Division of Research Graduate School of Business Administration The University of Michigan February 1977 TOP-DOWN ORGANIZATION DEVELOPMENT AND THE CASE FOR INDEPENDENT DIAGNOSIS Working Paper No. 143 by Bernard J. White V. Jean Ramsey Graduate School of Business Administration The University of Michigan Ann Arbor, Michigan 48109 FOR DISCUSSION PURPOSES ONLY None of this material is to be quoted or reproduced without the express permission of the Division of Research,,-.

Abstract Top-down organization development is strongly advocated by many authors who believe it is required for success of the intervention and dictated by pragmatic considerations. At the same time, the organization development (OD) consultant should perform a comprehensive and objective organizational diagnosis prior to any change effort. This paper suggests that top-down OD may seriously impair the consultant's ability to perform such a diagnosis. A study is presented in which predictions were made by an independent observer of the content of the final diagnostic report to the client organization when the consulting team had only had interactions with top management. These predictions were compared with the content of the actual report. The findings corroborate the suggestion of significant top management influence on the diagnostic process. Alternative explanations, future research directions, and practical implications of the findings are also presented.

The Case for Top-Down Organization Development That organization development (OD) efforts should begin at and be managed from the "top" of the organization on down is virtually an article of faith among writers and practitioners in the field. Indeed, the most popular definition of OD (that of Beckhard, 1969) includes this element as part of its definition: Organization development is an effort (1) planned, (2) organizationwide, (3) managed from the top, (4) to increase organizational effectiveness and health through (5) planned interventions in the organization's "processes" using behavioral science knowledge. (Emphasis added) Beckhard is certainly not alone in advocating top-down OD. In discussing the diagnosis and problem-recognition phase of the consultation, Greiner (1967) observes that members of the organization must "assemble information and collaborate in seeking the locations of and causes of problems." He then states explicitly: "This process begins at the top, then moves gradually down through the hierarchy (emphasis added)." This suggestion of a top-down diagnostic approach as well as the reasoning behind it are reiterated by Greiner in a later article (1972): Early in the planning of OD, there is a special need to involve key managers in the diagnosis and planning of the direction and methods for implementing the program... achieve a more collaborative planning and problem-solving relationship between experts and managers in designing OD programs.... Managers have much to contribute in diagnosing their own ills while experts can provide new tools and fresh perspectives for enlivening managerial insight — without going so far as to recommend one "best" solution. (Emphasis added) Indeed, the call for initiating and managing OD efforts from the top of the organization hierarchy is so common that Porter, Lawler, and Hackman (1975), in reviewing the field, conclude: "Most interventionists -1 -

-2 -in the organizational development tradition (e.g., Schein, Bennis, Beckhard, Argyris, Blake and Mouton) express in their writings a strong preference for the top-down approach." Because the top-down approach is the preferred OD intervention strategy, and because the purpose of this paper is to challenge this conventional approach, it is appropriate to summarize the major reasons cited by advocates favoring the approach. The reasons tend to fall into one of two general categories: (1) those relating to the need for top management support and involvement as requirements for the success of the intervention, and (2) those relating to pragmatism and the realities of organizational life. Greiner (1967) represents the first point of view. He suggests that by first involving top management, and then encouraging them to consult with subordinates in information-gathering and problemsolving activities, one critical element of OD success, namely, sharing in power and the change process, is initiated. In addition, Greiner notes that this procedure provides visible evidence to members lower in the hierarchy that: "(a) top management is willing to change, (b) important problems are being acknowledged and faced up to, and (c) ideas from lower levels are being valued by upper levels." Greiner also notes that in many cases of unsuccessful OD intervention, top management used a "delegated approach which tended to abdicate responsibility by turning over authority to lower levels in such a non-directive way that subordinates seemed to question the sincerity and real interest of top management."

