Stakeholder satisfaction • Various stakeholders … various measures

Alignment between org.-level parts Diagnosis of alignment usually means an investigation of … • Whether or not the strategic orientation (the transformations part) fits with inputs • e.g. does structure accommodate uncertainties in the environment? • Do all the elements of strategy fit with each other? • e.g. do the rules and procedures support risk taking if innovation & creativity are at the heart of the operation? • Do the elements of organisation design fit with each other? • e.g. is the reward system sufficiently flexible to reinforce routine desired behaviour in production, and creative and frame-breaking activity in other parts? • Do the items in organisation design support the strategy?

Group-Level Diagnostic Model Inputs Design Components Outputs Goal Clarity Task Team StructureFunctioning Group Group Composition Norms Team Effectiveness Organisation Design • Source Waddell, Cumming and Worley (2007) Organisation Development & Change. Thomson, South Melbourne Australia

Group level diagnosis • The template for diagnosis at this 2nd level is the same (inputs, transformations, outputs etc) • Note: many larger organisations have departments that behave (and in some instances, have similar numbers of staff) as organisations. It can be useful to overlay the organisation-wide diagnostic template over their operation. • Realise or appreciate how the elements take on different forms (e.g. organisation design shapes/influences how groups are set up … design then becomes an input at this level)

Individual-Level Diagnostic Model Inputs Design Components Outputs skill Variety Task Identity Autonomy Task Feedback Significance about Results Individual Effectiveness Organisation Design Group Design Personal Traits • Source Waddell, Cumming and Worley (2007) Organisation Development & Change. Thomson, South Melbourne Australia

Diagnosis at the individual level • Note how the two levels of design (organisation-level & group) both have the capacity to influence individual behaviour … they are inputs at this individual level of diagnosis • Consider … what are some of the benefits of cross-functional work teams? • How might this impact on individual behaviour?

Summary – this section on diagnosis • Diagnosis is the data collection phase that precedes intervention • Diagnosis attempts to portray how the organisation is functioning • Problems and opportunities can be identified through this diagnosis activity • The open systems model informs this module – we have considered this at 3 levels of functioning, but others are possible. • Regardless of level, the various properties or elements of the open systems model are applied during diagnosis • There are numerous other models of diagnosis.

Testing understanding Which of the below items best summarises and describes the relationship between diagnosis and intervention?(a) there is no relationship because the two activities are carried out by different interests (b) diagnosis informs intervention (c) intervention informs diagnosis (d) diagnosis can only occur after the entry of a change consultant

Testing understanding In a large international magazine producer’s (e.g.. Cosmopolitan Mag.) organisational structure, the production facility has to work to tight time deadlines, and there are clear distinctions and roles between the various levels of management. However, the journalists who write for this magazine are typically given licence to organise their time and energies, and few meetings are held with this set. This example illustrates which of the below?(a) permeable boundaries (b) equifinality (c) high differentiation (d) Cosmo. is not a good place to work

Testing understanding Many companies operate with limited human resource management, preferring to outsource some of the HRM functions. However, if this isn’t done effectively it can hinder organisational functioning, especially if there’s little consistency with performance appraisal and performance management in different areas, or differences in the ways that people are paid. Which of the below is most evident in such a scenario?(a) weak integration (b) high differentiation (c) culture is out of alignment with strategy (d) myopic management

Lecture 3 – Diagnosis: overview