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4 Entering and Contracting

5 Diagnosing

Collecting, Analyzing, and Feeding Back

Diagnostic Information

7 Designing Interventions

8 Managing Change

Evaluating and Institutionalizing Organization

Development Interventions

Sunflower Incorporated

Kenworth Motors

Peppercorn Dining

Diagnosis and Feedback at Adhikar

Managing Change: Action Planning for the Vélo V Project
in Lyon, France












Entering and Contracting


Describe the issues associated with entering into an OD process.

Describe the issues associated with contracting for an OD process.

he planned change process described in
Chapter 2 generally starts when one or
more managers or administrators sense an

opportunity for their organization, department, or
group, believe that new capabilities need to be
developed, or decide that performance could be
improved through organization development
(OD). The organization might be successful yet
have room for improvement. It might be facing
impending environmental conditions that necessi-
tate a change in how it operates. The organization
could be experiencing particular problems, such as
poor product quality, high rates of absenteeism, or
dysfunctional conflicts among departments. Con-
versely, the problems might appear more diffuse
and consist simply of feelings that the organization
should be “more innovative,” “more competi-
tive,” or “more effective.”

Entering and contracting are the initial steps in
the OD process. They involve defining in a
preliminary manner the organization’s problems
or opportunities for development and establishing
a collaborative relationship between the OD
practitioner and members of the client system
about how to work on those issues. Entering and
contracting set the initial parameters for carrying
out the subsequent phases of OD: diagnosing,
planning and implementing changes, and evaluating
and institutionalizing them. They help to define

what issues will be addressed by those activities,
who will carry them out, and how they will be

Entering and contracting can vary in complexity
and formality depending on the situation. In
those cases where the manager of a work
group or department serves as his or her own OD
practitioner, entering and contracting typically involve
the manager and group members meeting to
discuss what issues to work on and how they will
jointly meet the goals they set. Here, entering and
contracting are relatively simple and informal. They
involve all relevant members directly in the
process—with a minimum of formal procedures. In
situations where managers and administrators
are considering the use of professional OD
practitioners, either from inside or from outside the
organization, entering and contracting tend to be
more complex and formal.1 OD practitioners may
need to collect preliminary information to help
define the problematic or development issues.
They may need to meet with representatives of
the client organization rather than with the total
membership; they may need to formalize their
respective roles and how the change process will
unfold. In cases where the anticipated changes are
strategic and large in scale, formal proposals from
multiple consulting firms may be requested and
legal contracts drawn up.


This chapter first discusses the activities and
content-oriented issues involved in entering into
and contracting for an OD initiative. We will focus
our attention on complex processes involving OD
professionals and client organizations. Similar
entering and contracting issues, however, need to
be addressed in even the simplest OD efforts,
where managers serve as OD practitioners for their

own work units. Unless there is clarity and
agreement about what issues to work on, who will
address them, how that will be accomplished, and
what timetable will be followed, subsequent stages
of the OD process are likely to be confusing and
ineffective. The chapter concludes with a
discussion of the interpersonal process issues
involved in entering and contracting for OD work.

4-1 Entering into an OD Relationship
An OD process generally starts when a member of an organization or unit contacts an
OD practitioner about potential help in addressing an organizational issue.2 The organi-
zation member may be a manager, staff specialist, or some other key participant; the
practitioner may be an OD professional from inside or outside of the organization.
Determining whether the two parties should enter into an OD relationship typically
involves clarifying the nature of the organization’s current functioning and the issue(s)
to be addressed, the relevant client system for that issue, and the appropriateness of the
particular OD practitioner.3 In helping assess these issues, the OD practitioner may need
to collect preliminary data about the organization. Similarly, the organization may need
to gather information about the practitioner’s competence and experience.4 This knowl-
edge will help both parties determine whether they should proceed to develop a contract
for working together.

This section describes the activities involved in entering an OD relationship: clarifying
the organizational issue, determining the relevant client, and selecting the appropriate OD

4-1a Clarifying the Organizational Issue
When seeking help from OD practitioners, organizations typically start with a presenting
problem—the issue that has caused them to consider an OD process. It may be specific
(decreased market share, increased absenteeism) or general (“we’re growing too fast,”
“we need to prepare for rapid changes”). The presenting problem often has an implied
or stated solution. For example, managers may believe that because costs are high, laying
off members of their department is the obvious answer. They may even state the present-
ing problem in the form of a solution: “We need to downsize our organization.”

