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10 Principles of Effective Organizations

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Organizations are pretty good at solving specific problems as they arise, but many lack a set of criteria and goals to meet in order to maintain their ability to compete and grow. The author identifies 10 research-backed principles from the field of organization development to guide companies: 1) Encourage cooperation, 2) organize for change, 3) anticipate the future, 4) remain flexible, 5) create distinctive spaces, 6) diversify your workforce — and create an inclusive environment, 7) promote personal growth, 8) empower people, 9) reward high performers, and 10) foster a leadership culture.

As organization development evolves alongside institutional practices and insights into human behavior, a big piece of the field is still missing: a set of principles that convey what organizations must do well to thrive. Organizations are adept at identifying specific problems and have at their disposal a host of interventions designed to resolve them, but they operate without broader developmental criteria, or goals, that must be satisfied to preserve companies’ ability to compete and grow. Accordingly, below are 10 principles to guide developmental initiatives within your organization.

1. Encourage cooperation.

The central objective of organization development is to achieve a cooperative institutional order and quash destabilizing self interest. Can you imagine a company that could survive with members having divergent motives and antagonistic goals? And yet, the temptation to act in ways contrary to the purposes of organizations is high. Indeed, often the easiest and most lucrative course of action is to accept the benefits of group accomplishment such as compensation while contributing little to the group’s cause in return — much like a public radio listener who partakes in the pleasures of programs without donating to the cause. (Or, as often happens in technology companies, to benefit from the corporate association while concealing one’s best ideas that might personally pay off later.)

One way companies try to solve this “free-rider” dilemma is by changing the calculus of the relationship through rewards and punishments. A company might, for example, reward employees’ displays of cooperation or provide public accolades for teamwork, or censure against a lack of cooperation.

A more effective and lasting strategy, however, is to change the nature of work relationships. Friends cooperate more than strangers, where the allure of self-maximizing behaviors is high. Consequently, good companies expend a great deal of energy creating strong social bonds among employees. Group activities that forge strong interpersonal connections may seem superfluous to the Type A ilk who do not think socializing constitutes real work; however, just as the games children play are not just games but safe encounters with the real world, the amusements in which companies engage are not just amusements. They are affective bridges back to the organization that positively build relationships and influence performance.

2. Organize for change.

Organizations that need to change often don’t. Once-great companies have found their final resting places in an expansive graveyard of slow-movers and has-beens. These companies failed because they were unable to adapt to changing conditions and succumbed to capitalism’s unapologetic truth that only the fittest will survive. While employees often are portrayed as the villains in these scenarios for their resistance, people in fact are amenable to change in all facets of their lives when they believe in the necessity and appropriateness of change.

In effective organizations, leaders upend paralysis by generating a consensus of meaning and action. They build the case for change, create a positive mindset for change, convince others of the value and legitimacy of the change efforts, and battle against systemic forces of institutional inertia that lock companies into their current, misguided trajectories. Confidence, conviction, and courage are helpful companions in this journey, as not all change is readily apparent and must be made before there is an evident need for it and the window of opportunity has closed.

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3. Anticipate the future.

Not every organizational death is avoidable. That said, corporations do not have to linger indefinitely on the edge of life or die prematurely. The preservation of an organization­ depends on its leaders having the navigational judgment and skill to prepare their companies for what lies ahead. However, when the future arrives, many companies cannot meet the demands that new markets and consumer tastes require, as long-term aspirations have been thwarted by short-term impulses.

Indeed, executives must contend with plenty of pushes toward the short-term in which the figurative foreground overwhelms the fuzzy objects in the distance. The short term is clear and salient. The short term is undertaken with greater certainty of outcomes. The short term can be very rewarding. The short term provides executives with the continuing authority to lead by demonstrating their effectiveness in producing results. Leaders must be able to look past nearby obstructions to see clearly what lies beyond.

