Diagnosing Organizations:The Process, The Performance Gap, The Interview Data

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Organization Development MGMT 628

Lesson 15

Diagnosing Organizations

All consultants advocate expert diagnosis and action-taking. Engineers and behavioral scientists alike have

diagnoses of organizational conflict and prescription for solving it. Diagnosis is medical jargon for the gap

between sickness and health. As biology exploded in the late 19th century, the human body, like the

workplace, was divided into manageable components, too. Doctors became the industrial engineers of the

human physique. Their claim of expertise was based on their ability to factor in every relevant "variable"

and thus heal the sick.

It is no surprise that, applying to industrial science, diagnosis is conceived as identifying and closing gaps

between how things are and how they should be, using all the tools of science and technology.

Lewin added a new dimension to this model. He highlighted processes unseen through 19th-century eyes

because nobody had a conceptual lens powerful enough.

The concept he developed goes by the name of the "task/process" relationship  the subtle chicken/egg

interplay between ends and means, methods and goals. A task is something concrete, observable, and thing-

oriented. It can be converted into criteria, measurements, targets, and deadlines. A task group dynamics

people were fond of saying refers to what is to be done.

Process refers to how. It reflects perceptions, attitudes, reasoning. Process diagnosticians ask, "Why aren't

we making progress?" They don't ask when, where, and how many but why, how, and whether.

Task/process thinking can be likened to the famous visual paradox of the Old Woman/Young Woman.

Do you see a young beauty with her head turned or an old woman in profile?

Figure 18: Old woman/young girl

You can't see both at once. By some mental gyration, you can learn to shift between them.

Action, on the other hand, reflects pure process. We guide it largely on automatic pilot, fueled by little

explosions of energy in the right brain of creativity, insight, synthesis that can't be quantified or

specified as "targets."

Through trained observation, you can diagnose ingenious linkages between task and process. When work

stops, for example, determine what is not being talked about the gap between word and deed, the all-too-

human shortfall between aspiration and action. You must shift attention the way a pilot scans instruments

from compass to altimeter to air speed indicator to keep task and process synchronized. That requires

skills few of us learn in school.

Unfortunately, left-brain diagnostic thinking perfected by scientists for more than 100 years leads

people to pay attention to the compass and to consider the altimeter a frill. The diagnoser is assumed to

stand outside, impartial, "objective," and aloof from what is observed. If you add to this your propensity to

defer to authority parents, boss, and experts you have a setup for disappointment. For the

authority/dependency relationship itself becomes a "process" issue, especially when the person invested

with abilities lacks satisfactory "answers."

Organization Development MGMT 628

Group dynamics' great contribution to management was its relentless gaze at the process as inseparable

from the task, the diagnoser inseparable from the diagnosis, a leader's effectiveness inseparable from

follower contributions.

What is Diagnosis?

Diagnosis is the process of understanding how the organization is currently functioning, and it provides the

information necessary to design change interventions. It generally follows from successful entry and

contracting, which set the stage for successful diagnosis. They help OD practitioners and client members

jointly determine organizational issues to focus on, how to collect and analyze data to understand them,

and how to work together to develop action steps from the diagnosis.

Unfortunately, the term diagnosis can be misleading when applied to organizations. It suggests a model of

organization change analogous to medicine: an organization (patient) experiencing problems seeks help

from an OD practitioner (doctor); the practitioner examines the organization, finds the causes of the

problems, and prescribes a solution. Diagnosis in organization development, however, is much more

collaborative than such a medical perspective implies and does not accept the implicit assumption that

something is wrong with the organization.

First, the values and ethical beliefs that underlie OD suggest that both organization members and change

agents should be involved in discovering the determinants of current organizational effectiveness. Similarly,

both should be involved actively in developing appropriate interventions and implementing them. For

example, a manager might seek OD help to reduce absenteeism in his or her department. The manager and

an OD consultant jointly might decide to diagnose the cause of the problem by examining company

absenteeism records and by interviewing selected employees about possible reasons for absenteeism.

Alternatively, they might examine employee loyalty and discover the organizational elements that encourage

people to stay. Analysis of those data could uncover determinants of absenteeism or loyalty in the

department, thus helping the manager and the practitioner to develop an appropriate intervention to

address the issue. The choice about how to approach the issue of absenteeism and the decisions about how

to address it are made jointly by the OD practitioner and the manager.