-3 -Other, more pragmatic, reasons for top-down OD are suggested by Walton and Warwick (1973). In response to the self-addressed question of why organizational change should be managed from the top, the authors suggest the real answer lies in the fact that top management is the consultant's client, despite pious pretentions of serving the "client organization" or "the organization as a whole." Specifically, Walton and Warwick state: With few exceptions, the ODP [Organization Development Practitioner] gains access to the organization through management, which also pays for his services. While many ODPs argue that they are working for the entire organization, the fact remains that they enter the system as management consultants. Without stereotyping a wide variety of situations, it is fair to say that in most OD interventions issues of sponsorship, point of entry, and accountability are far from inconsequential. Thus, the grounds for initiating OD intervention at the top of the organizational hierarchy and for managing it from the top are clear. Top-down OD is believed to be a condition for success and is mandated by pragmatism and "real world" considerations. Indeed, the case for top-down OD seems so compelling that it has seldom been questioned, either in the literature or, as we suspect, in practice. Unintended Consequences Our criticism of top-down OD strategy is not directed at the intended consequences summarized above. Top management interest, involvement, and commitment obviously are critical conditions for a successful intervention, and realities of sponsorship and access are, similarly, important considerations. However, the unintended consequences of beginning at the top cannot be ignored.

-4 -We assume that the OD consultant's aim is to make a comprehensive and objective diagnosis of the organization prior to any change effort. A top-down OD strategy carries with it the inherent risk of impairing the consultant's ability to make such a diagnosis. To the extent that the consultant internalizes top management's definition of organizational problems and allows these perceptions to structure and guide (however subtly) the diagnostic process, the comprehensiveness and objectivity of the "independent" diagnosis may be reduced. Only a subset of variables which should be included may be measured, and only the views of a nonrandom sample of the organization's members may be represented. The risk of this unintentional consequence is especially high in OD situations which are often characterized by high uncertainty, and in which information gathering and analysis do not proceed in a prescribed, systematic, step-by-step fashion. An OD consultant is typically inundated by information about the client —information from such diverse sources as on-the-scene observations, interview results, survey data, and numerous conversations with both members and outsiders about the organization. Some information needs are defined prior to the intervention and systematically gathered. As a result of early impressions and findings, however, many others are defined during the intervention. In addition, a great deal of information about the client is gathered in a serendipitous, "as available" fashion. Another aspect of this information "glut" is the consultant's awareness, from the outset of the intervention, that he (or she) will

-5 - be obligated to draw specific conclusions, to assess organizational strengths and weaknesses, and to define problems; in short, to make a diagnosis. This diagnosis is, in a sense, the "bottom line" of the consulting relationship. The need to create order out of informational chaos is a weighty responsibility and is seldom far from the consultant's thoughts. Credibility and professional reputation rest in large part on the consultant's performance in this area. Because of the importance of the consultant's diagnosis, we were intrigued by two questions: 1) Given the variety of information sources about the client organization which is available to the consultant, to what extent is each source used in drawing conclusions about the organization? 2) What is the process whereby certain information sources and certain types of information are weighed more or less heavily by the consultant in drawing these conclusions? The answers to these questions are critical for two reasons. First, there is growing concensus in the literature on the need for the consultant to make a thorough and unbiased diagnosis of the organization's functioning. Such a diagnosis is the only antidote to the traditional OD approach of beginning with a helping technique (team building, sensitivity training, leadership training, etc.), and then "backing into" a supporting diagnosis, measuring only variables

-6 -relevant to the available technique. Obviously a comprehensive, objective, unbiased diagnosis implies collecting a set of data on specified variables first, then analyzing it in a fashion which gives equal weight to all relevant information and data sources. Answers to the questions posed above would help us understand the extent to which such a procedure is followed by OD consultants at present, and would help us "get a handle" on the problem of achieving complete data collection and unbiased analysis in making the organizational diagnosis. Second, these questions should be answered for ethical reasons. A few thoughtful writers (e.g., Baritz, 1960; Bennis, 1969; Argyris, 1961) have pointed out the ethical problems of OD intervention. Whose values will dominate? Whose interests will be served? Walton and Warwick (1973) suggest that top-down OD may have unintentional consequences with ethical implications, tending to "align [the consultant's] influence pattern with the influence mechanisms that already characterize the organization and his thinking with top management's views of 'problems,' needs, and purposes." Consistent with the viewpoint expressed in this paper, Walton and Warwick also take the position that "a core component of OD is the collective identification of one or more problems as the focus of subsequent action. What gets defined as a problem is thus one of the most crucial and politically salient aspects of OD." Does a top-down OD strategy result in undue reliance by the \ consultant on top management as an information source? Are top /

