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Employee Development and Organizational Development – Are they synonymous?

14 June, 2021
5 mins

Employee development and organizational development are two terms that are well known in the industry today. There is a fine line between them and because of this most people are rather confused about their true meaning and their impact. Both employee and organizational development may go hand in hand, however, it is to be noted that they are not at all synonymous. Let’s find out in what way they are different from one another.

Employee Development through JOP
Source: Pexels

Organizational development largely deals with the process of making any small to large organization more effective. For instance, employees are offered the necessary skills they would need to further develop and tackle a wide range of challenges in this ever-changing market.

As for employee development, for any company to thrive, its workforce must evolve as well. One great way of ensuring this is by offering employees opportunities to develop, especially in areas that support the company’s growth and prosperity. Another way is by rolling out a formal program that enables organizational development where the management offers a curriculum that enhances the overall skills of the individuals and allows them to perform better. 

According to the Association for Talent Development (ATD), organizations that offer comprehensive training programs have 218% higher income per employee as compared to those without formalized training. Such companies have also witnessed a 24% higher profit margin as compared to those who spend less on training. The key learning here is that simply investing in training and development, even if there is an economic downturn, can prove to be a smart move.

Employee Development

The term employee development refers to the necessary resources that you as the employer would provide to your team members or staff to acquire or enhance their skills. You, as the employer, would fund the training program to grow the skills and knowledge of employees to improve efficiency and inculcate innovative business ideas. 

Financial support is one common means of employee development. As per 2008 US News and World Reports, on average, about half of all American workers have received financial assistance to take on higher courses or to be able to obtain a higher degree. Some employers focus on work-related classes that would add value to the employee and the services that he can offer to the organization.

In the past, human resources were mainly concerned with the efficiency of management and the employment process, which would include both hiring and termination. The HR department would also focus on enabling organizations to comply with government regulations and to be able to mitigate hiring risks. This was why HR was found to be acting as a support department for business units. HR used to be process-oriented; however, due to competition and changes in market trends, they have now diversified their attention and focus on employee development. This, in return, enables organizational development both in the short and long run.

Organizational Development (OD)

Organizational development was introduced for applying behavioral science to enable organizations to improve team members and enhance underlying systems. The organizational development plan has a holistic effect, and it is defined in such a way to help people operate better within the organization. Two primary tools that are used to measure organizational development and its impact are:

1. Assessment

2. Interventions

Quite different from HR operations, an OD professional would not look at checklists and HR manuals but would be somewhat interested in data and research.

Organizational Development is more to do with leadership and management and less to do with HR operations. It can be seen as a planned entity, which focuses on improving business effectiveness and efficiency. It allows analysis and insight into organizational structures and long-term goals. Only when a long-term strategy is mapped out then only can we see the impact of Organizational Development. By adopting newer and better practices and bringing change in behavioral science techniques, businesses can witness the growth and, in return, are better prepared for the ever-changing market.

How Investing in Employee Development Can Lead to Organizational Development

Employees are seen as the building blocks of any organization of today. If the employee does well in his or her day-to-day work activities then it has a positive impact on the organization and as a result, the company as a unit can also do well. It’s all about identifying gaps and investing in the right kind of skill sets to enhance the performance of the employee. 

Whether it’s employee development or organizational development, education remains one common factor between these practices. The difference would be that while an employee may be allowed a certain amount of freedom in choosing the right development program to pursue, organizational development would require employees to adhere to and follow a specific plan. 

The objective of organizational development is to focus on developing business in such a way so that training and workshops are made available and remain in sync with the overall organizational goals. While employee development is aimed at enhancing overall employee performance, organizational programs aim to improve the skillsets of employees in specific areas that would enable the company to do better both short term and in the long run.

What are the Risks and Challenges involved?

It is interesting to know that both employees and the company share equal amounts of risks. For the organization, both money and high attrition levels are of concern. While learning new skills is time-intensive, employees have even less time to showcase what they have learned. During the learning phase, the company would experience lesser productivity and higher costs due to the money spent to meet the costs of training and workshops or to hire external entities, or procure learning material. If the same employee leaves, that could turn out to be a loss for the employer.

Importance of Attraction, Retention, and Engagement

Organizational development programs should have the sheer resilience to dramatically bring about a positive change in the organization and uphold the well-being of their employees. This is one reason why organizational development requires the complete attention of business leaders. In the competitive world, we live in today, the ability to win largely depends on the talent of individuals and their performance. If your company can attract, retain, and engage employees for a significant number of years, you could be well ahead of your competitors.

Organizational development can be perceived as a strong arm that needs continuous guidance from business leaders. However, unfortunately, this seems to be blurred and complex for most staff members. But suppose you can do an excellent job making employees understand the proper use of organizational development principles, concepts, processes, and tools and techniques. In that case, you may have a winning strategy in hand.

Finally, organizational development should improve organizational effectiveness while adhering to key elements like culture and values. In addition, business leaders need to maximize employees’ potential and amplify their contributions to ensure success. Proper assessment of what is happening within an organization is essential, and then intervening and trying to create a positive change is even more critical.