Page 163 - DMGT520_ORGANIZATION_CHANGE_AND_DEVELOPMENT

Organization Change and Development

Notes  Establish the system’s purpose and objectives.
 Design the performance appraisal system.

Effects of Performance Appraisal

In the meta analysis of performance appraisal interventions feedback was found to be having
positive effect on the individuals and would lead to better organisational performance.

11.7.3 Reward Systems

Organisational rewards are powerful incentives for improving employee and work group
performance. OD traditionally has relied on the intrinsic rewards to motivate the employee
performance. More recently OD practitioners have focused to include the extrinsic rewards like
pay, stock options, bonus, promotions, profit sharing and gain sharing etc. They have discovered
that both the intrinsic and extrinsic rewards can enhance individual performance.
The three contextual factors which determine how these practice affect work performance are:
 Business Strategy: defines the goals and objectives that are needed for an organisation to
compete successfully.
 Work Place Technology: affects whether performance management practices should be
based on the individual or the group.

 Employee Involvement: The level of employee involvement in an organisation should
determine the nature of the performance management practices.

11.8 Impact of OD

The significance of Organisational Development is often underestimated when planning a
turnaround or significant improvements, yet it represents the single most important parameter
when considering the sustainability of any changes that may have been put in place during the
process. OD is the main tool to develop and manifest an organisation’s culture and it is the
culture of the organisation that sustains how the organisation executes, embraces change, manages
customer focus, creates new value and integrates new team members.
Organisations are led towards focusing on the customer, the external customer, and significant
resources, time, and emotional engagement is invested to achieve “best in class” customer
focus. The author considers the sustainable external customer focus resulting into customer
satisfaction and more importantly customer loyalty to be a result only of how an organisation
manages customer focus and customer satisfaction throughout the internal value chain of the
company. An organisation will reflect external customer focus in a sustainable fashion to the
same degree as it manages to generate respect and excellence in execution of its internal customer/
supplier relationships.
11.9 Key Points for Implementation of OD

There are five keys to manage OD. They relate directly to the problems identified earlier and to
elements of the organisation. Each can influence the elements of the social system and may help
the organisation avoid some of the major problems in managing the change:
 Take a holistic view of the organisation.

 Secure top management support.

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