-7 -management's perceptions of problems, needs, and purposes internalized by the consultant, with implications for the process employed in defining information needs, and gathering and interpreting information? In short, what are the unintentional consequences of top-down OD? Case Study The research reported in this paper was conducted to determine the extent to which a consulting group draws on various sources of information in formulating an organizational diagnosis, and to determine the extent to which top management influences the diagnostic process. We offer the research in the spirit of the suggestion by Walton and Warwick (1973) for "more frequent publication of case studies that facilitate ethical discussion in concrete, and greater candor among ODPs raising questions in their own practice." In the winter of 1976, one of the co-authors (Ms. Ramsey) observed a group of four advanced graduate students conducting an organization study in a one-semester seminar on organizational diagnosis in the Graduate School of Business Administration at The University of Michigan. Ms. Ramsey, acting as a nonparticipating observer of the consulting group, attempted to trace the contents of the final organization report in question back to the various sources of data about the client. The objective was to determine which of the final conclusions and recommendations were based on data obtained from observations, interviews, survey data, and other sources.

-8 - All of the group's members were business school students with prior academic work in the study of organizations; three of the four were majoring in the Organizational Behavior-Industrial Relations area. The group was assigned to study a 34-member operating department within a large, complex organization. The size of the work groups reporting to six first-level supervisors in the department varied from one to seven. Also included in the study were a "Supervising Foreman" and a "District Manager" who are collectively referred to as "top management." (See Exhibit 1.) Exhibit 1 "Top Management" — 26 Hourly Employees —

-9 -A letter, sent to the District Manager prior to the study, summarized the intent of the consulting team as follows: "The outcome of our study will be a report on the current functioning of your organization, its strengths and problems, our assessment of their causes, and our recommendations, if any.... Our focus will be on the human organization." The procedure which was outlined to top management and followed by the consulting team was adapted from Levinson's model in Organizational Diagnosis (1972): 1. Explanation of study to and obtaining consent from organization members (in small group sessions) 2. Tour of facilities (conducted for study group by head of organization) 3. Gathering of factual data on organization's history and current functioning (through interviews with head and key members of organization) 4. Survey administration (Survey of Organizations [Taylor and Bowers, 19721 and the Levinson Reciprocation Scale administered to all but one employee) 5. Observations and interviews (structured interviews adapted from Levinson [19721 conducted with all but one employee) 6. Report preparation 7. Report presentation (first to head of organization [in this case to top management], then to his staff [all first-level supervisors], and finally, in an appropriate and abbreviated form, to the remainder of members) In addition to data collected from interviews and questionnaires, members of the consulting group were asked to keep individual logs as a record of their impressions and observations. During the first two weeks the consulting team met with the District Manager, introduced the study to all organizational members

-10 -in a series of small group meetings, and held four group planning sessions. The team leader had, in addition, several informal conversations with members of top management. Observations of these sessions, combined with impressions from individual conversations with team members and knowledge of their academic frame of reference, led the nonparticipating observer to conclude that critical assumptions which would affect the content of the final report had already been made at the end of this two-week period. A memorandum documenting these impressions and predicting the content of the group's final report to the organization was sent to the seminar's professor and co-author of this paper, Bernard J. White. (See Exhibit 2.) Each prediction was documented by excerpts from notes taken during observations or just after conversations with individual group members. (Note that, at this point in time, the consulting '/ team had not systematically collected data within the organization:. the group's only information came from their own impressions, assumptions, and information from top management.) Eighty percent of the predictions made in the memorandum were included in the group's final report to the organization. The following discussion compares the predictions in the memoran/ dum of February 7, 1976,-with the content of the final report to the client organization, submitted in mid-April. The headings of the sections which follow Exhibit 2 are predictions taken directly from the memorandum.

