Organizational Development vs Human Resources: Key Differences Explained

How you manage your employee processes, from hiring to helping them grow, can either fall under human resources, organizational development or both. For example, recruitment and compliance fall under human resources yet performance management is also considered to be a type of organization development. Many similarities exist between organizational development and human resources, and they are often considered close cousins, but there are definite differences between the two.

What is Organizational Development?

Organizational development, as defined in Thomas G. Cummings and Christopher G. Worley’s book Organization Development & Change, uses behavioral science to develop, improve, and reinforce strategies, structures, and processes in order to advance overall organizational effectiveness. Organizational development uses facts and figures from science-based processes to implement change at a company. For example, if a company has consistently high operating costs, it might analyze benefit and payroll costs and make deductions where necessary.

The organizational development process is structured and controlled, relying on scientific findings rather than trial and error. OD practitioners use data and testing to ensure outcomes reflect the original intent or goal. Organizational development can be used to implement company-wide change or applied to a single location or department.

What’s the Goal of Organizational Development?

Organizational development is about creating change that makes a company more effective. Change can be measured by financial performance, customer satisfaction, organizational member engagement, and an increased capacity to renew the business. Each company measures success differently; some may focus on financial gains, while others may aim to improve company culture or promote values throughout the workplace.

A central goal of organizational development is increasing competitiveness. Competitive advantage is what makes a company’s goods or services superior to other customer options. Organizational development can help companies win within their marketplaces.

Examples of Organizational Development

Cummings and Worley’s book breaks down organizational development techniques or interventions into several categories:

Human Process Interventions

Human process interventions fall into two categories: personal or group approaches and organizational approaches.

• ​Interpersonal and group process approaches include process consultation, third-party interventions, and team building. Process consultation helps groups understand, diagnose, and improve their behaviors. Third-party interventions focus on dysfunctional interpersonal conflict. Team building helps teams perform tasks better and ensures group goals are clear.
• ​Organizational approaches include organizational problem solving, leadership, visioning, and task-oriented accomplishments between groups. These approaches help organizations encourage employees to identify and confront pressing issues. They also include conflict resolution and large-group interventions, allowing various stakeholders to interact simultaneously.

Technostructural Interventions

Technostructural interventions are change programs that focus on the technology and structure of an organization. These programs include structural designs, moving away from traditional ways of dividing work (like functional, divisional, and matrix structures) to more integrative and flexible forms, such as customer-centric and network structures. Companies diagnose their issues before determining which structure is appropriate. For example, a technostructural approach might involve downsizing through layoffs, restructuring, or outsourcing to reduce costs.

Technostructural interventions also include total quality management or continuous process improvement, work design (aligning jobs to be efficient and satisfying), and job enrichment.

Human Resource Management Interventions

Human resource management interventions focus on how employees are managed, typically through performance management, employee development, benefits management, and diversity.

• ​Performance management involves regular performance reviews.
• ​Employee development offers training to improve work or further careers.
• ​Benefits management includes health and wellness benefits.
• ​Diversity interventions focus on increasing workplace diversity, including gender, race, age, sexual orientation, disabilities, veteran status, and culture.

Strategic Change Interventions

Strategic change interventions center around transforming an organization or changing its basic character. These interventions go beyond small improvements and focus on changing how the company views itself and its environment. Strategic change interventions include transformational change, continuous change, and transorganizational change.

• ​Transformational change involves changing the company’s structure and operations.
• ​Continuous change occurs over time.
• ​Transorganizational change includes changes related to mergers, acquisitions, and strategic networking.

What Is Human Resources?

The purpose of a human resources department is to manage the employee process, from hiring to termination. These processes can include recruitment, hiring, onboarding, payroll, compensation, time and attendance, benefits, performance management, development, and succession planning. HR must perform all these processes while ensuring the company maintains compliance, whether pre- or post-hire. HR is also key in eliminating employee risk, such as reducing turnover, adhering to labor standards, or offering fair compensation.

What’s the Goal of HR?

The goal of HR is to hire, manage, and grow employees. Good HR processes handle these tasks efficiently, reducing strain on staff and employees.

• ​Recruit new employees while maintaining hiring compliance. An Applicant Tracking System (ATS) can target a diverse group of applicants by automatically posting job listings on multiple job boards. HR departments can use it to track applicants, essential for employers who must comply with Equal Employment Opportunity regulations. An ATS can also add EEO taglines and keep records of every applicant, which is vital in the event of an audit.
• ​Get employees on the job faster while ensuring legal compliance. Onboarding should be efficient, allowing new employees to upload personal information and sign off on handbooks, ensuring legal compliance for each hire.
• ​Reduce paperwork while quickly and accurately producing paychecks. Cloud-based payroll and time and attendance systems work together to provide accurate paychecks. Time and Attendance tracks when and where hourly employees work, helping monitor labor costs and ensuring overtime is paid correctly. The system updates payroll in real time, so staff are never waiting for paper timesheets. Payroll has accurate, signed-off information to process pay efficiently.
• ​Reduce turnover risk with competitive pay. HR departments that use compensation management can stay competitive by offering market-reflective wages and rewarding high performers, helping keep employees engaged and reducing turnover. HR can assess the impact of pay changes on budgets and streamline compensation decisions.
• ​Offer transparency on government-mandated health insurance. HR can simplify open enrollment by allowing employees access to plan options and update their own life changes. A good benefits management system should maintain compliance and offer reporting features for the Affordable Care Act (ACA).
• ​Keep employees engaged while enforcing policies and procedures. HR is involved in growing the employee base with performance management and development. Regular performance reviews allow managers and employees to set and track goals and provide valuable feedback. Learning management keeps workplaces safe by requiring certification renewals and updating employees on policy changes. Regular development helps organizations fill skills gaps.

How OD and HR Relate or Overlap

Organizational development and human resources often get confused because they overlap in employee management. Performance management, employee development, and benefits management often fall under HR but are also directly related to company goals. Strategic goals like increasing production, sales, or lowering costs are managed and promoted through performance management, development, and benefits.

For example, if a company’s organizational development team wants to implement technostructural interventions to its production line, employers will need to use development initiatives to train employees on new job alignments. Or, if OD practitioners want to implement team building interventions, performance management provides 360-degree feedback so managers can understand how teams work together.

Improving diversity is also part of HR’s scope. Recruiting a more diverse pool of candidates requires HR to reach out to job boards that target minorities and offer employee rewards for minority referrals. HR can use development procedures to train employees on appropriate behaviors and language. Diversity can also be used in future team building, recruitment, and retention plans.

Organizational development is complex, and this overview only scratches the surface. Whether or not your company focuses on organizational development, it will inevitably overlap with human resources.