No formulaic solution exists for the ability to peer into the future, but leaders can surround themselves with capable, perceptive people who collectively challenge the assumptions on which their current actions are based in order to imagine other possibilities. As Thomas Kuhn maintained, if your conception of the world is that it is flat, you will see things one way; if your conception is that it is round, you will see things in quite other ways. But you cannot see the implications of roundness until you suspend belief in flatness.

4. Remain flexible.

Organizations must be at once disciplined and flexible, prudently reacting to the unexpected during turbulent times and flexibly bending when rushes of demand are placed on them — then regaining their shape once the need for transformation has passed. This ability to situationally morph in response to customer/market demands is typically achieved through improved automation and additions to staff in number or function in the attempt to align the technology and people with what customers want, when they want it — while avoiding costly utilization errors like being understaffed at peak times.

Often the successful design of organizations and deployment of people requires a simple creative additive of divergent thinking. For example, Singapore’s Changi Airport reconceptualized the problem of handling long customer lines by redirecting people directly to their gates for check-in rather than having fliers converge and pile up at a single point like pouring seeds into a funnel. The customer’s burden of waiting is shifted to the responsiveness of security, who must allocate labor to the right gates in a timely manner. In the case of Singapore’s airport, authorities make judicious use of generalist floaters on staff who are dynamically assigned to where the needs are greatest at any given time.

5. Create distinctive spaces.

It is hard to find studies that don’t support the link between the quality of a work environment and employees’ health, satisfaction, and performance. Indeed, the basic dimensions of environmental indoor quality such thermal comfort, air quality, lighting, acoustic quality, and the ergonomic features of furnishings positively relate to enhanced performance. The quality of environment is a potential competitor for scarce mental and emotional resources that can either enable or undermine learning and task performance. For example, open spaces are notoriously problematic due to auditory and visual distractions.

Environments can support coping behaviors, personal replenishment, and performance, or they can be stressful, draining, and, implicitly permissive of anti-normative behaviors through aesthetic neglect. They can be designed to stimulate creativity or to deaden souls. One corporate trend that is refreshingly catching on is the inclusion of nature into architectural design given its well-documented health advantages. Research consistently finds that employees who have greater contact with nature experience less stress and have better problem-solving skills, impulse control, attention spans, coping abilities, and productivity. Thus, companies like bicycle producer and distributor QBP have the right idea. They encourage nourishing naturalistic walking meetings in the adjacent nature preserve and bicycle meetings on the quiet surrounding streets.

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6. Diversify your workforce — and create an inclusive environment.

Complex tasks require a diverse mix of viewpoints and abilities to satisfactorily complete. We know that it takes a composite of designers, computer scientists, engineers, and manufacturers to build a car. Indeed, the wisdom of needing different people to pool their physical, attitudinal, and intellectual assets to solve problems is well established. Studies routinely show that gender and racial diversity, for example, improve the performance of workgroups, top management teams, and boards of directors when conditions of inclusion prevail.

Although diversity is necessary, conflicts can arise among dissimilar people that can impair team performance. Without adept leadership and conditions of psychological safety, diversity in groups may create factions and interpersonal frictions called “faultlines” that must be broken down through ongoing efforts that make people feel significant, wanted, and welcome.

Overall, companies — like environmental ecosystems — require large numbers of different agents to enhance system reliability and resilience. To illustrate, imagine a ship tilting at sea with all hands on deck. A non-diverse crew all will run to one side of the ship and then the other in attempts to correct its lean but, instead, will create a larger and larger pitch until the ship capsizes. A diverse crew, on the other hand, will keep the ship relatively stable reacting in non-uniform ways: by using only certain crew to cross back and forth on the deck (some coming, some going) until the danger has passed.

7. Promote personal growth.

An effective talent management program is one in which a company has a large pool of able, external job candidates, sufficient competent coverage of existing positions, succession plans throughout the organization, and a panoply of support programs: career counseling and development, career planning workshops and vocational assessments, mentoring and coaching programs, and in-house training and educational assistance to augment employees’ career objectives. That said, the most notable way organizations expect people to improve is in job-related ways by honing expertise.

