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Organizational Development is Your Company’s Key to Success in 2025

Post Author - Elena Prokopets Elena Prokopets Last Updated:

Markets today are unpredictable. Technological advancements, supply chain disruptions, and shifts in economic and consumer behavior compel businesses to stay agile.

To win in the future, 62% of CEOs admit they must rewrite their business playbook rather than play to existing strengths. Yet, organizational change never comes easily, especially when you lack a clear action plan. 

Organizational development (OD) provides science-based methodologies and interventions for steering your company in a new direction through cultural, business process, and performance management transformations.

OD helps different units align on key business objectives, promotes effective change management, and ultimately improves innovation capability and long-term resilience. To flip the operating script in 2025, here’s what you need to know about effective organizational development.

TL;DR — Key Takeaways

  • Organizational development boosts company performance and drives change management through targeted interventions grounded in social and behavioral science.
  • The purpose of OD is to transition organizations from where they are now to where they want to be through incremental changes in operating, cultural, people management, and technology practices.
  • The main steps in the organization development process include problem identification, root cause(s) diagnosis, data collection, strategic planning, intervention implementation, and outcome assessments.
  • Many popular organizational development frameworks help with different OD elements — McKinsey 7S, Kurt Lewin’s Three-Step Model, Kotter’s 8-Step Change Model, and others. 
  • Similarly, there’s a host of OD interventions for improving different organizational elements, from talent planning and acquisition to succession planning, cross-team collaboration, and overall management processes. 
  • Human resource teams play a key role in ongoing organization development through proactive facilitation in change management, employee communication, and strategic planning. 

What is organizational development?

One of the first definitions of organizational development (OD) comes from Richard Beckhard, an American pioneer in organizational research: 

Organizational development is an effort (1) planned, (2) organization-wide, and (3) managed from the top to (4) increase organization effectiveness and health through (5) planned interventions in the organization’s “processes,” using behavioral-science knowledge.

What now? In simpler terms, organizational development is a systematic, science-backed process for driving continuous improvement in business performance through changes in organizational culture, processes, and talent management.

Modern OD combines social sciences, human resources management, agile business management, and strategic communication principles with newer data collection and analysis techniques.

OD helps leaders assess baseline organizational performance, determine necessary transformational change, and establish better processes for achieving desired outcomes such as: 

  • Alignment between leadership vision and employee execution
  • Higher workforce productivity and employee engagement 
  • Better organizational effectiveness and cross-team collaboration 
  • Continuous employee development and training 
  • Faster, less disruptive change management 
  • Long-term business resilience and sustainability 

Goals of organizational development

The core objective of organizational development is improving business health. By analyzing what’s going wrong (and why), OD practitioners deliver timely advice for staying innovative, optimizing profit margins, and being in sync with market trends. 

Without such “check-ups,” a company risks untimely demise. Take Kodak, which once dominated the photography market. Its leadership was blinded by its success with film cameras and ignored the rise of digital technology, despite a Kodak engineer inventing the digital camera prototype in 1975.

Still, Kodak’s management refused to adapt to consumer preferences. They believed a 70% profit margin on film photography would keep them afloat through the “fad” of digital photography (which it didn’t). The company started its change process too late, and the market momentum was lost to competitors. In 2012, Kodak, once a several billion-dollar company, filed for bankruptcy

To avoid similar scenarios, smarter leaders pursue incremental OD improvements for continuous course correction in business performance. Sample goals of OD interventions may include:

  • Business model transformations to increase organizational competitiveness, better leverage unique resources, and progressively serve the links with legacy assets and practices. 
  • Business process optimization to eliminate redundancies, improve information flows, and automate manual steps for faster work execution and streamlined decision-making. 
  • Better change management capabilities to successfully implement organizational restructuring, adopt new technologies, and break false synergies between the old and the new practices. 
  • Higher workforce performance to align employees with the new company vision, reduce disengagement, improve workplace wellness, and provide more professional growth opportunities. 
  • Cultural transformations to create a more flexible and inclusive work environment, encourage innovative thinking, continuous learning, and cross-functional collaboration among different business units. 
  • Leadership development to improve emotional intelligence, communication, and management skills among current leaders and nurture new talents as part of wider workforce planning efforts. 

Understanding the organizational development process

The goal of organizational development is to change the way your company operates, one targeted intervention at a time. 

