 In today's session, we are going to look at OD interventions and human resource function. In nutshell, what we are going to discuss is how different activities in the HR functions can be designed and implemented as OD intervention. I would like your attention to go back to the definition of OD intervention which we discussed in the previous sessions. So, OD intervention is a set of sequenced and the planned actions or events intended to help the organization increase its effectiveness. Interventions purposely disrupt the status quo. If you want to bring about a change and to develop individual team or organization, we can use HR function as OD intervention. Before we talk about and discuss about the HR functions as OD intervention in detail, can you recall some of the HR functions? So, you may recall that HR functions are like recruitment and selection, performance management, talent management and development, managing diversity at workplace, compensation management, etc., etc. So, these are the HR functions. So, how HR function can work as OD intervention? Recruitment strategy in process is one of the strongest determinants of the organization culture. In this way, recruitment, if done consciously, can be used as an intervention to develop a certain type of organization culture. Performance management directs the employee behavior and development towards strategically important goals. So, we can design HR function in a way which directs the employee's behavior towards the strategically relevant goals of the organizations. Similarly, diversity and wellness are the key for innovation and employee engagement. So, we can introduce diversity and wellness interventions with specific objective of innovation of certain type or enhancing employee engagement. Reward and recognition are very important aspect of work life. They have the potential to direct the employee's behavior towards valued goals. So, if we are aware about the most valuable goal we wish our people and employees to pursue, we can design the financial and non-financial reward in a way which motivates people, which instigate people to demonstrate that type of behavior. So, in this way we can see that most of the HR activities can be used as OD intervention if we consciously design and introduce those after proper diagnosis with the sufficient rigor in thinking, we can implement some of the HR functions as OD intervention. In this session, we are going to look at two broad categories of the HR function which can be used as OD interventions, performance management and talent management. If you recall our conversation about the performance management, it is an umbrella term. It includes training and development, coaching and mentoring and performance appraisal. So, performance appraisal is about setting work standard, assessing performance, providing feedback to employees to motivate them to correct them and persuade them to continue their performance. Coaching and development is again an aspect of performance management. Coaching and mentoring is also a developmental aspect of performance management. So, performance management basically is an integrated approach to ensure that employees, performance supports and contributes to the organization's strategic aim. Now, we will look at how the performance management can be used as OD intervention. First of all, we need to look at what is the context of performance management system. The context of performance management system is business strategy, workplace technology and employee involvement. What is the meaning of context is that any design and implementation of the performance management system is contingent upon, must be informed by and must be on the basis of the business strategy. Business technology means work design, individual versus group-based performance management and employee involvement, meaning to what extent the formalized or participatory decision making is practiced in the organization. So, there are different components in the PMS which can be used as OD intervention. We will look at three components specifically within the PMS which can be used as OD intervention. Goal setting, performance appraisal and reward system. There are two of the shelf very well-established OD and interventions which revolves around performance management. One of them is MBO which was popularized in the 60s and balance scorecard which became popular in early 90s. MBO is about goal setting at different levels of hierarchy with mutual consultation. With MBO, the collaboration and consultation process started while setting up the organization objectives. Along with that, MBO included counseling and support to the employees, groups and the departments to fulfill the organizational objectives. So, in MBO, basically organizational objectives are divided according to the departments. Those functions or department further divide these objectives in their sub-departments or groups and the objectives at the group level or sub-department level are translated at the individual level. But in this step-by-step process of setting up the objectives is conducted in the consultation of the different stakeholders, particularly superior and subordinate while setting up their objectives are engaged in a consultation and if required counseling and support is provided to the people to fulfill their objectives. Balance Scorecard involves goal setting not only about the financial aspect but it insists to identify the operational excellence related goals, customer satisfaction related goals, learning and development goals and this gives a full picture of the organizational performance. We all know that financial performance are the lagging indicators, they are the stronger predictor of the past performance. But how organization will perform in future that is reflected in the learning and development goals and the customer satisfaction goals. How the profitability will be achieved is also linked to the operational excellence and operational efficiency. So, if we look at operational excellence, customer satisfaction and learning and development are the futuristic goals, so they can help in predicting the performance of the organization in future. So, these indicators are called leading indicators, so balance scorecard involves a combination of the leading indicators like operational excellence, customer satisfaction, learning and development and lagging indicator like financial performance. How OD can be done, how the organization development can be done through goal setting. We can do it in several ways. First is by setting up this challenging but realistic and specific goal with the adequate resource allocation. So, this can be a comprehensive exercise where we not only set up the challenging and realistic and specific goals but people means superior and subordinates with the help of HR department are also