The means by which the metamorphosis from novice to expert occurs lays on a continuum anchored by two extremes, one that entails a natural evolution (our physical attributes and temperaments) and one that entails effort (training and practice). Suffice it to say that both nature and nurture are implicated in personal growth and that an important dimension of growth and using one’s strengths is to correctly match employees’ native interests and abilities to their personal development and work assignments. People will perform better in fields that are most consistent with their inherent aptitudes and passions where they are able to do what they enjoy most. The best companies, then, try to calibrate the native interests and abilities of their people to the work, backed by the sensible rationale that employees who are absorbed and energized by their work are more committed to the organization, perform better, and stay longer than those whose jobs are misaligned with their true interests and abilities.

8. Empower people.

The practice of empowerment in organizations is often like a parent handing the keys of a high-performance vehicle to their teenager and hoping, day after day, that the car will return intact. Simply handing over power to another provides little assurance that something positive will come of it.

Similarly, a company cannot simply dictate a new operating procedure that shifts decision-making from centralized control to greater delegation and distributed authority. The change entails a significant shift in culture and operations that involves increased information-sharing, technological enhancements, participative decision making, extensive training, collaborative problem solving, and team trust.

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As in baseball, with empowerment, due preparations are made, the field of play is set by values, goals, and budgets, and, within these few boundaries, the manager empowers employees to play ball. Once the game begins, the manager steps onto the field only a limited number of times to advise, coach, or reposition and change personnel. No micromanagers needed here. The only managers that matter are the ones who can support people’s confidence and assure that they have control over their affairs, can cope with disappointments, and are able to achieve goals that matter to them.

9. Reward high performers.

Despite the rhetoric of attracting and retaining the best, the aggregate talent within organizations often is mediocre. The reason is simple. Decisions regarding hiring, pay, promotions, and retention are based on factors other than merit such as friendship ties, tenure, petty jealousies (as when threatened managers rid themselves of worthy competitors), favoritism, politics, and discrimination. The consequences to organizations are obvious.

In contrast, when executed well, merit-based pay for performance plans increase job satisfaction and motivate action and, when appropriately structured, are instrumental in producing environments in which the best help the rest. Indeed, it is common in teams that the top members will lift the performances of good, but less capable, members. These effects are observed when:

  • People share a common goal
  • Each team member is viewed as indispensable to goal success
  • Every member has a vested interest in each other’s success and are depending on one another to do their best
  • Each member is encouraged to be the best by learning from others and engaging in healthy internal competition akin to sportsperson-ship in which individuals strive for personal excellence but graciously advise and instruct others when called upon

10. Foster a leadership culture.

Everyone who has worked in an organization knows the affective power of leadership and its effects on culture, both good and bad. On one hand, the adverse effects of abusive supervision and incivility on employees’ mental and physical health, job satisfaction, and performance are well-documented. On the other hand, supportive, inclusive management practices that provide assurances of safety allow people to take reasonable risks, make mistakes, speak up and challenge the status quo, and ask for help and request resources to make improvements.

The evidence overwhelmingly proves that leaders who can produce safe environments encourage employees to more openly and beneficially interact, learn and grow, display greater creativity, and think of themselves as potent and efficacious actors. Despite the known value of leadership, organizations frequently show little genuine interest in the quality of leadership by foregoing meaningful assessments and by being far too accommodating of managerial miscreants who may be productive but are toxic to the organization’s culture. The organizations that excel are those that diligently work to develop more enlightened leaders who boldly embrace sustainable corporate practices and are attuned to basic human needs and welfare.

Fulfilling these 10 principles is a tall order. They are ambitious aims. Still, as with any goal, these principles convey standards to pursue that jointly express the possibilities for organizational growth and development.

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