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Essay: Organization Development (OD) is an effort designed for today’s organization to meet the needs in rapidly changing environment.

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Organization Development (OD) is an effort designed for today’s organization to meet the needs in rapidly changing environment. The OD process is handled and implemented by the top to down with objective to enhance organizational effectiveness through OD interventions. (Source: managementhelp.org). OD will require the involvement and ownership of all stakeholders to succeed in the process. OD usually facilitates the process of change. These change agents need the organization employees as internal consultants or those from outside the organization as an outside consultant. The leader with knowledge and experience is important on managing change and maintain the rapid change of the organization by freezing and freezing (Source: alumnus.caltech.edu.)
There are many organizations that fail and unable accommodate a rapidly changing environment such as NOKIA. The main reason NOKIA’s failure is disinterest and rejection of stakeholders during its transformation. The change management teams and leaders, employees, consultants play an important role in the process of change management especially critical times. The external and internal stakeholders of the organization should share common vision in the objective of change management (Source: atozgossips.com).
The family-owned business is different from any other business organizations in some way. It is mainly complex way about managing an organization especially a family and shareholders. This included three different system which is family, company and shareholder (Source: sedlak-partner.com). Nowadays, the organizational development and change (ODC) has expanded widely to focus on aligning organizations with their rapidly changing and complex environments through knowledge management, organization learning and transformation of organizational norms and values (Source: Bacal, 2007).
2.0 Question 1
Given the unique characteristics of family owned business, what modifications to the usual organizational development practices are relevant? Describe such modifications and contrast them with the usual organizational development practices.
Every organization has gone through a process of change in order to achieve more effectiveness and company’s optimism goal. As usual, a normal organization will go through two different types of incremental and revolutionary change; growth and change. This change will execute and monitor by the change management team by applying a learning curve theory and changes process according to the situation (Source: shmula.com). Especially to Family Business both of the changes required different approach. As organizational development is thought to be a process of integration of culture and family goals, the family business may not follow the actual process as what an actual business organization does and always leads to improved strategic implementation which families speaking the same language (Source: Bacal, 2007).
It was pointed out that tackle problems during the growth of family business with a great opportunity to cultivate long-term family ownership. Although it has been showed the family business need to use behavioral science approach as a key for organizational development to establish a high-level leader, most of the time their behavioral traits in the family and ensuring that their family needs emerge instead of focusing on employees demand. As such, there are some of the modifications that can be identified like the system of the family business, complexity and satisfaction and etc.
Every family business has a set of three different systems; the family system, the ownership and the management system. The owner will always behave as the shareholders and there are purely owned by their own family or trustworthy person as friends, which both of their goals will be the same to achieve higher profit in the business and securing a long term position and family well-being. As a family business created the change, usually not difficult as the top management team are from the same family as their thoughts is similar as compared to others organization. The managers from normal organization could be from the outside which more well-versed with the norm of business. The main development issue in this area is that they even hired some people from outside the organization; the final decision makers are still family. A family business and the family leaders that recognize and manage these three systems are more effective at keeping sustain a success which is not applicable in normal organization; only two different group managers and shareholders work to make the business successful. Therefore, the modifications that need to be made are to consider the process as a consolidation of two elements and to include more non-family members in the system to enhance the process.
In family-owned business, satisfaction may be more complicated as family ownership is needed to adapt to new financial needs or to meet unacceptable external quality, as family businesses rarely accept changes and are constantly changing due to the insecurity they do not trust others in the business (Source: sedlak-partner.com). Families are now often compromised so that businesses can continue to be at a tolerable level of anxiety that a normal organization always wants to meet shareholder needs and achieve business goals. Unless they know the difference between a family and a business, the change may not be easy to adapt to a family business. (Source: Gary, 2005)
In normal organization, the CEO or managers will play and work according to their task and responsibility however this is not much applicable into the family business as they are bound by the complex structure and misunderstand. It has a complex structure and most of the time will lead to any misunderstand and everyone wants to keep each other feeling taken into care. In this context they may very reluctant to do any continuous improvement as they feel it may be reflecting the weakness of their own family members and they have the habit to find a scapegoat to be victimized and this not been likely by the employees. This also difficult process as they required take care additionally a family and shareholder which in certain need to be confronted with situations that cannot be solved without anyone feel offended or insulted. This issue frequently evolves in the family-owned company and they may not able to settle it in smooth and employees may not able to interfere. OD may not adopt in here because this process is difficult to be change unless the system changes to accept other in the board of directors or shareholder like PARKSON – The Lion Group.