Second, the medical model of diagnosis also implies that something is wrong with the patient and that one

needs to uncover the cause of the illness. In those cases where organizations do have specific problems,

diagnosis can be problem oriented, seeking reasons for the problems. On the other hand, as suggested by

the absenteeism example above, the practitioner and the client may choose to frame the issue positively.

Additionally, the client and OD practitioner may be looking for ways to enhance the organization's existing

functioning. Many managers involved with OD are not experiencing specific organizational problems.

Here, diagnosis is development oriented. It assesses the current functioning of the organization to discover

areas for future development. For example, a manager might be interested in using OD to improve a

department that already seems to be functioning well. Diagnosis might include an overall assessment of

both the task-performance capabilities of the department and the impact of the department on its

individual members. This process seeks to uncover specific areas for future development of the

department's effectiveness.

In organization development, diagnosis is used more broadly than a medical definition would suggest. It is

a collaborative process between organization members and the OD consultant to collect pertinent

information, analyze it, and draw conclusions for action planning and intervention. Diagnosis may be aimed

at uncovering the causes of specific problems; be focused on understanding effective processes; or be

directed at assessing the overall functioning of the organization or department to discover areas for future

development. Diagnosis provides a systematic understanding of organizations so that appropriate

interventions may be developed for solving problems and enhancing effectiveness.

Organizational diagnosis is a major practitioner skill. It usually examines two broad areas.

The first area comprises the various interacting sub-elements that make up the organization. These include

the divisions, departments, products, and the relationships between them. The diagnosis may also include a

comparison of the top middle, and lower levels of management in the organization.

The second area of diagnosis concerns the organizational processes. These include communication

networks, team problem-solving, decision-making, leadership and authority styles, goal-setting and planning

methods, and the management of conflict and competition.

The Process:

Diagnosis is a cyclical process that involves data gathering, interpretations, and identification of problem

areas and possible action programs, as shown in Figure 19. The first step is the preliminary identification of

possible problem areas. These preliminary attempts often bring out symptoms as well as possible problem

areas.

Organization Development MGMT 628

The second step involves gathering data based on the preliminary problem identified in the preceding step.

These data are categorized, analyzed and presented to the client in a feedback session (steps 3 and 4). If it is

determined that enough data are available (step 5), the client and practitioner jointly diagnose and identify

likely problem areas (step 6). At this point, the client's level of motivation to work on the problems is

determined (step 7). Based upon the diagnosis, the target systems are identified and the change strategy is

designed (step 8). Finally (step 9), the results are monitored to determine the degree of change that has

been attained versus the desired change goals.

Fig 19: The Diagnostic Process

The Performance Gap:

One method in the diagnostic process is to determine the performance gap---the difference between

what the organizations could do by virtue of its opportunity in its environment and what it actually does.

This leads to an approach that may be termed gap analysis. In this method, data are collected on the actual

state of the organization on a varying set of dimensions and also on the ideal or desired state, that is,

"where the organization should be. As shown in Figure 20, the gap, or discrepancy, between the actual state

and the ideal form a basis for diagnosis and the design of interventions. The gap may be the result of

ineffective performance by internal units or may emerge because of competitive changes or new

innovations. A performance gap may also occur when the organization fails to adapt to changes in its

external environment.

Competent organizational diagnosis does not simply provide information about the system; it is also helpful

in designing and introducing action alternatives for correcting possible problems. The diagnosis affirms the

need for change and the benefits of possible changes in the client system. Important problems are very

often hidden or obscure, whereas the more conspicuous and obvious problems are relatively unimportant.

In such situations, dealing with the obvious may not be a very effective way to manage change; this

underscores the importance of the diagnostic stage.

A performance gap may continue for some time before it is recognized, in fact, it may never be recognized.

On the other hand, the awareness of a performance gap may unfreeze the functions within the organization

that are most in need of change. When this happens, conditions are present for altering the structure and

function of the organization by introducing OD interventions.