In many cases, however, the presenting problem is only a symptom of an underlying
problem. For example, high costs may result from several deeper causes, including inef-
fective new-product development or manufacturing processes, inappropriate customer-
service policies and procedures, or conflict between two interdependent groups. The
issue facing the organization or department must be clarified early in the OD process
so that subsequent diagnostic and intervention activities are focused correctly.5

Gaining a clearer perspective on the organizational issue may require collecting pre-
liminary data.6 OD practitioners often examine company records and interview a few
key members to gain an introductory understanding of the organization, its context,
and the nature of the presenting problem. Those data are gathered in a relatively short
period of time—typically over a few hours to one or two days. They are intended to pro-
vide enough rudimentary knowledge of the organizational issue to enable the two parties
to make informed choices about proceeding with the contracting process.


The diagnostic phase of OD involves a far more extensive assessment of the prob-
lematic or development issue than occurs during the entering and contracting stage. The
diagnosis also might discover other issues that need to be addressed, or it might lead to
redefining the initial issue that was identified during the entering and contracting stage.
This is a prime example of the emergent nature of the OD process: Things may change
as new information is gathered and new events occur.

4-1b Determining the Relevant Client
A second activity in entering an OD relationship is defining the relevant client for
addressing the organizational issue.7 Generally, the relevant client includes those organi-
zation members who can directly impact the change issue, whether it is solving a partic-
ular problem or improving an already successful organization or department. Unless
these members are identified and included in the entering and contracting process, they
may withhold their support for and commitment to the OD process. In trying to
improve the productivity of a unionized manufacturing plant, for example, the relevant
client may need to include union officials as well as managers and staff personnel. It is
not unusual for an OD project to fail because the relevant client was inappropriately

Determining the relevant client can vary in complexity depending on the situation.
In those cases where the organizational issue can be addressed in a specific organization
unit, client definition is relatively straightforward. Members of that unit constitute
the relevant client. They or their representatives must be included in the entering and
contracting process. For example, if a manager asked for help in improving the
decision-making process of his or her team, the manager and team members would be
the relevant client. Unless they are actively involved in choosing an OD practitioner and
defining the subsequent change process, there is little likelihood that OD will improve
team decision making.

Determining the relevant client is more complex when the organizational issue can-
not readily be addressed in a single unit. Here, it may be necessary to expand the defini-
tion of the client to include members from multiple units, from different hierarchical
levels, and even from outside of the organization. For example, the manager of a produc-
tion department may seek help in resolving conflicts between his or her unit and other
departments in the organization. The relevant client would extend beyond the bound-
aries of the production department because that department alone cannot resolve the
issue. The client might include members from all departments involved in the conflict
as well as the executive to whom all of the departments report. If that interdepartmental
conflict also involved key suppliers and customers from outside of the firm, the relevant
client might include members of those groups.

In such complex situations, OD practitioners need to gather additional information
about the organization to determine the relevant client, generally as part of the prelimi-
nary data collection that typically occurs when clarifying the issue to be addressed. When
examining company records or interviewing personnel, practitioners can seek to identify
the key members and organizational units that need to be involved. For example, they
can ask organization members questions such as these: Who can directly influence the
organizational issue? Who has a vested interest in it? Who has the power to approve or
reject the OD effort? Answers to those questions can help determine who is the relevant
client for the entering and contracting stage. However, the client may change during the
later stages of the OD process as new data are gathered and changes occur. If so, parti-
cipants may have to return to and modify this initial stage of the OD effort.


4-1c Selecting an OD Practitioner
The last activity involved in entering an OD relationship is selecting an OD practitioner
who has the expertise and experience to work with members on the organizational issue.
Unfortunately, little systematic advice is available on how to choose a competent OD
professional, whether from inside or outside of the organization.8 To help lower the
uncertainty of choosing from among external OD practitioners, organizations may
request that formal proposals be submitted. In these cases, the OD practitioner must
take all of the information gathered in the prior steps and create an outline of how the
process might unfold. Table 4.1 provides one view of the key elements of such a pro-
posal. It suggests that a written proposal include project objectives, outlines of proposed
processes, a list of roles and responsibilities, recommended interventions, and proposed
fees and expenses.