One of the successful family business that growing and anticipate changes and using revolutionary changes like PARKSON – The Lion Group. Even though they are family business but the ideas and concept are very much relevant to the concept of open management in normal organization; the modification they have done is the change the entire system works in the organization by implementing a board of director which consists of outsider. This openness approach encouraged and creates better growth in terms of innovation and the succession planning may not work for them and they may find it as threatening. This may be cause problematic if anyone in the family faces serious illness or worst, and the continuation of the original plan may not be feasible because they do not inherit the legacy. In addition, they are reluctant to the change due to the insecure feeling and do not trust any others in their business except their own family. (Source: Gary, 2005)
3.0 Quest
ion 2
Describe family-owned business developmental stages and the concept of “Parallel Planning Process”. What are the critical issues in family-owned business that organizational development practitioner has to identify and diagnose?
The concept of organizational development and change seems to be not easy to execute in family business because the complexity between the family management and professional management as the problem as usually the person who hold high position like CEO or Managing Director may not able to be the right candidate with the relevant qualification especially in specific management skills, beside this it is sometimes it is difficult when someone unable to behave professionally. The most impossible elements of the successful family business plan are the strategic planning between the family and business where owner and managers can produce mutual commitment and alignment towards company’s goal (Source: thefbcg.com).
Figure 1 – Parallel Planning Process (Source: thefbcg.com)
Based on the Figure 1, the parallel planning process split to four principal which is the family must clarify and also shared beliefs amongst the team, experience and legacies that unite them in their ownership of the family enterprise however this can be easily identified as a critical issues in a family business because not all the employees able to accept the shared beliefs. This issue also needs to be encounter by the ODC practitioner since most of the families’ leaders are more interested to solve the misunderstanding rather than create a strong values and business policy for strategic planning. The most of the family businesses are not interested on strategic planning. Secondly is the strategic thinking principal applied to both business and family; will ensure a communication flow in between since there must be a set of alignment in between family’s expectation and business where business must proactively plan for growth, however this could lead to be critical factors as when conflict or misunderstanding occurs in the business the communication flow stop and end. Therefore, the strategic planning may not able to be applied. (Source: thefbcg.com)
Next, the third principal is shared future vision or common goal that leads both the family and the business. This family expectation will set the balance against business needs in setting the vision for future but the critical factor will be how this future vision can be continued if there is any illness or death in the family business where the leader who creates the vision is no longer therein some circumstances. Thus, lack of managerial skills among the management staff especially the one related to the family may not have the specific skills in management to develop a vision and shared within employees. Lastly, the continuous formulating long term plans, where the parallel planning process requires a commitment to have ongoing feedbacks and improvement. However, the metrics may look difficult to be builds no expertise and somehow employees may need to confront the managerial person. (Source: thefbcg.com)
Other than the findings or factors through Parallel Planning process, the ultimate difficult that may face by the OD practitioners is the resistance to change from the family business as the family members always want to remain the old history and legacy and difficult for them to move from their own comfort zone and accept the changes because the feeling of insecure that others may will take the business from them and they want to secure the business for their next generation.
OD practitioners not only develops the family continuity plan which at the same time focuses on critical success factors for both families and businesses through necessary assessments but the problem arises as an important factor is the family reluctant to change due to uncertainty and fear. They are neutral parties who have responsible to stabilize the emotional team within the family. Hence, they bring expertise and work professionally with many families and employees in the company. (Source: inc.com)
Besides that, the difficult factors to choose in a family business in between “business first” and family first” becomes irrelevant with the process of assuming the success of the business now supports the continuity and well-being of the family next generation which for them always “family first”. OD practitioner may find it difficult to formulate a strategy that supports the current and future welfare of the family assures management and shareholder. In a family business with a poor transitions and lack of succession planning could lead to a failure. A strong and effective board by OD practitioner need to be establish since a strong candidate are needed to create a continuity and aligned the mission and vision (Source: thefbcg.com)
4.0 Question 3
What are the organizational development interventions in family-owned business? Describe each of the said interventions in details; giving real life examples whenever appropriate.
