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The Evolution of Organization Development at Cornell University: Strategies for Improving Performance and Building Capacity Chester C. Warzynski Advances in Developing Human Resources 2005; 7; 338 DOI: 10.1177/1523422305277175 The online version of this article can be found at: http://adh.sagepub.com/cgi/content/abstract/7/3/338

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10.1177/1523422305277175 Advances in Developing Human Resources Warzynski / ORGANIZATION DEVELOPMENT AT CORNELL

August 2005

The Evolution of Organization Development at Cornell University: Strategies for Improving Performance and Building Capacity Chester C. Warzynski The problem and the solution. Beer and Nohria propose that there is an inherent tension between organizational strategies designed to improve economic performance (Theory E) and organizational strategies designed to build organizational capacity (Theory O). They argue that the most effective approach to change integrates the two theories along six dimensions: goals, leadership, focus, process, rewards, and use of consultants. This article assesses the efficacy of the Beer and Nohria hypothesis in explaining organizational change by examining four senior leadership initiatives at Cornell University during the past decade and the organizational development strategies that emerged to support them. The article concludes with some lessons learned and the observation that an evolutionary approach to organizational development may provide a useful model for other universities. Keywords:

process consultation; sociotechnical systems development; strategic OD; collaboration

Organizational development (OD) may be defined as a planned change process in which people, cultures, work processes, structures, and technologies are developed, integrated, and aligned to strengthen an organization’s economic performance or increase its capacity to adapt and respond effectively to the environment in which it operates. OD is an essential function in many universities today. Increasing demands for new knowledge and educated people to maintain our social institutions and solve societal problems require sustained economic performance and increased capacity at all levels of organization. Hence, there is an ongoing need for new approaches to OD. Advances in Developing Human Resources Vol. 7, No. 3 August 2005 338-350 DOI: 10.1177/1523422305277175 Copyright 2005 Sage Publications

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Beer and Nohria (2000), academic researchers in the field of organizational behavior, propose a comprehensive and integrative approach to change in which an organization may simultaneously improve economic performance while developing organizational capability. According to the authors, this can be accomplished through recognizing the value of satisfying both goals simultaneously; providing top management direction but involving employees from below; focusing on the integration and alignment of structure, culture, and systems; developing flexibility and spontaneity in work processes; using incentives to reward changes in performance rather than drive change; and using consultants as experts in conjunction with empowered employees. The key driver of organizational change or adaptation in their theory is the decision of senior leadership to focus on improving economic performance, enhancing organizational capacity, or pursuing both goals. This article describes four organizational initiatives at Cornell University during the past decade and examines the approaches to OD that evolved to support them. The four initiatives and the OD strategies that evolved from them include (a) Total Quality Management (process consultation); (b) Project 2000, an enterprise information technology initiative (sociotechnical systems development); (c) Workforce Planning (strategic OD); and (d) a Call to Engagement (collaboration and co-evolution). These initiatives and their corresponding strategies represent specific stages in the development of OD at Cornell. The four stages of OD will be described in the sections below. The examination of each initiative will include a summary of the context leading up to it, a description of the OD strategy that emanated from it, and a short commentary on the results achieved. The article concludes with some lessons learned from the initiatives and the outline of an evolutionary approach for OD in universities.

Stage 1: Building Organizational Capacity Through Process Consultation The decision of senior management in 1993 to reconstitute the department of OD at Cornell University grew out of the need to integrate and centralize professional development (training), career services, and OD to support the university’s total quality management initiative. Senior management’s goal during this phase of the organization’s history was to market, coordinate, and support the quality improvement process. The original decision to initiate a quality improvement process was driven by senior leadership’s desire to build capacity for improving the quality of services across the university. To quote from the university’s implementation plan (Cornell University QIP Design Team, 1992), The incorporation of the principles of Total Quality Management (TQM) in the cultural fabric of colleges and universities, although not new, is neither widespread nor well-developed, particu-

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larly within administrative or support units. Faculty, can, and have asserted that the traditional nature of faculty interactions has, for generations, followed the precepts of TQM. . . . Cornell’s approach to TQM, the Quality Improvement Process (QIP), is perhaps one of the few to anticipate incorporation of the principals and processes by activities across the entire university.