Because every company starts at a unique position, there’s no right (or wrong) approach to organizational development. Rather, several frameworks help with the overall process structure, problem diagnosis, and change implementation. 

Traditionally, the OD process is guided by the Action Research Model, proposed by Kurt Lewin and later visualized by John Elliot.

Action Research Model provides a staged method for problem identification and progressive resolution. It’s a great starting point for structuring your ideas and customizing each step to your business needs. From there, you can use extra strategies to address common change barriers like cultural resistance, lack of leadership support, or missing capabilities. 

Here’s how the OD process will look from start to finish. 

Identify the problem

Running a business is hardly smooth sailing. There are always factors demanding your attention, from economic shifts and geopolitical tensions to changes in consumer preferences and low employee performance. 

But everything can’t be an immediate priority. You have to choose your battles and focus on one problem at a time. For most companies, it can be one of the following blockers: 

  • Misaligned priorities: Almost half of businesses report a mismatch between their business strategy and technology investments, which leads to overspending and poor return on investment. 
  • Skills mismatch: Most HR leaders report workforce demand is growing faster than workers’ skills, driven by technology. People lack competencies for assigned tasks and require up-skilling or re-skilling training.
  • Organizational inertia: Change comes slowly. Over two-thirds of leaders say their companies must leverage technologies that change faster than employees can adapt.
  • Lack of innovation: New ideas take time to incubate and become reality, but time is short. 82% of CEOs believe their competitor will be out of business in 10 years unless they change their current business model. 
  • Capacity issues: Companies often lack visibility into available resources. Subsequently, 57% of leaders admit they may be operating below capacity due to a lack of tools to measure underperformance or overstaffing.
  • Bloated organizational structures with too many C-suite ‘cooks’ and a lack of individual contributors breed sluggishness. 40% of leaders believe a complex structure causes inefficiency in their company, and a similar number cite unclear roles and responsibilities.
Top tips to enlarge those brains Top tip:

We suggest picking a major theme for improvement in 2025 — then drill down into its root causes.

Diagnose the issue

Your core problem is usually triggered by a combination of factors. For example, if your profitability has declined, several factors may be at play:

  • External factors like reduced consumer spending, supply chain issues, regulatory changes, or market saturation. 
  • Revenue factors, including declining sales volumes, loss of key clients, or price undercutting from new competitors. 
  • Financial factors like ineffective resource allocation, subpar pricing strategy, or poor capital investment decisions. 
  • Product factors like declining quality, higher manufacturing costs, or lack of innovative features to fulfill new market needs. 
  • Workforce factors like labor shortages, skills gaps, low employee productivity, or ongoing management issues. 

To discover all the root causes, analyze your company’s fabric — the combination of people, processes, and technologies powering your business. For that, OD professionals may use the following methods:  

  • McKinsey 7S framework analyzes corporate effectiveness through seven key elements: strategy, structure, systems, skills, staff, style, and shared values. 
  • The Burke-Litwin model maps the cause-and-effect relationships between various organizational and external market factors to guide new strategies. 
  • Nadler-Tushman’s congruence model evaluates how well the company’s components (tasks, people, structure, and culture) align to achieve optimal performance.
Top tips to enlarge those brains Top tip:

Consider the problem’s nature when choosing a framework. Is it strategic, cultural, operational, or related to org structure? Next, consider the change scope. Some frameworks, like Lean Six Sigma, promote continuous changes, while others, like the Burke-Litwin Model, encourage transformational shifts.

Gather data and feedback

Data holds the answers to your problem. Use employee surveys and questionnaires to collect evidence from your workforce, stakeholders, or customers. Pair these with interviews and focus groups for qualitative insights.

Similarly, use niche methods for specific problems. If you struggle with talent planning, consider a skills mapping session and talent gap analysis. If organizational efficiency is your biggest hurdle, a productivity audit or Six Sigma process mapping can help.

Other effective data-gathering methods include:

  • Observations of workplace dynamics, workflows, and customer interactions to uncover process or behavioral issues. 
  • Employee performance reviews to gain clarity into workforce productivity, engagement, absenteeism, and turnover levels. 
  • Benchmarking — data-driven comparison of standard industry KPIs against industry averages. 
  • Policy and document reviews to deliver insights into standard operating procedures and identify bottlenecks and possible redundancies. 
  • External feedback from clients, vendors, or other external stakeholders to gain their perspective on potential mishaps. 
Top tips to enlarge those brains Top tip:

Regardless of how you do it, your goal is to gather diverse, definitive, and objective data, explaining why your organization is lagging in a certain area.