The organizational development interventions are learning process on the action stage of organizational development which has a structured activities used by an individual or agent to improve their social task performance. It has also noted that influences in organization’s improvement program in a change agent whereas client system relationship which also is an intervention. There are six assumptions in how OD could intervene into an organization according Beckhard (Source: alumnus.caltech.edu). The assumptions are:
a. The basic building blocks of an organization like group.
b. An analysis relevant change goal is the reduction of inappropriate competition in between the organizational development.
c. Decision making in a healthy organization is located where the information sources.
d. Organization, subunit and individual continuously manage their affairs against goals.
e. One goal of a healthy organization is to develop generally open communication, mutual trust and confidence between an across level.
f. People support what they help create.
In general, Organizational Development (OD) usually involves a more comprehensive approach compared to traditional organizational change technologies that alters the thinking and behavior of the entire organization. OD includes actions that apply behavioral science research to organizational change. It covers a wide range of processes and activities, with aim to improve individual organizations (Source: referenceforbusiness.com).
We understand that any changes in any organization are difficult to achieve maximum result if there is structural barrier. OD intervention is designed to improve the effectiveness of key tasks, especially in dealing with change agent. As an example, BONIA is a family-centric company with unique structures where they have a charismatic and insightful leader who can guide and improve the organization on the change. It shows that the importance of change agents that can create goals that are relevant to organizational development (Source: managementstudyguide.com).
In addition, change institutionalized change management programs must be visionary and subject to shareholder review. The ultimate difficulty for family businesses is that the management structure often shares the inheritance rights with parents and children, siblings, or both family members and non-family members and may complicate the remuneration and reward system. Interpersonal issues are often multidimensional, in which case external intervention may guide the correct organizational structure to distinguish between family affairs and business management. This can be seen in the Chiang’s family how they operate
the BONIA Group, to create an independent management structure and independent leader is the chief executive officer of most employees; the staff treated averagely. Recently, the Top management decided to downside by closing down those non-profit subsidiaries and necessary cut-loss on certain department. There are few heads of department which also the family members have requested early retirement during the change process. This is actually creates lots of uncertainty and fear between the employees and affected the daily company’s process and progress (Source: referenceforbusiness.com).
(i) Eliminating Hierarchical Decision-Making
We understand that decision-making should occur based on the facts are instead from top of the chain of command. The responsibilities of decision-making should swap during the developmental change from being a task designated to managers to share with all the employees. However, this intervention is always not difficult in a family business because the manager is the top member in the family and he/ she able to make hierarchical decision making. For example in BONIA Corporation, all the final’s decision will be decide by the Chiang’s family who is appointed as Executive Director cum Brand CEO and he control and the ultimate power to decide for all. Other than this, the family members usually are in the important role in each department like Head of Department and Managers. Therefore, the OD practices maybe a bit difficult on this as they may not accept the change in term of decision by eliminating the power (Source: smallbusiness.chron.com).
(ii) Focusing on Groups & Building Trust
In order to promote change and open communication, the culture of mutual trust is a must. In order to breed trust, managers must first show employees that they are trusted. An organization is not just individuals whereas by a team of members from different culture. The managers cannot expect employees to trust them automatically. Thus, the change team within an organization must have a clear understanding about its purpose, mission and goals, as well as the purpose and organization of the company’s structure. The employees and their respective departments should have a good understanding and work effectively regarding the various departments within an organization and their relationships (Source: smallbusiness.chron.com).
With rapid globalization expansion, BONIA management was held their first training in Indonesia with objective to strengthen the brand’s future growth. The employee who have participated not only the local team also included representatives from Malaysia, Singapore and Vietnam. The cultural exchange and interactive activities created lots of new ideas and gaining better trust between employees. In addition, this is also one of the human resource practices to retain employees or expatriate who is assign in overseas country. Apart from that, the employee involvement on decision making of company’s future goal will increase the sense of belonging within the team and indirectly motivate them be a part of the company. Like an example, the BONIA brand boot camp to review and develop strategies and action in order constantly adapt and manage changes in competitive market. Board of Directors, Country head and all the key management teams from all subsidiaries are involved in this event (Source from Bonia Annual book 2015).
(iii) Reducing Unnecessary Competition and investing on employees
The company shall focus on creating a culture focused on collaboration within employees. Employees collaborative will help improve teamwork and communication and motivate them for continuous contributions. Aside from that, investing in its staff to improve the skills, vice versa the staff will work more effectively in the company. In addition to monitor goals, provide feedback, and strengthen positive activities, organizations should also strive to develop the skills of workers and enhance their sense of well-being. Such investments can include educational opportunities, employee benefits and provide the support and tools needed to get the job done effectively (Source: smallbusiness.chron.com).