The need to support the QIP was a significant move on the part of senior management to blunt a considerable amount of skepticism among faculty and administrative staff as to the viability of deploying business management technologies in higher education. At the time of senior management’s decision to move ahead with the quality initiative, the business world was engaged in a fierce, competitive struggle with the Japanese, who were rapidly increasing their market share in key industries, especially the automotive industry, through quality management practices. Many faculty and staff did not believe that this new quality initiative would make a difference at the university because of the uniqueness of higher education and the differences between the public and private sectors. Criticism of the new initiative was anticipated by senior management and recorded in the implementation plan as follows: (a) New procedures to improve quality would be added to workloads instead of replacing workloads; (b) there would be no changes in organizational structure, resources support, work unit priorities, job descriptions, compensation, or culture to support the quality improvement initiative; and (c) individuals would be asked to model the principles of QIP without seeing adherence to these principles at the top of the organization. The new director of OD was hired to neutralize these issues by partnering with unit managers and leaders across the university and building support for the QIP initiative. His charge was to help unit managers identify opportunities for quality improvement, develop strategies and action plans to improve quality, manage resistance to the initiative, and resolve problems facing the unit managers. He and his staff worked closely with senior leaders and unit managers, as sounding boards, coaches, problem solvers, and facilitators. During this stage, a process consultation approach was deployed to build relationships and develop visibility and credibility for QIP and OD. The process consultation approach, popularized by Edgar Schein, emphasizes the importance of developing a helping relationship with leaders and managers. Process consultation is described by Schein (1988) as the desire and skill on the part of the consultant to create a relationship with the client that the client will regard as helpful, that will enable the client to focus on the critical process events in his own environment, and will enable the client to diagnose and intervene in those processes to make his organization more effective. (p. 20)

In contrast to an expert model that tends to be more prescriptive and based on research, a process consultation approach requires the consultant to work closely with the client to develop a customized approach geared specifically to

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the client’s issues, needs, and situation. In process consultation, the client’s needs are paramount and the process for meeting the client’s needs is mutually determined. The principles underlying process consultation include partnership, mutual learning, helping, building future capacity, and tailoring a solution to meet the client’s needs. This approach to change is designed to build strong relationships and mutual action from which sustained organizational change and improvement occur. The client and consultant work in partnership to diagnose the situation and determine a solution. In the process, they learn, build organizational capacity, and accept mutual responsibility for the outcome. During the next 3 years, the OD director and his staff developed helping relationships through process consulting with hundreds of key managers and supervisors across the university. They listened to the challenges and concerns of senior leaders, coached and encouraged unit managers to address organizational needs and issues, planned process interventions, facilitated problem-solving sessions with supervisors, mediated conflict between managers and employees, built a network of trainers, and provided management development and training. These efforts significantly enhanced the visibility and credibility of OD across campus, helped to focus and balance the data-driven problem-solving process of the QIP program, and resulted in the development of a network of relationships with key leaders and managers as future clients for OD services. By 1995, more than 200 managers and supervisors were trained in the principles and methods of quality improvement. Thirty-five teams from across the campus piloted the QIP and initiated quality improvements. But by 1997, the QIP program had run its course. The director of OD left the university to become dean of a business school, and the senior vice president, who had launched the QIP initiative, left the university to head up a professional association. Although QIP still limped along in administrative departments for another year or so, without champions, it gradually waned in importance and was replaced by a new organizational initiative.

Stage 2: Improving Economic Performance Through Sociotechnical Systems Development Facing a financial shortfall in 1997, the new senior vice president and chief financial officer launched Project 2000, an enterprise information technology initiative designed to streamline and integrate the university’s business systems in HR, finance, student services, alumni affairs and development, and sponsored research. Project 2000 promised to be a radically different way of doing business that would provide faculty, staff, students, and external stakeholders with better service at less cost by streamlining the processes necessary to transact business, initiating organizational changes to complete work efficiently, and redirecting the underlying motivation of