Organization Development MGMT 628

One OD practitioner suggests a self assessment version of gap analysis using questionnaires to gather

information in four key areas:

1. The organization's strengths.

2. What can be done to take advantage of the strengths?

3. The organization's weaknesses.

4. What can be done to alleviate the weaknesses?

In organizational diagnosis, the practitioner is looking for causality that is, an implication that change in

one factor (such as compensation) will cause change in another factor (productivity): a cause-effect

relationship. The client is often aware of the evidence of the problem, such as declining sales, high

turnover, or loss of market share the symptom of a problem. In the diagnosis phase, the practitioner tries

to identify what factors are causing the problem, and therefore what needs to be changed to fix it.

Fig 20: The Performance Gap

The process of identifying the organization's strengths

and

weaknesses

often

leads

recognition of performance gaps and to change programs.

The Need for Diagnostic Models:

Entry and contracting processes can result in a need to understand a whole system or some part, process,

or feature of the organization. To diagnose an organization, OD practitioners and organization members

need to have an idea about what information to collect and analyze. Choices about what to look for

invariably depend on how organizations are perceived. Such perceptions can vary from intuitive hunches to

scientific explanations of how organizations function. Conceptual frameworks that people use to

understand organizations are referred to as diagnostic models. They describe the relationships among

different features of the organization, its context, and its effectiveness. As a result, diagnostic models point

out what areas to examine and what questions to ask in assessing how an organization is functioning.

However all models represent simplifications of reality and therefore choose certain features as critical.

Focusing attention on those features, often to the exclusion of others, can result in a biased diagnosis. For

example, a diagnostic model that relates team effectiveness to the handling of interpersonal conflict would

lead an OD parishioner to ask questions about relationships among members, decision-making processes,

and conflict resolution methods. Although relevant, those questions ignore other group issues such as the

composition of skills and knowledge, the complexity of the tasks performed by the group, and member

inter-dependencies. Thus, diagnostic models must be chosen carefully to address the organization's

presenting problems as well as to ensure comprehensiveness.

Potential diagnostic models are everywhere. Any collection of concepts and relationships that attempts to

represent a system or explain its effectiveness can potentially qualify as a diagnostic model. Major sources

of diagnostic models in OD are the thousands of articles and books that discuss, describe, and analyze how

organizations function. They provide information about how and why certain organizational systems,

processes, or functions are effective. The studies often concern a specific facet of organizational behavior,

Organization Development MGMT 628

such as employee stress, leadership, motivation, problem solving, group dynamics, job design, and career

development they also can involve the larger organization and its con text, including the environment,

strategy, structure, and culture. Diagnostic models can be derived from that information by noting the

dimensions or variables that are associated with organizational effectiveness.

Another source of diagnostic models is OD practitioners' experience in organizations. That field

knowledge is a wealth of practical information about how organizations operate. Unfortunately only a small

part of that vast experience has been translated into diagnostic models that represent the professional

judgments of people with years of experience in organizational diagnosis. The models generally link

diagnosis with specific organizational processes, such as group problem solving, employee motivation, or

communication between managers and employees. The models list specific questions for diagnosing such

processes.

Let's look at a general framework for diagnosing organizations. The framework describes the systems

perspective prevalent in OD today and integrates several of the more popular diagnostic models. The

systems model provides a useful starting point for diagnosing organizations or departments.

Open-Systems Model:

This section introduces systems theory, a set of concepts and relationships describing the properties and

behaviors of things called systems - organizations, groups, and people, for example. Systems are viewed as

unitary wholes composed of parts or subsystems; the system serves to integrate the parts into a functioning

unit. For example, organization systems are composed of departments such as sales, operations, and

finance. The organization serves to coordinate behaviors of its departments so that they function together

in service of a goal or strategy. The general diagnostic model based on systems theory that underlies most

of OD is called the open -systems model.

Organization as Open Systems:

Systems can vary in how open they are to their outside environments. Open systems, such as organizations

and people, exchange information and resources with their environments. They cannot completely control

their own behavior and are influenced in part by external forces. Organizations, for example, are affected

by such environmental conditions as the availability of raw material, customer demands, and government

regulations. Understanding how these external forces affect the organization can help explain some of its

internal behavior.

