Difference Between Employee Development & Organizational Development

by John Cromwell; Updated September 26, 2017

For a business to grow and develop, its workforce must evolve as well. One means of doing that is by providing employees with opportunities for development that are subsidized by the company. Another method is through a formal program of organizational development, where the employer provides a curriculum of educational opportunities to improve the overall skill level of the organization.

Employee Development

Employee development refers to the resources an employer provides to workers so they can acquire new skills or accreditations. The employer offers funding or courses as a means to grow employees’ skills and knowledge, in the hope that the improvement leads to improved efficiency and new ideas for the business. A common means of employee development is financial support to obtain a degree. About half of all American workers receive financial incentives to take college courses or obtain higher degrees, according to a 2008 report in “U.S. News and World Report.” Some employers limit subsidized courses to work-related classes that would make the employee more valuable to the business.

Organizational Development

Organizational development is a management planned, entitywide process of organizational evolution focused on improving a business’s effectiveness and profitability through the application of behavioral-science knowledge. Organizational development is a function of careful analysis and study of existing organizational structures and thoughtful consideration of the long-term trajectory of the organization. Only after these issues are carefully mapped out does the organization take action. Through the adoption of new practices and using behavioral science techniques, such as behavior modeling, sensitivity training and transactional analysis, the business can grow to be better prepared for adapting to an ever-evolving marketplace.

Development Overlap

Both employee and organizational development include education as an important component. However, while employee development allows the worker a certain amount of freedom in choosing what to pursue, organizational development requires employees to follow a specific plan. Organizational development is focused on developing the business in specific ways, so the classes available are comparatively limited to conform to the organization’s developmental goals. While employee development is intended to improve employees generally, organizational programs are focused on improving workers in specific areas that would help the overall business.

Risks and Challenges

Both employee and organizational development share the same three risks of time, money and loss of employees. Learning new skills is time intensive, which necessarily means employees have less time to produce for the employer. This means a decrease in productivity in the short-term. Learning new skills also costs money, whether it is through enrollment in an outside educational institution or through the purchase or creation of learning materials. Finally, developing an employee’s skill set makes her more valuable to competitors. This increases the risk that an employee could leave for other opportunities, which would represent a loss of investment for the employer.

About the Author

John Cromwell specializes in financial, legal and small business issues. Cromwell holds a bachelor's and master's degree in accounting, as well as a Juris Doctor. He is currently a co-founder of two businesses.