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the campus from policy adherence to customer satisfaction (Rogers, 1997). The decision to move ahead with this new initiative was driven by economic pressures to save $20 million annually by reducing the number of staff working on administrative transactions. Thus, unlike the goal of the QIP program to build organizational capacity, the goals of Project 2000 were both an E change to save money and create efficiencies and an O change to provide a tool for enhanced management control. The underlying challenge of Project 2000 was the need to develop and integrate social and technical systems. Sociotechnical systems development (STS) is a process by which the social, technical, and economic aspects of new technologies are brought together, jointly optimized, and woven into the fabric of an organization’s existing work processes, technologies, structures, and cultures (Emery, 1993). STS was the OD approach adopted to facilitate the installation of the new information technology. The approach to STS was influenced by Piore’s functional theory of organizational and technological change (Piore, 1992). According to Piore, economic performance and growth is a product of the division of labor. The division of labor involves partitioning economic activity into specialization and integration. Specialization deepens the knowledge and skill base and creates functional conceptual frameworks for deploying resources and directing action. Technology embodies new conceptual frameworks for organizing and deploying resources in different and more powerful ways. Consequently, the implementation of a new technology creates reintegration problems in terms of the existing division of labor. When new information technology is introduced into an organization, it establishes new specialties and work processes that require new conceptual frameworks, competencies, roles, and relationships. This kind of change creates role confusion between functional and technical employees and alters relationships between people. Moreover, it is often contrary to the existing culture. According to Piore, there are three possible solutions to this problem of reintegration: (a) internally through establishing a new management hierarchy (restructuring the division of labor); (b) externally through a free market (i.e., becoming a market- or customer- or client-driven organization); or (c) through a network organization that allows change to emerge naturally as part of an informal, loosely configured, interdependent, nonhierarchical network. The method of integration selected for Project 2000 was a combination of the hierarchical and customer-driven approaches. It involved developing a new conceptual framework for bringing together technical and functional staff in the form of unit implementation teams with new goals, roles, relationships, and training. To manage the change process, the implementation teams required a strong business case and a set of goals, a clear sponsorship structure, the assignment of unit leaders, team building, extensive training

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for both technical and functional staff in the new software and work processes, and a robust communication system. The reintegration of the functional and technical systems for the HR payroll system (Phase 1 of the project) was neither a quick nor an easy process. It required a substantial effort, including consultant-driven project management, financial incentives, intensive training, and extensive negotiations between functional and technical people. Even with these practices, the effort to reintegrate encountered enormous resistance because of a decentralized organization structure and a strong local culture. Thus, the transaction costs inherent in implementing the new technology were enormous. The sociotechnical systems development efforts resulted in the installation of the new HR/payroll system in January 1999. The estimated touch time and cycle time savings were estimated at $16 million. The new HR information system did not yield as much functionality as was initially planned. Resource requirements (financial and human) were significantly higher than was anticipated by senior management. A greater number of highly skilled functional experts were needed to maintain the current workload and effect the transition to the new system. Moreover, slipped milestones compressed the training and limited the exposure of pilot groups to the new work processes and components of the system. This resulted in excessive “redos” and “work arounds” and reduced the amount of hands-on time that could be spent piloting and practicing with the new system. Despite the problems that occurred during the implementation process, the competencies, capabilities, and intellectual capital developed as part of the project have had a significant effect on how the university is managed. Managers and staff are much more aware of how to implement new technologies. They also are cognizant of the importance of developing requisite competencies at organizational and individual levels and of holding managers and staff accountable for performance. The HR/payroll implementation set the stage for future IT installations in alumni affairs and development, student services, and financial affairs.

Stage 3: Improving Economic Performance and Building Capacity Through Strategic Organizational Development To address a serious gap between projected revenues and expenses of $25 million, the president announced a Workforce Planning Initiative in November 2001. This involved a university-wide staff hiring freeze and a comprehensive review of nonacademic support services in eight functional areas, including human resources, financial management, alumni affairs and development, facilities, information technology, student services, library, and procurement. The goal of the workforce planning effort was to achieve $20 million in annual nonrecurring financial savings through reducing staff and streamlining operations.

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In addition to this economic goal, the workforce planning initiative also was designed to build organizational capacity by integrating activities across organizational boundaries. In the words of the vice president of planning and budget (“Workforce Planning Update,” 2004), It is evident that support operations, both centrally and at the unit level, have suffered from an inability to build dependencies and integrate activities across organizational units. The result has been inconsistent perceptions of quality and responsiveness, lack of mutual trust and respect, wasted resources, and a “silo” oriented culture. Unfortunately, this culture has evolved to an acceptable norm and behavior pattern that most believe is ineffective. The workforce planning initiative has begun to change this culture, but continued and focused effort is essential to avoid reversal in the progress made and to realize full potential such change can bring to an effectively managed university.