Develop a strategic plan

A good organizational development plan includes a step-by-step solution for the diagnosed issue(s). If your goal is to improve workforce planning to reduce skills gaps, optimize hiring costs, and improve succession planning, the sub-steps may include:

  • Launch a professional development program for mid-management for better career progression 
  • Adopt skills-based hiring principles to improve the quality of new hires, eliminate skills mismatches, and increase employee retention 

Each step should include a list of sub-tasks and key milestones. When possible, add specific progress measures, like tracking the percentage of workers who received and completed new training.

Obviously, bigger changes require more drastic measures. When Ynon Kreiz joined Mattel in 2018, the toy company had witnessed several years of declining sales. Kreiz decided to try something new and transition the company from being a toy manufacturer to becoming an IP company managing franchises. 

Kreiz brought in Greta Gerwig to help Mattel’s brand reconnect with fans and gave her full creative autonomy. What came to be is an iconic Barbie movie, which brought the company a record-setting $155mn box office, a 9.3% increase in doll sales, and extra profits from new brand merch like “Kenough” swag. 

But that’s just the pinnacle of Mattel’s transformation. Under the hood, the company has also been transforming its supply chain strategy for greater effectiveness and lower cost. The company changed its production planning algorithms, carving out an extra 30% in productivity and resizing its capacity. Mattel also removed some 40% of poor-performing toys to further optimize work schedules and improve productivity. 

Throughout the transformations, the company kept an open line of communication with its people, explaining the scope and impacts of the changes. “When the company cares about its people, the people will care about the company. It’s simple”, shared Roberto Isaias, Mattel CSCO. “You must ensure you’re being fair, checking decisions thoroughly, and engaging your team in the best possible way.”

Implement the plan

OD initiatives often face resistance because they challenge the status quo. People prefer routines and dislike forced change, especially when it has become constant.

In 2022, the average employee experienced 10 planned enterprise changes — such as a restructuring to achieve efficiencies, a culture transformation to unlock new ways of working, or the replacement of a legacy tech system — up from two in 2016.

Gartner

When pushed too hard, employees’ reactions to change can range from subtle annoyance to downright sabotage. In response to RTO mandates, about half of Amazon employees are looking for a new job. Similarly, a bunch of key OpenAI employees (including co-founder John Schulman) left the company in 2024 because they felt it was moving in the wrong direction

To preserve employee satisfaction and engagement through the transformations, leaders need to:

  • Clearly communicate the foundational information about the change: What is happening? Why? What better future is ahead? What support is everyone getting? By candidly discussing the issues, you can reduce the risk and misunderstanding.
  • Clarify the key priorities: Change often causes confusion and chaos. Aim to reduce both with structured information and clear tasks, indicating the main milestones at every stage. Give people a new ‘scheme’ they can progressively settle in to thwart their worries about too many shifts happening around them.   
  • Give your people a say: During transformations, employees may feel at the mercy of the leadership. Get their buy-in by giving them a degree of control. For example, allow teams to choose the timing for the transition to the new software or the ability to suggest certain changes to the new process. Doing so reduces the sense of fear and discomfort, leading to higher engagement. 
  • Provide consistent support: Help workers cope with change by listening to their concerns and acknowledging their worries. Rather than labeling hesitation as resistance, understand that they’re going through a mindset shift. Provide mentoring, training, and other resources to help your people feel heard and supported. 
Top tips to enlarge those brains Top tip:

Frameworks like Kotter’s 8-Step Change Model, the ADKAR model, and Kurt Lewin’s Three-Step Model can also improve program engagement and promote changes on an individual level.