Open systems display a hierarchical ordering. Each higher level of system comprises lower-level systems:

systems at the level of society comprise organizations; organizations comprise groups (departments); and

groups comprise individuals. Although systems at different levels vary in many ways--in size and

complexity, for example--they have a number of common characteristics by virtue of being open systems,

and those properties can be applied to systems at any level. The following key properties of open systems

are described below: inputs, transformations, and outputs; boundaries; feedback; equifinality; and

alignment.

Case: The Old Family Bank

The Old Family Bank is a large bank in a southeastern city. As a part of a comprehensive internal

management study, H. Day, the data-processing vice-president, examined the turnover, absenteeism, and

productivity figures of all the bank's work groups. The results Day obtained offered no real surprises except

in the case of the check-sorting and data-processing departments.

The study

The study revealed that, in general, the departments displaying high turnover and absenteeism rates had low

production figures, and those with low turnover and absenteeism were highly productive. When the check-

sorting and data-processing figures were analyzed, Day discovered that two departments were tied for the

lead for the lowest turnover and absenteeism figures. What was surprising was the check-sorting

department ranked first as the most productive unit, whereas the electronic data-processing department

ranked last.

This inconsistency was further complicated by the fact that the working conditions for check-sorting

employees are very undesirable. They work in a large open room that is hot in the summer and cold in the

winter. They work alone and operate high-speed check-sorting machines requesting a high degree of

accuracy and concentration. There is little chance for interaction because they take rotating coffee breaks.

The computer room is air-conditioned, with a stable temperature year around: it has perfect lighting and is

quiet and comfortable. Both groups are known to be highly cohesive, and the workers in each department

function well with one another. This observation was reinforced by the study's finding of the low levels of

turnover and absenteeism.

The Interview Data

Organization Development MGMT 628

In an effort to understand this phenomenon, Day decided to interview the members of both departments

in order to gain some insight into the dynamics of each group's behavior. Day discovered that the check-

sorting department displayed a great deal of loyalty to the company. Most of the group members are

unskilled or semiskilled workers; although they have no organized union, they all felt that the company had

made special efforts to keep their wages and benefits in line with unionized operations. They knew that

their work required team effort and were committed to high performance.

A quite different situation existed in the data-processing department. Although the workers liked their

fellow employees, there was a uniform feeling among this highly skilled group that management put more

emphasis on production than on staff units. They felt that the operating departments had gotten better pay

raises, and that the wag gap did not reflect the skill differences between employees. As a result, a large

percentage of the group's members displayed little loyalty to the company, even though they were very

close to one another.

Case Analysis Form

Name: ____________________________________________

I. Problems

Macro

____________________________________________________

B. Micro

_____________________________________________________

II. Causes

_____________________________________________________

III. Systems affected

Structural ____________________________________________

Psychosocial __________________________________________.

Technical ______________________________________________

Managerial _____________________________________________

Goals and values __________________________________________

IV. Alternatives

_________________________________________________________

________________________________________________________

V. Recommendations

1. _________________________________________________________

2. __________________________________________________________

3. __________________________________________________________

Case Solution: The Old Family Bank

I. Problems

Macro

The lack of loyalty to the entire bank could affect the effectiveness (and profitability) of the bank.

The bank may have a poor process for setting pay policies.

B. Micro

Though the personnel in the data-processing department have a strong team, they are not

loyal to the larger organization.

Data-processing personnel believe that management does not appreciate them, their skills, and

contributions.

Data-processing personnel may be underpaid when compared to similar workers in other

companies.

Organization Development MGMT 628

II. Causes

The skilled workers in the data-processing department do not recognize all of the factors that may

affect pay and rewards.

The data-processing personnel possibly has access to more company-wide information by virtue

of the type of work their department does than do personnel in other departments. Consequently, they get

a portion of the data without understanding how managers make decisions based upon that data.

III. Systems affected

The attitude of the data-processing personnel to the bank likely affects the entire bank's

operations.

IV. Alternatives

H. Day gathers more data to confirm/disprove initial diagnosis.

Use a diagnosis model such as force-field analysis to better understand the problem. Working

through the model may bring to light ways to change the situation in the data-processing

department.

Day checks on regional employment data to determine if data-processing personnel are being paid

competitively with similar workers in other companies. Adjust pay if warranted by the data.

Meet with the department and explain the bank's procedures and rationale for how pay levels are

set.

V. Recommendations

All of the alternatives listed above can be undertaken by Day.

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