Strategic organizational development (SOD) grew out of this decision of senior management to improve economic performance and build organizational capacity. SOD is based on the approach to strategic management proposed by Ansoff (1979). According to Ansoff, the degree of turbulence in the environment determines the optimal strategic thrust, competence, and resource capability required to maximize return on investment. SOD is designed to help leaders of organizational units at Cornell develop, integrate, and align strategy, structure, and culture with the environment. SOD develops and motivates managers and supervisors to improve their performance by (a) assessing and diagnosing their organization; (b) identifying goals and strategies that align with their stakeholders’ needs and environment; (c) developing and aligning the organization’s structure, competencies, capabilities, and resources to the strategy; (d) building teams to support the implementation of strategies; and (e) establishing a performance management (measurement, feedback, and accountability) system. This OD strategy was used in the creation of business service centers and in the redesign and development of more than 200 unit organizations during the past 3 years. Not all unit managers elected to apply all aspects of the SOD process. In most cases, units had a much narrower agenda—one that involved only one or two strategic interventions. The most popular interventions were organizational assessment, strategic planning, team building, and leadership and supervisory development. The assessment and development of organizational units employs an action research and learning process. Through this process, OD consultants seek to create a collaborative environment in which members of the organization discuss challenges and issues openly, seek to understand each other, make joint decisions on how to improve the organization’s performance, and work as a team to achieve desired results. Ongoing group discussion and action planning within a transparent process of decision making, directed by common values and goals, facilitates individual and organizational learning and innovation, fosters esprit de corps, and strengthens organizational performance.

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The workforce planning initiative, with the support of SOD, has resulted in estimated annual savings of $15.7 million. The HR function has been reorganized; HR and financial transactions have been centralized in business service centers. A competency model for staff (success skills) has been developed and linked to the performance management system with a pay for performance program. Professional development seminars and workshops and online training courses have been aligned with and linked to the core success skills, and leadership and supervisory development programs are reinforced by a performance feedback and accountability system.

Stage 4: Building Capacity Through Collaboration and Co-Evolution Cornell University operates within an incredibly complex and turbulent environment. The university adapts to this environment through senior leadership initiatives and OD approaches such as process consultation, sociotechnical development, and SOD. It also adapts through the interaction of a vast network of self-organizing structures, processes, and free agents (faculty). In the academic system, the faculty interact according to certain rules, and the system evolves over time in a nonlinear fashion to attain some measure of fitness between the system and its environment. Faculty adapt and align their strategy and structure, including their teaching, research, and consulting, by changing their rules and internal models as a result of their training and interaction with colleagues and clients both within the university and outside the university. The faculty as a system exhibits coherence under change through conditional action and anticipation, and without the central direction of senior administration. Previous experience and collegial interaction guides their behavior so that as time passes, they make better use of the environment for their own ends. At the same time, there are critical leverage points where small changes can produce large results. Knowing these leverage points can provide academic leaders with critical strategies for influencing and improving the faculty’s and the university’s ability to adapt to a complex and turbulent environment. Some of these change points have been identified by Holland (1995) as follows: 1. Increased collaboration and connectivity to the environment facilitates self-regulation and adaptation. 2. Diversity of viewpoints introduces new information into the system. 3. Experimenting with new rules, competencies, capabilities, and structures enhances adaptability. 4. Rewarding successes and failures reinforces attitudes and behavior. 5. Creating new feedback loops fosters individual learning and group formation.

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To facilitate environmental fit in higher education, university leaders may engage members of their organization in interpreting and shaping social reality facing the institution through collaboration and storytelling. By examining the patterns of behavior and responses that emerge from these collaborations, a leader can identify opportunities for change and foster adaptive behavior. As the authors of one study put it (Plesek & Wilson, 2001), Leaders at all levels of organization need to develop a more sophisticated view of change in complex systems. This can be accomplished by exploring with others the degree of certainty and agreement around both the “what” and the “how” of a given issue . . . those who seek to change an organization should harness the natural creativity, organizing ability of its staff and stakeholders through such principles as generative relationships, minimum specification, the positive use of attractors for change, and a constructive approach to variation in areas of practice. (p. 8)