engaged in adequate resource allocation. Goal setting through branch mark or best practices reference is another way of OD through goal setting. It means identifying who are the best people in our industry. In a simple term who are the other players doing their job best, what the job which we are doing, who in the market, who in the industry are doing this similar job in a more efficient and more profitable way. In the benchmarking process we come to know the limits or the potential of organization and keeping that as a reference point we work backward and identify the different processes and systems apply the creative thinking and intelligence to reach that benchmark. Next point is goal setting with the more employees participation. If goal setting is done in the uniform and in a hierarchical way it may not be the best thing, particularly it may not be good in the situation which are more ambiguous and which are more complex. In a complex and ambiguous situation goal setting has to be done in a participative manner wherein the appraiser and appraiser both have opportunity to discuss the possibilities of the achievement. In that process appraiser gives the perspective and the context for the goals and objectives and appraiser make a realistic assumption and does the planning and creative thinking to accomplish those objectives. Another way of making goal setting as OD intervention is by better strategic alignment of the departments and individual goals. These pathways can be related to the cost cutting, which is called cost leadership, it can be related to the innovation, the strategy which is called differentiation and it can be niche strategy which is about serving a niche customer segment. After clarifying the strategic direction departments, sub departments, teams and individuals have to define their goals. That is always in line with what is most important aspect of the organizational performance and when this exercise is conducted organizations achieve a kind of harmony, they achieve a similar language, they achieve a shared mental models to realize their strategic objectives. We will look at how OD can be done through performance appraisal. So one simple and effective way of making performance appraisal as OD intervention is making the appraisal process and making the appraisal conversations developmental and integrative in nature. What is the meaning of that? Developmental meaning performance appraisal discussion need to be not only focused on the past performance, but it must be focused on the future potential and future performance as well. And secondly, it has to be integrative that means different aspects of the performance have to be considered. And we need to have performance appraisal which includes the performance towards different stakeholders. So also means performance appraisal accounts the long term performance goals. So performance appraisal not subjected to recency effect is a simple but very profound exercise which can direct the behavior of employees towards specifically identified business objectors. Another way of using performance appraisal as OD intervention is holistic appraisal like 360 degree assessment. In the 360 degree assessment, a structured assessment is conducted by the supervisor but not only about them supervisor of the organization. Assessment is conducted with the peers, subordinates as well. We get the full picture about the performance data related to the supervisor's goal, related to his interaction or her interaction with the colleagues and related to his or her interaction with the subordinates. Though the implementation of the 360 degree assessment is a complicated and a comprehensive process. So a certain type of leadership readiness is required in any organization which is intending to implement the 360 degree assessment. However, it can be a very powerful exercise to direct people towards the valued goals as well as to plan for their own development. People can take the responsibility about the self-development based on the insights arising out of 360 degree assessment. A very similar 360 degree assessment process is called stakeholder's audit. So a stakeholder audit is a qualitative assessment of the employee's performance. When there is a challenge in quantifying the appraisal criteria, a qualitative assessment by different stakeholders can be useful tool for performance assessment and that is what is done in the stakeholder's audit. Another way of making performance appraisal as OD intervention is by making the appraisee's role more active. It means not only supervisor giving rating to the appraisee but appraisee have a open conversation about the ratings being given and appraisee has opportunity to do the self-evaluation as well. This kind of intervention brings fairness, accountability and sense of responsibility in both appraisee as well as appraiser. But these things cannot be implemented immediately. It requires a certain kind of preparation. Sure intervention like training and coaching people can be made ready to use these methods of performance appraisal which in turn can become a kind of OD intervention. Another important aspect through which the performance appraisal can be converted a kind of OD intervention is when we make a judicious combination of objective and subjective aspect of performance and behavioral and outcome based performance. What is the meaning of that? Objective aspects of performance meaning those aspects of performance which can be measured in an objective way in a numerical way. So subjective aspect of performance are those criteria which are difficult to be quantified but they are impactful for the performance of the employees. So for example a sales data or operations data particularly the production related data on a per day or per week basis it is an objective assessment. objective assessment is customer expectation about supervisors experience of capability of the employees towards strategic thinking. His employees relation the quality of relation employees have with the different stakeholders these aspects may be difficult to be quantified. We need to take the feedback about these aspects in a qualitative way. Behavioral and outcome based measurement are the two different ways of performance appraisal. The behavioral performance is good when effort of the employee and the result of the result of his work have a long time duration. For example R&D R&D or teaching or artistic activities require reflection they require more preparation. So the effort of the employee and the outcome of these activities will have a long time duration may even extend beyond one year or two year. In these kind of situations it is difficult to measure the employees performance on a yearly basis just based on the output of the employees. But in this situation we need to identify what are the functional behavior that