-11 -Exhibit 2 Observer's Memorandum Predicting Content of Consulting Report MEMORANDUM February 7, 1976 To: Professor White From: Jean Ramsey Subject: Prediction of Content of Final Report to [ During the period from January 23 - February 6 (2 weeks), the consulting team working with [ ] held four group planning sessions, met with [the district manager], and introduced the study to the organization. Observations of these sessions, combined with impressions from individual conversations with team members, have led me to conclude that critical assumptions (which will affect the content of the final report) have already been made. I would, therefore, like to document my impressions so that someone else can compare these early predictions with the final report. This should control, to a certain extent, the danger of my finding results in the group process which justify my own initial assumptions. Findings predicted include: 1) Noninvolvement of lower-level employees 1/28 (group meeting) —[team leader] sees the study as an opportunity for employees to have input. 1/29 (group meeting) —[team leader] reported that [supervising foreman] said that there has been a morale problem in the past —employees feel that they have no input into decision-making.

-12 - Exhibit 2 - Continued Memo to Professor White February 7, 1976 2/5 (intro. session) —[team leader] indicated that the consulting team will serve as "communicators" between workers and supervisors. Ideas will become known and put into effect. 2/5 (conv. w/[team leader]) —Question: Why do you think the response [to the proposed study] was so good? Answer: Really think that people have not been involved and now's their chance. They feel "left out." 2/6 (conv. w/[team leader]) —No one is "involved": employees are "told" how things are going to be. 2) Distrust of supervisors 2/5 (conv. w/[team member A]) —He detected general expectation that employees were afraid to talk to supervisors. Comments were made by team, such as "You can open up to us." 2/6 (conv. w/[team member B]) —There were comments made at Wednesday's introductory sessions, such as "Where's the mike?" 2/6 (conv. w/[team leader]) —Deep distrust of management by employees. 3) Fear of change (related to above) 2/5 (conv. w/[supervising foreman]) —Potential obsolescence due to computerizing operations. 4) Resentment of severe control systems 2/2 (class) —You talked about a) the amount of pressure on workers in terms of workload and b) the uniqueness of controls under which employees at [ ] operate — everyone is operating on a "margin."

-13 - Exhibit 2 - Continued Memo to Professor White February 7,1976 2/2 (group meeting) —[team leader] reported on meeting with [supervising foreman]: The little red dot chart is new and has not gone over too well with [workers]. In a discussion of what a foreman would do when chart gets "out of whack," [team leader] suggested that a foreman would "demand" that the situation be shaped up. 2/6 (class) —You suggested that performance measures may be more often used for negative feedback rather than for positive reinforcement (in contrast to Emery Air Freight). 2/6 (conv. w/[team leader]) —[supervising foreman] told him that there used to be a rule that employees could not talk to each other while working. 5) Problems in coordination and cooperation 2/5 [study introduction] —Example of why on-the-job observations would be necessary: Perhaps some problem of interface, e.g., I can't do my work before I get the orders from someone else. 2/5 [study introduction] —Example of kinds of questions included in structured interviews: Maybe you're dissatisfied with the way your group works together. 6) Lack of management training for first-line supervisors 2/6 (conv. w/[team leader]) —First-line supervisors are promoted from ranks but have no training. As a result, there are problems with them having a "narrow view" and their new position of authority "going to their head." 7) Lack of expectation for advancement 2/6 (conv. w/[team leader]) —[ ] uses assessment centers for "early identification" of management poten*,~/ ~ tial. Managers select candidates,or employees can

-14 - Exhibit 2 - Continued Memo to Professor White February 7, 1976 nominate themselves. Is a general feeling, though, that if managers don't select, they don't have a chance: a reluctance to volunteer. In general, I expect the report to focus on communication problems between management and "workers" and low morale of employees as a result of non-participation. I would also anticipate that the report will concentrate on the "needs" of lower-level employees within the constraints imposed by management: v 1) Use of positive reinforcement through existing performance measures-;. 2) Earlier and more thorough explanations of management decisions and future plans, and their implications for employees, 3) Management training for first-line supervisors with emphasis on interpersonal relations. 4) Increased emphasis on advancement potential for lowerlevel employees. In the meantime, I will continue to try to "keep the faith" by remaining uninvolved in the group's consulting efforts and noting assumptions and biases as they occur (this with gritted teeth).