An approach to foster collaboration and co-evolution and build organizational capacity at Cornell was initiated by its new president, Jeffrey Lehman, who in January 2004 issued a “Call to Engagement.” The Call to Engagement was a broad appeal to faculty, students, staff, and others to engage in answering a set of questions that would help shape the future of the university. As stated in Lehman’s (2004) own words, In my inaugural address, I asked the Cornell community to consider how our university should evolve during the years leading up to our sesquicentennial in 2015. I believe that Cornell, with its unique set of animating principles, history, and contemporary structure, can make contributions to humanity that no other university in the world can make. We have a shared responsibility to reflect carefully on how to pursue that goal. I hope that during this academic year the broad community of Cornellians—faculty, students, staff, alumni, and other neighbors and friends near and far—will engage a set of important questions and will share the fruits of that engagement.

The Call to Engagement was framed around eight sets of questions. The initial question for each set is indicated below. 1. 2. 3. 4. 5. 6. 7.

What should we be teaching our students? How should we be teaching? Whom should we be teaching? Where should we be present? What does our land grant mission mean today? How should we collaborate? Should we be identifying special domains of research emphasis where Cornell is unusually well situated to make enduring and significant contributions? 8. How should the university be organized? To facilitate collaboration in responding to the Call to Engagement, a modified open space technology meeting was devised by OD services. An open space meeting operates on the principle that to gain maximum contribution and commitment, people must be given free space, adequate time, and an unstructured venue in which to interact freely with others around the issues they feel passionately about.

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Open space and a variety of other kinds of meetings, sponsored by members of senior administration, deans, directors, and department heads, were held with hundreds of faculty, staff, students, alumni, and members of the community. Written reports of these meetings as well as individual responses to the Call to Engagement were submitted to the president. In total, almost 1,200 written submissions were received and reviewed by the president. The president distributed the written responses to his senior staff and prepared a reflection paper on what he had learned. He also presented to the Board of Trustees and the university community a formal statement on the opportunities that lie ahead for Cornell. The full effect of the Call to Engagement has yet to be realized. What is clear at this writing is that faculty, staff, alumni, and other stakeholders fully participated in the process and responded with exciting new ideas, directions, and opportunities for Cornell University.

Conclusion The leadership initiatives and OD approaches at Cornell during the past decade are consistent with and provide support for Beer and Nohria’s (2000) theory of change. They were driven by senior leadership decisions and organizational initiatives designed to improve economic performance and build organizational capacity. Process consultation, evolving from the quality improvement initiative, helped to build organizational capacity and credibility of OD as an acceptable practice by creating social capital (a network of helping relationships based on trust). Sociotechnical systems development, evolving from the IT initiative, helped to integrate functional and technical capabilities and establish a new information system to coordinate and control resources. SOD, evolving from the workforce planning initiative, helped individual units and business service centers improve economic performance and increase organization–environment fit by developing and aligning strategy, structure, and culture. And finally, collaborative co-evolution (open space technology), evolving from the Call to Engagement, helped to increase interaction and connectivity of faculty and staff to stakeholders and identify new opportunities for Cornell to meet the needs of a changing world. Many lessons were learned in the process of implementing these OD strategies. In the case of process consultation, it was learned that helping relationships are the bedrock for more sophisticated approaches to OD. Process consultation provided unit managers with essential experience about OD and created the social capital and a viable market of clients for sociotechnical systems development and SOD. It was learned from sociotechnical systems development that (a) fully dedicated project managers and human resources, rather than partially real-