For less formal and structured selection processes, the late Gordon Lippitt, a pio-
neering practitioner in the field, suggested several criteria for selecting, evaluating, and
developing OD practitioners.9 Lippitt listed areas that managers should consider before
selecting a practitioner—including their ability to form sound interpersonal relationships,
the degree of focus on the problem, the skills of the practitioner relative to the problem,
the extent that the consultant clearly informs the client as to his or her role and contri-
bution, and whether the practitioner belongs to a professional association. References
from other clients are highly important. A client may not like the consultant’s work,
but it is critical to know the reasons for both pleasure and displeasure. One important
consideration is whether the consultant approaches the organization with openness and
an insistence on diagnosis or whether the practitioner appears to have a fixed program
that is applicable to almost any problem or organization.


Essentials of an Effective OD Proposal

Elements Description

Objectives of proposed

A statement of the goals in clear and concise terms,
including measurable results, if any.

Proposed process or
action plan

Provide an overview of the process to be used. Usually
includes a diagnosis (including how the data will be
collected), feedback process, and action-planning or
implementation process.

Roles and

A list of key stakeholders in the process, including the
OD practitioner, and the specific responsibilities for
which they will be held accountable.


A description of the proposed change strategies,
including training, off-site meetings, systems or pro-
cesses to be redesigned, and other activities.

Fees, terms, and

Provide an outline of the fees and expenses associated
with project.

SOURCE: Adapted from A. Freedman and R. Zackrison, Finding Your Way in the Consulting Jungle,
141–47. San Francisco: Jossey-Bass/Pfeiffer. © 2001.


Certainly, OD consulting is as much a person specialization as it is a task specializa-
tion. The OD professional needs not only a repertoire of technical skills but also the per-
sonality and interpersonal competence to use himself or herself as an instrument of
change. Regardless of technical training, the consultant must be able to maintain a
boundary position, coordinating among various units and departments and mixing dis-
ciplines, theories, technology, and research findings in an organic rather than in a
mechanical way. The practitioner is potentially the most important OD technology

Thus, in selecting an OD practitioner perhaps the most important issue is the fun-
damental question, “How effective has the person been in the past, with what kinds of
organizations, using what kinds of techniques?” In other words, references must be
checked. Interpersonal relationships are tremendously important, but even con artists
have excellent interpersonal relationships and skills.

The burden of choosing an effective OD practitioner should not rest entirely with
the client organization.10 As described in the Ethical Dilemmas section of Chapter 3,
consultants also bear a heavy responsibility in finding whether there is a match between
their skills and knowledge and what the organization or department needs. Few man-
agers are sophisticated enough to detect or to understand subtle differences in expertise
among OD professionals, and they often do not understand the difference between inter-
vention specialties. Thus, practitioners should help educate potential clients, being
explicit about their strengths and weaknesses and their range of competence. If OD pro-
fessionals realize that a good match does not exist, they should inform the client and
help them find more suitable help.

Application 4.1 describes the entering process at Alegent Health, a large health care
system in Nebraska and western Iowa. The entry process was largely “virtual” in that the
researchers worked through two consultants who were conducting OD interventions on
a regular basis. The case highlights how OD work can come in different forms and
through different channels. It also reflects how quickly the “entry” process can occur.
This is the first in a series of applications based on the Alegent project that will be used
throughout the text.

4-2 Developing a Contract
The activities of entering an OD relationship are a necessary prelude to developing an
OD contract. They define the major focus for contracting, including the relevant parties.
Contracting is a natural extension of the entering process and clarifies how the OD pro-
cess will proceed. It typically establishes the expectations of the parties, the time and
resources that will be expended, and the ground rules under which the parties will

The goal of contracting is to make a good decision about how to carry out the OD
process.11 It can be relatively informal and involve only a verbal agreement between the
client and the OD practitioner. A team leader with OD skills, for example, may voice his
or her concerns to members about how the team is functioning. After some discussion,
they might agree to devote one hour of future meeting time to diagnosing the team with
the help of the leader. Here, entering and contracting are done together, informally. In
other cases, contracting can be more protracted and result in a formal document. That
typically occurs when organizations employ outside OD practitioners. Government agen-
cies, for example, generally have procurement regulations that apply to contracting with
outside consultants.12







legent Health (AH) is a five-hospital sys-
tem that serves the greater Omaha,
Nebraska, and western Iowa region.
Alegent was formed when two religious-

sponsored health care systems merged to
leverage health care industry changes and to
bargain more powerfully with physicians and
insurance providers. The system had its own
managed care insurance program, was imple-
menting a consumer-directed health care pro-
gram for its employees, and had about 100
employed physicians in addition to the physi-
cians with privileges at its hospitals.