-15 - Noninvolvement of lower-level employees and need for earlier and more thorough explanations by management The final report included several examples of change which had been implemented in the past "without soliciting comments or suggestions from employees" and cited survey data which "showed the response to the question related to solicitation of ideas for decision making in general was at the 25th percentile and the response related to solicitation of ideas by supervisors was at the 29th percentile; both compared to national norms." Recommendations were included for regularly scheduled group meetings, a district newsletter, and periodic department-wide meetings. Distrust of supervisors The report stated that "employees feel the outer office 'window wall' (proposed as a part of a physical remodeling of the department) is nothing more than a pretense for management spying." And again, survey data were included: "For the survey question dealing with how much trust and confidence employees have in their supervisor, the overall department score was at the 35th percentile, while group scores ranged from the 10th to the 66th percentile." Fear of change This was not included in the final report except as an example v/ of the dysfunctional effects of the "grapevine'":" "The recent rumors about imminent layoffs had everyone talking about the possibility of losing their jobs."

-16 -Resentment of severe control systems and need for more positive reinforcement One recommendation of the report was that there be "increased informal feedback from supervisors with emphasis on positive reinforcement," and, if possible, "formalized as a positive reinforcement program." An entire section of the report was entitled "Feedback," vv and the term "positive reinforcement" (or the synonyms "constructive feedback" or "positive feedback") was used ten times in five pages. The report also suggested that the "formal evaluation procedure used within the [ ] department is not understood by the average employee" and "has been less effective than it could be in channeling employee behavior patterns toward improved departmental operation." The consulting group recommended that "performance feedback should be more frequent, more objective (actually dealing with performance), and it should take the form of constructive suggestions rather than negative criticism." Problems in coordination and cooperation This particular subject followed an interesting progression and illustrates the tenaciousness of early assumptions. Because of the sequential and routine nature of the tasks involved (conclusion drawn from notes of a conversation with the team leader: "...no cooperation with people within office needed"), the report recommended, instead, "improved coordination with outside departments."

-17 -Lack of management training for first-line supervisors and need for more emphasis on interpersonal relations One of the first problems discussed in the final report was "the inconsistency in how supervisors apply and interpret rules" and was mentioned again in several sections of the report, including the section dealing with recommended formal supervisory training. There the report stated: "Supervisors are periodically sent to courses in order to improve their technical expertise. However, the team found supervisors do not receive specific training which develops their managerial and interpersonal skills." The team recommended "improvement in both the quality and consistency of interpersonal relationships between employees and supervisors." Lack of expectation for advancement and need for increased emphasis on advancement potential for lower-level employees The group reported that "most craft personnel said training wouldn't do them much good with respect to advancement, since the kind of person who is promoted is not, in their opinion, necessarily the one who performs his job the best." Again, survey data were used to support their conclusions: "Overall score for the [ ] department was at the 38th percentile. Individual group scores varied from the 26th to the 48th percentile indicating no work group was particularly satisfied with future advancement prospects." These scores were interpreted as "primarily related to how employees feel about the use of performance appraisals, and their perception as to the type of person who is promoted." Recommendations included increased use of

-18 -the management replacement position as an "excellent way to provide supervisory training for aspiring employees." General predictions The memo concluded with general statements indicating that the final report would focus on communication problems, low morale, and the "needs" of lower-level employees. 4//. Over one-fourth of the final report (nine of the thirty-three pages) and six of the fourteen formal recommendations dealt with "communication problems." (Subsections of the report were fairness and equity, problem solving, downward communication, implementation of change, interdepartmental coordination, and grapevine.) An additional six pages were devoted to a section on satisfaction — a subject identified as "the most significant common denominator which cut across all the problem areas." Low morale, also a factor, was not attributed directly to nonparticipation but was viewed instead as the logical result of problems in communication, feedback, and training. In summary, the nonparticipating observer predicted in early February seven specific problem areas and three additional general topics which would be included in the consulting group's diagnostic report to the client. When that report, submitted in mid-April, was examined against the earlier memorandum, 80 percent of the predictions were found to be accurate. (See Table 1.)