Assess the outcome of interventions

After implementing every action step, take the time to assess the impacts. Use different groups of metrics to track OD success. For example:

WorkforceOrganizationalBusiness Goals
Metrics• Employee satisfaction rates 
• Employee engagement levels
• Productivity growth 
Skills gap reduction
• Competency scores
• Increased output and/or performance
• Percentage of automated processes 
• Change adoption and resistance levels 
• Improvements in resource allocation and budgeting
• Customer satisfaction scores
• Profit margin growth 
• Sales volume increases 
• Production volume increases 
• Service delivery speeds

Your goal is to understand how different measures have impacted your bigger goals. Some OD initiatives can be quantified through financial impacts (e.g., cost savings in production). Others can be measured through “softer” measures like higher succession pipeline strength or lower employee turnover

By knowing which interventions generated desired results, you can effectively scale these new changes across the organization to shape up your entire business.  

Examples of common OD interventions

You have no shortage of effective measures for improving different aspects of your organization. Depending on what you want to fix, you can try:

Human process interventions 

  • Team building workshops to improve communication, collaboration, and interpersonal dynamics across different units. 
  • Individual personal improvement plans that provide timeline-based goals for addressing recurring performance issues and professional shortcomings.
  • Communication training to coach staff in cultural sensitivity, negotiation, conflict resolution, feedback-giving, and other areas of internal and external comms. 

Human resource management interventions

  • Employee development and certification programs to train employees in new skills and acquire extra competencies. 
  • Succession planning frameworks to establish transparent progression criteria,  draw clear career paths, and promote better internal mobility
  • Incentive programs to improve employee retention and engagement with new performance bonuses, profit-sharing schemes, or stock options. 

Organizational interventions

  • Role redesign to broaden or narrow the scope of responsibilities to ensure better capacity planning and workforce productivity. 
  • Process reengineering to remove repetition, overlaps, and duplication in workflows for greater efficiencies. 
  • Cultural changes to evolve corporate values, behavioral norms, and interpersonal practices for a healthier work environment. 

Technology-led interventions 

  • Data analytics adoption for new use cases and functions to enable faster problem-solving and data-guided decisions. 
  • Virtual collaboration solutions to better support hybrid and remote work, streamline knowledge exchange, and address information asymmetry. 
  • Robotic process automation for streamlining repetitive, manual tasks, improving accuracy rates, and execution speed. 

The role of human resources in change management

HR teams support the workforce during the transition by providing knowledge, tools, and resources for coping with change. Additionally, they convey key concerns to the leadership, minimizing disruptions and cultural resistance.

In other words, HR teams act as conduits, transferring directives and feedback between employees and leadership while adding their unique perspectives. 

HR involvement in change management often includes:

  • Initial assessments of employee readiness for change via surveys and focus groups 
  • Development and distribution of communication plans to concerned employees 
  • Resource coordination and alignment to support change management 
  • Strategic support with creating new training, development, and re-skilling programs
  • Direct involvement in implementing or optimizing business processes 
  • Monitoring of legal and regulatory compliance throughout the process 
Top tips to enlarge those brains Top tip:

Change will be uncomfortable for many. By staying in close touch with employees, HR teams can address inevitable cultural resistance, rally support from internal influencers, and find ways to encourage new behaviors.

But to do that well, HR teams also need a good degree of autonomy, trust, and decision-making power. So, invest as much in this team as you can in the rest!

We invest a lot in people managers as frontline change agents. We know good managers make change feel personal and manageable for each employee, so we prioritize providing them with the information and resources they need to navigate their people through change that has a huge impact.

Teuila Hanson, Chief People Officer at LinkedIn

Build better businesses with Toggl 

Toggl helps (un)official OD consultants make better sense of the company’s dynamics. 

With Toggl Track, you can: 

  • Combine time and task insights into one detailed pane of productivity analytics.
  • Learn where your teams lose hours to process inefficiencies, redundancies, and red tape 
  • Improve resource allocation and business profitability with accurate task, project, and billing estimates

In turn, Toggl Hire supports HR teams, who can: 

  • Use better tools for talent planning
  • Attract candidates with proven competencies
  • Detect skills mismatches and gaps to plan ahead
  • Grow talent pools 

Get reliable data to diagnose your business problems and administer the right OD interventions. Book a free Toggl Hire demo to talk to our experienced hiring team and see our tools in action.

Elena Prokopets

Elena is a freelance writer, producing journalist-style content that doesn’t leave the reader asking “so what." From the future of work to the latest technology trends, she loves exploring new subjects to produce compelling and culturally relevant narratives for brands. In her corporate life, Elena successfully managed remote freelance teams and coached junior marketers.

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