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located resources, are essential for an effective project outcome; (b) functional staff must fully understand technical requirements and technical staff must fully understand functional requirements; (c) relationship building between functional and technical staff must occur early in the change process through integrated training and clarification of roles and responsibilities for mutual understanding and effective execution; (d) line managers and supervisors also need to be engaged early in the change process and have a legitimized cross-functional decision-making process, based on clear criteria; and finally, (e) sociotechnical systems development is considerably more difficult and takes much longer to achieve than most reengineering and technology installation plans suggest. Behavioral and cultural change does not follow directly from the design and installation of a new technology, no matter how much involvement, communication, training, and change management have occurred. Behavior and culture change occur only after a long, agonizing period of adjustment in which new behavior patterns and relationships are forged and new attitudes take shape and became embedded in the culture. This kind of change may take years rather than months of persistent effort to achieve. The principle lesson from SOD was that unit executives and managers are generally not inclined to adopt an extensive systematic approach to developing and aligning their strategy, structure, and culture. Whereas some unit managers opt for a comprehensive assessment and diagnosis followed by strategic planning, reorganization, and a performance management system, most are satisfied with more immediate needs such as having a team building workshop to establish a normative framework to help management and staff work together more effectively or to resolve interpersonal or intergroup conflict. Consequently, SOD in its fullest sense seems to work best with new managers and units rather than older, embedded units. The lesson learned from the Call to Engagement and the open space meeting technology is that attractor methods can be effective in encouraging innovation, self-regulation, and adaptation. Faculty and staff want to be asked for their ideas. The 1,200 written responses to the president’s questions helped seed future opportunities for self-regulated action and created a context for pursuing future leadership initiatives and organizational opportunities. The strategic initiatives and OD approaches presented in this article did not follow a strictly linear sequence or path from the senior leadership initiatives. They were neither mandated by senior management nor were they prescribed by the Department of Organizational Development Services. Rather, they seemed to flow from a combination of existing conditions, including changes in financial support from the State of New York, decisions of individual OD practitioners, and the culture of the institution itself. The process of growth and adaptation seems to follow an unfolding

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self-regulating growth pattern similar to the evolutionary life cycle theory proposed by Greiner (1998). According to Greiner (1998), an organization, department, or function proceeds through several stages of growth or challenges such as creativity, direction, delegation, coordination, and collaboration. In terms of the OD strategies summarized in this article, the challenges included building a market of clients; integrating functional and technical (and disciplinary) conceptual frameworks, roles, and relationships; developing and aligning strategy, structure, and culture with the environment; and dealing with complexity and turbulence through collaboration and self-regulation. The application of an evolutionary approach to OD may provide a heuristic model for OD in universities that simultaneously integrates Beer and Nohria’s (2000) E and O theories of change for improving economic performance and building organizational capacity. In conclusion, it should be noted that a good deal of care must be exercised in forming generalization- or conclusion-based on qualitative research from a single case study. Further research on the evolution of OD in universities may help to shed additional light on these findings and on the Beer and Nohria (2000) hypothesis.

References Ansoff, H. I. (1979). Strategic management. London: Macmillan. Beer, M., & Nohria, N. (2000, May-June). Cracking the code of change. Harvard Business Review, pp. 133-141. Cornell University QIP Design Team. (1992, December 17). QIP implementation plan for teams. Unpublished document, Cornell University. Emery, M. (Ed.). (1993). Participative design for participative democracy. Canberra: Australian National University. Greiner, L. (1998, May-June). Evolution and revolution as organizations grow. Harvard Business Review, pp. 3-11. Holland, J. (1995). The hidden order: How adaptation builds complexity. New York: Perseus Books. Lehman, J. H. (2004). Call to engagement. Retrieved from http://www.cornell.edu /president/engagement.cfm Piore, M. J. (1992). Fragments of a cognitive theory of technological change and organizational structure. In N. Nohria & R. Eccles (Eds.), Networks and organizations: Structure, form, and action (pp. 430-444). Boston: Harvard Business School Press. Plesek, P., & Wilson, T. (2001). Complexity, leadership, and management in health care organizations [Electronic version]. British Medical Journal, 323, 746-749. Retrieved from www.http://bmj.bmjjournals.com/cgi/content/full/323/7315/746 Rogers, F. (1997, November 26). Leadership challenges of Project 2000. Unpublished document, Cornell University.

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Schein, E. (1988). Process consultation volume I: Its role in organization development. Reading, MA: Addison-Wesley. Workforce planning update on Workforce Planning Initiative. (2004, July 7). Retrieved from www.http://dpb.cornell.edu/wp/prject_overview.htm Chester C. Warzynski is the director of organizational development services and a lecturer in the School of Industrial and Labor Relations at Cornell University. He is responsible for providing management and organizational consulting services— including leadership development, strategic planning, organization design, team building, performance management, professional development, and conflict resolution—to academic and administrative units of the university. He teaches graduate courses in personal and organizational development and leadership.

Warzynski, C. C. (2005). The evolution of organization development at Cornell University: Strategies for improving performance and building capacity. Advances in Developing Human Resources, 7(3), 338-350.

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