(iv) Active Employee Participation and Strategic Interventions
All employees should have the opportunity to actively participate in the employer’s decisions and achievements. This will helps to create employee ownership and loyalty and help them embrace change agents. Strategic intervention is sometimes necessary for within company change and its relationship with the external environment. The interventions may include mergers or acquisitions, rapid market expansion, new or increased competition from another competitor (Source: smallbusiness.chron.com).
OD is needed in strategic invention and help to enhance the succession planning this is because even though BONIA is a family owned business but there really pays attention on their development of strategic intervention. OD act as an agent to develop and create changes. When organization working toward a goal, all levels of organization involved, not only managerial strategies must understand the responsibility. The organization works as a whole, individual departments and employees must consistently evaluate their activities or result against set goals.
5.0 Conclusion
Good family-owned businesses must understand and address the three systems they face – family systems, ownership systems and management systems. Leaders and family members who are always recognizing and managing these three connected systems are more likely to succeed as a family business for many generations. It is important to remember that systems they interact in a way that is not easily quantitative. Hence the leaders have to resolve issues affecting businesses and families, such as the need to stop taking family members who may be disturbing the change process (Source: netfamilybusiness.com).
6.0 REFERENCE
1) Organizational development and change definition available at https://managementhelp.org/organizationdevelopment/od-defined.htm#anchor74706 (Accessed: 12 Jan 2018)
2) Organizational Development (Beckhard) – the management of change by Robert H. Rouda & Mitchell E. Kusy, Jr. available at http://alumnus.caltech.edu/~rouda/T3_OD.html (Accessed: 12 Jan 2018)
3) Lewin Change Management Model available at https://www.mindtools.com/pages/article/newPPM_94.htm (Accessed: 11 Jan 2018)
4) Bacal and Association (2007).The most common reason strategic planning fails, online article, retrieved available at http://www.canberra.edu.au/researchrepository/file/81c02a90-6a15-91ae-c7a2-ff44c96d60b2/1/full_text.pdf (Accessed: 12 Jan 2018)
5) The study of Nokia change management available at http://atozgossips.com/2016/05/27/the-case-study-of-nokia-change-management/ (Accessed: 12 Jan 2018)
6) Family-owned business- a special type organization available at http://sedlak-partner.com/project/family-owned-business-a-special-type-of-organization/ (Accessed: 11 Jan 2018)
7) Gary N.Mclean (2005) Organizational Development, Processes, Performance, International Journal of Business and Management,12(3),pp.73-85. (Accessed: 14 Jan 2018)
8) Family-owned business available at https://www.inc.com/encyclopedia/family-owned-businesses.html (Accessed: 14 Jan 2018)
9) Developing a Winning Strategy for Family and Business: The Parallel Planning Process available at https://www.thefbcg.com/developing-a-winning-strategy-for-family-and-business-the-parallel-planning-process/ (Accessed: 14 Jan 2018)
10) Organizational development for family owne
d business available at http://www.netfamilybusiness.com/free-information-center/free-article-directory/201-organizational-development-for-family-owned-businesses (Accessed: 14 Jan 2018)
11) Flora Richards-Gustafson, Eight Steps for Organizational Development Interventions available at http://smallbusiness.chron.com/eight-steps-organizational-development-interventions-14144.html (Accessed: 13 Jan 2018)
12) 8 Steps for Organizational Development Interventions available at
https://www.linkedin.com/pulse/8-steps-organizational-development-interventions-nicol]as-schoenlaub (Accessed: 14 Jan 2018)
13) Bonia 2015 Annual Book available at http://bonia.listedcompany.com/misc/FlippingBook_PDF_Publisher/Publications/HTML/ar2015/bonia/files/assets/basic-html/index.html#20 (Accessed: 14 Jan 2018)
14) Parkson, Lion Group available at https://www.liongroup.com.my/ourbusiness.php (Accessed: 14 Jan 2018)
14) Learning curve theory and application available at http://www.shmula.com/the-learning-curve/362/ (Accessed: 14 Jan 2018)
15) Organizational Development available at http://www.referenceforbusiness.com/encyclopedia/Oli-Per/Organizational-Development.html (Accessed: 14 Jan 2018)
16) Change management in family business and professional companies available at http://www.managementstudyguide.com/change-management-in-family-business-and-professional-companies.htm (Accessed: 15 Jan 2018)
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