Two well-known OD consultants had been
working with AH for about two years, doing a
variety of OD work. By far, the largest project
was the design and delivery of large group
interventions known as decision accelerators
(DAs) to create strategies for the major clinical
service areas, such as orthopedics, cardiology,
and women’s and children’s services. [Note:
Large group interventions are multistakeholder
meetings of over 50 people—see Chapter 11
for more information.]

At an organization design conference in
April, one of the consultants was talking with
researchers from the Center for Effective Orga-
nizations at USC. The conversation turned to a
discussion of the work at AH and the possibil-
ity of evaluating the change effort. The
researchers were excited about the organiza-
tion development and large group intervention
work in the health care context. The consultant
agreed to pitch the idea to AH’s Chief Innova-
tion Officer (CIO).

Following some additional background
conversations with the researchers and the
CIO, the consultant sent the following email in

Dear CIO,
I would like to introduce you to the Center
for Effective Organization researchers. As
we discussed, the researchers are very
interested in the work being done at AH
and will be calling you early next week to
discuss the possibility of doing a research
project on the Decision Accelerator effort.

The form of research is typically action
research, meaning the data will be valuable
for Alegent in not only assessing the impact
and effectiveness of the DA intervention but
learning how to position this capability for
improved Alegent organizational effective-
ness. This can be quite valuable as Alegent
moves into the next round of change and

Thanks all.

The researchers spent the next few days
talking to the two consultants about AH, its
history, strategy, structure, and culture, as
well as the motivation for the large-group, deci-
sion accelerator process. They also collected
data on AH through the Internet. Alegent was
indeed a unique organization. It was highly
successful from a financial point of view, had
a new CEO who had been brought in from
Florida, and had a strong faith-based mission.

In the first phone call with the CIO, the
researchers introduced themselves, described
the mission of the research center, and their
interest in doing a case study of change at
Alegent. The CIO talked about the history of
change at AH and asked questions about the
value the project would have for them. He saw
several benefits, including the opportunity to
generate a history of the change, to learn
about the impacts of the change process on
the organization’s culture and members, and
to build a database that could be used to
advance AH’s objective of “changing the face
of health care.” The call ended with the agree-
ment that the CIO would talk with others in the
organization, including the CEO, and that the
researchers should begin to put together a
project purpose, cost estimate, and schedule.

In the second call, the researchers presented
their understanding of the project as a case study
assessment of how innovation was created and
implemented at Alegent. They described a way
of working with organizations—the establish-
ment of a “study team” composed of several
key stakeholders in the organization. The study
team would meet, before the project officially
began, to review the objectives of the study


Regardless of the level of formality, all OD processes require some form of explicit
contracting that results in either a verbal or a written agreement. Such contracting clari-
fies the client’s and the practitioner’s expectations about how the OD process will take
place. Unless there is mutual understanding and agreement about the process, there is
considerable risk that someone’s expectations will be unfulfilled.13 That can lead to
reduced commitment and support, to misplaced action, or to premature termination of
the process.

The contracting step in OD generally addresses three key areas:14 setting mutual
expectations or what each party expects to gain from the OD process; the time and
resources that will be devoted to it; and the ground rules for working together.

4-2a Mutual Expectations
This part of the contracting process focuses on the expectations of the client and the OD
practitioner. The client states the services and outcomes to be provided by the OD prac-
titioner and describes what the organization expects from the process and the consultant.
Clients usually can describe the desired outcomes, such as lower costs or higher job sat-
isfaction. Encouraging them to state their wants in the form of outcomes, working rela-
tionships, and personal accomplishments can facilitate the development of a good

The OD practitioner also should state what he or she expects to gain from the OD
process. This can include opportunities to try new interventions, report the results to
other potential clients, and receive appropriate compensation or recognition.

