This post follows on from The Levels of Organisational Development. In that post I explored Level 1 or the Formation Stage of the six levels of organisational development. In this post I will look in a bit more detail at level 2 – The formalisation stage of organisational development:
Level 2: Formalisation Stage
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The distinctive features of the formalisation level of organisational development is characterised by: –
a) ‘Functional’ barriers appearing between departments and employees.
b) These delineations and barriers force employees and managers to defend their own local goals and indicators which can often conflict with those of the organisation’s common goals
c) Bureaucratic administrative apparatus becomes larger together with the increased volume of management functions (control, coordination and meetings) and the growing total number of ‘managers
Companies in the formalisation level of organisational development find that they have to formalise the management system elements such as:
- the development of normative and regulatory documents
- definition of organisational structure in management
- the development of an information system to collect, record and analyse data on performance and efficiency of business processes for example.
- Additionally they have to start to take steps to reduce variation and the variability of the organisational processes and growing systems and processes
Then there becomes a clearer division of responsibilities and authority among the employees. Higher level of personnel administrative competence starts to become valued as well as operational competence. This then leads to a more formalised development strategy to ensure the continuity of development and operations.
Then what tends to happen is that some form of scorecard or dashboard is developed to connect the financial and non-financial indicators. In other words the organisation now starts to look at what is happening in the organisation and tries to use this to predict financial performance.