means what are the behavioral aspect which determine greatly the outcome of employees work. So on at ongoing basis what we evaluate are the behavior of the employee. Effort in the jobs where the effort and outcome have more immediacy meaning the employee make the effort and the outcome is visible in week or in month or in quarterly time period. In those situations outcome based measurement are more appropriate. If we keep aside the extreme jobs like that of scientist or like those of artist most of the jobs in the organizations have both the components meaning they have objective aspect of performance and they will certainly have subjective aspect of performance. Similarly some aspect of the effort required in the job will result in more immediate outcome and some aspect of the effort in the job result into outcome on a long term basis. So a good performance appraisal need to include a judicious mix of the objectives and subjective aspect of measurement and behavioral and the outcome based measurements. These decisions have to be made in the specific context wherein this kind of OD intervention is being implemented. So there is no fixed formula what is the most appropriate ratio of the objective and subjective aspect of measurement or behavioral or outcome based measurements. There is no fixed formula though OD practitioners and HR managers have to study their organizational context, business strategy and technology based on which they can make decisions about these components. Now we will look at how OD can be done through reward system. OD has traditionally relied on the intrinsic reward such as job enrichment, increasing autonomy, giving flexi timing and other quality of work life related interventions. Now OD practitioners have expanded their focus to include extrinsic reward in the form of base pay, stock options, gain sharing, promotions and benefits etc. So now we see the OD practice and OD practitioners are not only considering the intrinsic reward related interventions they are also looking at the extrinsic reward related intervention to complete the agenda of the enhancing organizational effectiveness. Reward system can be used as an OD intervention by using some of these key concepts for example the basis of reward system whether we want to give reward for the performance or for the job accomplishment. It is very similar to what we discussed the objective major of performance, objective major performance, behavioral aspect of performance and the outcome aspect of performance. Another major revelation which has happened in last 78 years is about the performance distribution in the organization and this revelation has an important impact on how reward can be distributed, reward system can be designed in any organization. This revelation is very interesting what it says for many many decades we believed that performance is normally distributed in an organization. But what is realized off late in the study of the Boyle and Aguinice that performance actually does not follow the normal distribution curve it follows Pareto law more closely. It simply means if organization performance follows Pareto law it simply means 20 percent of the people accomplish 80 percent of the organizational goals. So there are few stars who take whose performance is at times 150 percent or 200 percent more than the average performance. And they are the people who carry the burden of performance more strongly. So naturally they need to be recognized and that these policies are implemented to some extent in Microsoft and to a great extent in Netflix. Wherein at the same level of hierarchy the best performers at times in certain situations are getting 200 or 250 percent 300 percent salary of the average performers or the average employees in that particular cadre. So based on the job and based on the performance and looking at the optimum combination of the job based assessment and performance based assessment reward system can be designed and that can be useful to recognize the talent the to recognize the people who are contributing more to the organization and in this way they will direct the behavior of the other people in the organization as well. Another aspect of reward system is individual versus group reward. If job has high level of interdependency and complexity naturally the job has is conducted with the help of the group. In that situation group based reward system are more appropriate but if job is simple or even if it is complex one person can be held accountable for that then the reward system need to emphasize more on the individual performance based system. Another aspect is internal versus external equity. Employees keep comparing their performance and rewards with the people in the same department in the same organization and people in the similar profession outside of their organization. So we need to look at how to ensure the sense of equity amongst the employees. Lot of salary surveys are conducted which give the benchmark figures about what type of jobs are given what kind of monetary value in the job market. That reference must be kept in mind while designing or redesigning the reward system. Not according to the flat or hierarchical structure. If the organization is flatter meaning there would be lesser number of hierarchy. So in a flat organization there would be lesser number of bans of the reward system. In a hierarchical organization they can be there need to be more number of bans of the salary and compensation in the organization. Another aspect is financial and non-financial components of the reward. Non-financial components can be equally powerful in motivating the behavior of the employees. Best employee of the month most creative employee of the month employees look forward achieving these kind of medals. So depending on again the strategy technology and organization design a good mix of non financial and financial component of the reward has to be identified. You might be aware of the Vroom's model that can be very helpful in identifying the reward system. Vroom's model says that expectancy meaning my assumptions and understanding about to what extent my efforts will lead to the desired performance. It means whether the desired performance will result in certain specific type of rewards and valence it means to what extent those rewards are favored by me. To what extent I am attracted to get those rewards. So we need to look at these three components while designing a reward system. These at different stages of the career will have different expectancy instrumentality and valence that has to be factored into. These three aspects have to be translated according to the stage of the career or the nature of the work or nature of organization. And from there the insights will come about how to design or redesign the reward system which in turn can become a OD intervention.