-19 -Table 1 Comparison of Observer Predictions and Report Content Topical Areas Actual Content Areas Predicted by Covered by Diagnostic Observer Report to the Organization (early February) (mid-April) 1. Noninvolvement of employees x 2. Distrust of supervisors x 3. Fear of change 4. Resentment of control x 5. Problems in coordination x 6. Lack of management training x 7. Lack of advancement potential x 8. General predictions a. Communication x b. Low morale x c. "Needs" of employees In addition to the eight predicted problem areas, the final report covered five more topics, including problems in (1) perceptions of the supervisor's fairness and equitable treatment of employees, (2) reliance on the "grapevine" as a communication source, (3) the perceived lack of a performance appraisal program, (4) inadequate employee training, and (5) anticipated physical layout changes. Three of these problem areas were predicted in a subsequent memorandum submitted in early March to the professor. By March the consulting

-20 -team members had completed interviews with approximately 75 percent of the organization's members, but had not systematically shared their interview results or analyzed their survey data. Discussion The authors believe that top management of the client organization significantly (though perhaps unconsciously) influenced the consulting team's identification of organizational problems. We believe this occurred because the standard prescription for top-down OD commencing with in-depth discussions with top management was followed. Our conclusion is based on both the evidence presented and on our personal observations of the consulting process. An OD consultant's independent (comprehensive and objective) diagnosis of organization functioning can serve one of two purposes vis-a-vis top management's own on-going diagnostic efforts: the diagnosis can point up new or different problem areas not already identified by management; or, it can confirm the accuracy of management's own diagnosis. In either case, the key to an accurate diagnosis is the independence of the consultant's diagnostic procedure. In the absence of such independence, neither diagnostic effort can succeed. In our study, management might in fact have made an accurate diagnosis of the organizational problems which the consulting team simply confirmed. However, the selective use of quantitative data from the survey questionnaires makes this explanation suspect. Few

-20 -findings were presented to the organization based on questionnaire results alone; the data were used in the final report primarily to support conclusions previously drawn from other sources. It is also possible that this is a unique and erroneous finding (since N=1). No doubt the predictive ability of the observer was more accurate because of knowledge of the consultants' academic backgrounds and values. A later analysis of the group members' logs indicated, however, that the bulk of the organizational problems were first "discovered" after conversations with top management. Another factor may have been the age and lack of practical experience of this particular group in diagnosing organizational problems. The students may have been so uncertain of their ability to recognize "real" problems that they were overly receptive to management opinions. However, we believe the phenomenon uncovered in this study is of a more general nature and therefore cause for concern. The study should serve as a stimulus to further research and as a warning to OD practitioners. Research Directions and Practical Implications Several possible research strategies exist for investigating the effect of a top-down OD approach to the objectivity and validity of organizational diagnosis. Additional observations of consulting processes could be conducted in an attempt to replicate this study. An experimental design might also be employed: a consulting group could be divided in which half the members followed the normal

-21 - procedure of interacting with top management, while the other half restricted their interactions and data collection activities to lowerlevel employees. Yet another approach would be to employ independent analysis of data from written questionnaires and structured interviews, and to compare the conclusions with those of the consulting team. It would be a mistake, however, to wait until this research is completed to consider practical implications. The probability that excessive top management influence does indeed occur seems very high to us. Practicing consultants should be conscious of the possibility of having their problems defined for them early in the relationship and should develop specific steps to minimize the effects. (It should be remembered that our study was of a consulting group, the members of which provided their own checks and balances —most consultants work alone. This suggests the need for more "teamwork" in consulting —perhaps the use of an outsider to play the devil's advocate or to analyze the "hard" data independently.) Steps should be taken to minimize the depth of early discussions with top management. Initial contacts cannot be completely avoided since the logistics of the study have to be worked out with and support gained from management, but attempts to identify problems, except in their most general form, should be discouraged or at least documented. An alternative approach is to simultaneously interview a representative cross-section of the organization (including top management) very early in the study and develop questionnaires and subsequent

-22 -interview schedules from an analysis of these data. This approach has a dual advantage of tailoring the study to the organization and also of allowing equal probability of influence on initial problem definition from all levels of the organization. Perhaps most important is the need for a systematic and explicit model of organizational diagnosis which has a core of critical variables and specific procedures for documentation and evaluation (especially of "soft" data such as initial impressions, assumptions, observations, and informal conversations). Many writers have cited the need for such a model (Lippitt, 1959; Lorsch and Lawrence, 1972), but few models have been offered. We suggest that consultants need to verbalize and "concretize" the models from which they work and then examine them for areas in which there is potential for unrecognized influence from top management. What we are really asking is that every organizational problem have its own chance to stand up and be counted.

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