The Importance of OD in the Work of HR

Early in my career as an HR Director, I worked for a CEO who had come into a new organization with a vision to create a purpose-driven and outcomes-focused culture. As the HR Director, my assignment was to work with him to identify where change needed to occur and to facilitate an organizational shift. Over a multi-year period, we worked diligently to shift from an employee perspective that was myopic to one where employees embraced the organization’s mission and took pride in their respective roles in achieving the mission. This culture change resulted in higher than ever stakeholder satisfaction, lower employee turnover, higher levels of diversity and inclusion, and, frankly, it was just a much more pleasant place to work. Achieving these outcomes required an organization-wide approach to align our strategy, structure, processes, and people. We first had to conduct an honest assessment of our organization’s condition and identify the barriers we had to overcome and the strengths we could embrace to become the organization we wanted to become. We then had to develop a plan of action to mitigate the negative and capitalize on the positive. Intentional, transparent, and frequent communication was critical to our success. In addition to communicating the new vision, we provided training at all levels so that every member of the team could feel equipped, informed, and empowered to fulfill their role.

I tell you this story because the HR leader’s role has evolved from being a reactive compliance officer to that of a strategic partner, helping organizations build capacity and capabilities by focusing on the people. It is no longer enough for the HR leader to simply oversee the numerous transactional responsibilities HR is tasked with. These days, HR leaders find they must be intentional about moving their organization toward greater effectiveness, which benefits not only the organization but also the staff and the community. For many of these leaders, success depends on their ability to think in terms of the collective skills, knowledge, and other intangible assets of individuals that are available to create economic value for the organization. They have been successful at moving from a transactional mindset to a transformational mindset. The ability to think differently, coupled with a strategic human capital plan, lends itself to increasing the people’s capabilities within the organization, ensuring that initiatives are aligned with the company’s overarching goals, thereby increasing the capacity of the business.

This is a heavy lift, not easily accomplished without making the shift from transactional to transformational. I remember reading a Forbes article titled Transform Your Mindset, Transform Your Results that described the difference between a transactional mindset and a transformational mindset.

“A transactional leader focuses on routine and regimented activities. He invests most of his energy in making sure meetings run on time, that administrative details are properly handled, and that completed tasks are noted on checklists. A transformational leader focuses primarily on initiating and “managing” change. He influences people to improve, to stretch, and to redefine what’s possible.

Transactional things involve making sure the train runs on time. Transformational things involve ensuring that the train is on the right track, that it’s headed in the right direction, and that everyone who wants to make the trip has a ticket.”

So how do we get from transactional HR to transformational HR?  This is where the principles of organizational development (OD) come into play. What are we talking about when we say OD?

According to the OD Network, an international association of OD practitioners:

“Organization Development is an effort that is:

• Planned
• Organization-wide
• Managed from the top
• Increase organization effectiveness and health
• Through planned interventions in the organization’s “processes,” using behavioral science knowledge.

It is not a surprise that the unit of analysis for OD practitioners is organization, which means that OD we focus on developing organization capability through alignment of strategy, structure, management processes, people, and rewards and metrics.”

This sounds a lot like strategic HR, a concept we’ve been discussing for years!!  According to SHRM, “Strategic human resource management involves a future-oriented process of developing and implementing HR programs that address and solve business problems and directly contribute to major long-term business objectives.”

Great Place to Work identifies 7 key skills for HR to be strategic HR leaders. These skills are based on interviews they conducted with CEOs, Board members, researchers, and more. The skills are:

• The ability to understand and speak the language of business;
• The ability to increase the speed of change in an organization so that the organization is able to meet vital business requirements
• An understanding of how organizations work, what they call organization engineering, and the best practices for that organization’s success
• The ability to drive the culture, ensuring that what the company does is in alignment with what the company wants to have and be
• The ability to utilize data to ask the right questions, get the right answers and make the best decisions
• The ability to create an environment of inclusion where we tap into each employee’s passion, regardless of age, gender, race, etc.
• An understanding that employees are the face of your organization to customers, and the employee experience directly impacts the customer experience. When employees are happy, they tend to be your best brand ambassadors.

While the distinctions between HR and OD seem very clear in a theoretical sense, they become blurred in a practical sense, particularly as HR leaders look to positively impact organizational outcomes. At Employers Council, our OD and HR professionals are working as a consolidated team, known as Integrated Human Capital Services, to support our members as they navigate the transactional and the transformational aspects of this work. Give us a call; we’re here to help.