4-2b Time and Resources
To accomplish change, the organization and the OD practitioner must commit time
and resources to the effort. Each must be clear about how much energy and how many
resources will be dedicated to the change process. Failure to make explicit the necessary
requirements of a change process can quickly ruin an OD effort. For example, a client
may clearly state that the assignment involves diagnosing the causes of poor productivity
in a work group. However, the client may expect the practitioner to complete the assign-
ment without talking to the workers. Typically, clients want to know how much time will
be necessary to complete the assignment, who needs to be involved, how much it will
cost, and so on.

Peter Block has suggested that resources can be divided into two parts.16 Essential
requirements are things that are absolutely necessary if the change process is to be suc-
cessful. From the practitioner’s perspective, they can include access to key people or

and ensure that the work was relevant to the organi-
zation. There was some conversation about who
might be on that team, including the CEO, CFO, the
hospital presidents, and the VPs of the clinical service

Subsequent email exchanges among the con-
sultants, the CIO, and the researchers led to a

verbal agreement that the project should begin in
October. The CIO believed there was much to gain
from the project, and asked the Director of the
Right Track office (this was the internal name AH
had given to the decision accelerator) to lead the
contracting process and to help the researchers
schedule meetings and interviews.


information, enough time to do the job, and commitment from certain stakeholder
groups. The organization’s essential requirements might include a speedy diagnosis or
assurances that the project will be conducted at the lowest price. Being clear about the
constraints on carrying out the assignment will facilitate the contracting process and
improve the chances for success. Desirable requirements are those things that would be
nice to have but are not absolutely necessary, such as access to special resources or writ-
ten rather than verbal reports.

4-2c Ground Rules
The final part of the contracting process involves specifying how the client and the OD
practitioner will work together. The parameters established may include such issues as
confidentiality, if and how the OD practitioner will become involved in personal or
interpersonal issues, how to terminate the relationship, and whether the practitioner is
supposed to make expert recommendations or help the manager make decisions. For
internal consultants, organizational politics make it especially important to clarify issues
of how to handle sensitive information and how to deliver “bad news.”17 Such process
issues are as important as the needed substantive changes. Failure to address the con-
cerns may mean that the client or the practitioner has inappropriate assumptions about
how the process will unfold.

Application 4.2 describes the contracting process for the evaluation project at Alegent
Health. In this case, the contracting process was much more complicated than the entry
process. What would you list as the strengths and weaknesses of this example?

4-3 Interpersonal Process Issues in Entering
and Contracting
The previous sections on entering and contracting addressed the activities and content-
oriented issues associated with beginning an OD project. In this final section, we discuss
the interpersonal issues an OD practitioner must be aware of to produce a successful
agreement. In most cases, the client’s expectations, resources, and working relationship
requirements will not fit perfectly with the OD practitioner’s essential and desirable
requirements. Negotiating the differences to improve the likelihood of success can be
personally and interpersonally challenging.18

Entering and contracting are the first exchanges between a client and an OD practi-
tioner. Establishing a healthy relationship at the outset makes it more likely that the cli-
ent’s desired outcomes will be achieved and that the OD practitioner will be able to
improve the organization’s capacity to manage change in the future. As shown in
Figure 4.1, this initial stage is full of uncertainty and ambiguity. On the one hand, the
client is likely to feel exposed, inadequate, or vulnerable. The organization’s current
effectiveness and the request for help may seem to the client like an admission that the
organization is incapable of solving the problem or providing the leadership necessary to
achieve a set of results. Moreover, clients are entering into a relationship where they may
feel unable to control the activities of the OD practitioner. As a result, they feel vulnera-
ble because of their dependency on the practitioner to provide assistance. Consciously or
unconsciously, feelings of exposure, inadequacy, or vulnerability may lead clients to resist
coming to closure on the contract. The OD practitioner must be alert to the signs of
resistance, such as asking for extraordinary amounts of detail, and be able to address
them skillfully.







ollowing the verbal approval of the CIO to
begin the work, the researchers began
working with the Right Track director and
the consultants to formulate an agreement

on how to proceed with the case study and
assessment. The contracting process pro-
ceeded on two parallel paths. One path was
the specification of the formal contract—who,
what, how much, and why—and the second

path was the project scheduling—who, when,
and where.


The formal contracting process required the
researchers to propose a purpose, cost esti-
mate, and schedule for the case study. The
researchers’ initial proposal looked like this:

Work Stream September October November December January

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