Journal of Organizational Effectiveness: People and Performance

Organizational effectiveness, people and performance: new challenges, new research

agendas
Paul Sparrow Cary Cooper

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Paul Sparrow Cary Cooper , (2014),"Organizational effectiveness, people and performance: new
challenges, new research agendas", Journal of Organizational Effectiveness: People and Performance, Vol.
1 Iss 1 pp. 2 - 13
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Susan Albers Mohrman, Edward E. Lawler III, (2014),"Designing organizations for sustainable effectiveness:
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JOEPP
1,1

Organizational effectiveness,
people and performance: new
challenges, new research agendas

Paul Sparrow and Cary Cooper

Lancaster University Management School, Lancaster, UK

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Abstract

Journal of Organizational
Effectiveness: People and
Performance
Vol. 1 No. 1, 2014
pp. 2-13
r Emerald Group Publishing Limited
2051-6614
DOI 10.1108/JOEPP-01-2014-0004

Purpose As founding editors of the Journal of Organizational Effectiveness: People and

Performance, this paper welcomes the beginnings of a new academic community. The purpose of this
paper is to outline why both academic researchers and organizational practitioners need to enter into
and be guided by a new debate and new set of expertise. It signals the sorts of research agendas that
need to be addressed in this field.
Design/methodology/approach The paper establishes the future research agenda for
organizational effectiveness. It reviews historic literature and traces the development of the field
of organizational effectiveness from: early analysis of political judgements about effectiveness; systemic
analysis of the intersection of profitability, employee satisfaction and societal value; debates over
stakeholder, power, social justice and organizational fitness, resilience and evolution; the importance
of mental models of senior managers; how organizations use changes in work system design and
business process to modify employees mental, emotional and attitudinal states; and the use of an
architectural metaphor to highlight the locus of value creation perspectives.
Findings There are many echoes of the debates and concerns today in the past. The paper shows
how current concerns over strategic and business model change, organization design, talent
management, agile and resilient organization, balanced scorecard, employee engagement, advocacy
and reputation can be informed, and better contextualized, by drawing upon frameworks that have
previously arisen.
Research limitations/implications The paper argues that the authors must adopt a broad
definition of performance, and examine how the achievement of important strategic outcomes, such as
innovation, customer centricity, operational excellence, globalization, become dependent on people and
organization issues. It signals the need to focus on the intermediate performance outcomes that are
necessary to achieve these strategic outcomes, and to examine these performance issues across several
levels of analysis such as the individual, team, function, organization and societal (policy) level.
Practical implications The audience for this paper and the journal as a whole is academics who
work on cross-disciplinary research problems, the leading human resource (HR), strategy or performance
research centres, and finally senior managers and specialists (not just HR) from the internal centres of
expertise inside organizations who wish to keep abreast of leading thinking.
Originality/value The paper argues the need to combine human resource management
perspectives with those from decision sciences, supply chain management, operations management,
consumer behaviour, innovation, management cognition, strategic management and its attention to
the resource-based view of the firm, dynamic capabilities, business models and strategy as practice.
It argues for a broadening of analysis beyond human capital into related interests in social capital,
intellectual capital and political/reputational capital, and for linkage of the analysis across time, to
place the novelties and contexts of today into the structures of the past.
Keywords Employee engagement, Performance, Organization effectiveness, Business model change,
Agile organization, HR architecture
Paper type Research paper

Introduction
Organizations are facing complex performance drivers, such as the globalization
of their organizational capabilities, the need to pursue strategies of innovation,

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the need to build ever more lean, productive, but intelligently efficient and effective
processes and to shift the focus of their organizations so that they are customer centric.
Those responsible for people management need to be able to look into their
organization its strategy, mission, business model and performance priorities and
be able to articulate how the management of people can serve to create value for the
organization, capture that value, leverage it, whilst also protecting and preserving
what is of value. However, the human resource (HR) function has been looking in at
business strategy and performance, and at its own internal transformations for
many years now. This is still hugely important, and HR academics will continue to
examine the competitiveness challenges faced by organizations. But in an age of
constrained growth we have returned to an era when HR functions also have
a responsibility to start looking out again to understand the changing nature of
work and its place in society, and the issues that cut across organizations but will
strongly impact the internal world of any of them. We need HR academics to also
establish this looking out agenda.
These challenges require increasingly cross-disciplinary insight, and yet the academic
literature, and much organizational practice, still tends to be structured around
narrow and specialist lines. Inevitably, this leads to a fragmentation of organizational
capabilities and resources which, in turn, impact upon effectiveness and performance.
There is a need, therefore, to understand the implications that these problems
of organizational effectiveness have for both the people and organizational processes,
and to seek to challenge these through research lenses that synthesize and integrate
important logics of action, theories and models. To the extent that they address issues
of people and performance, we need to tap disciplines beyond those typically associated
with organization effectiveness and HR, such as consumer behaviour, operations,
risk and crisis management, political economy, population ecology, industrial sociology,
amongst others.
Therefore our dialogue needs to be undertaken in a new way: through different
disciplinary lenses and against different paradigms; across disciplines; and across
different levels of analysis. We want this journal to cross-fertilize academic debates,
forging points of common understanding and informing respective disciplines of
knowledge that can co-opted and applied to new settings.
We have chosen the term organization effectiveness for a reason, but we need to
stress that whilst all disciplines have an interest in this issue, it is the people and
performance aspects that this journal will focus on. To capture this work, the journal
will adopt a broad definition of performance, beyond of course just financial
performance hence the term organization effectiveness and tapping into the
achievement of important strategic outcomes, such as innovation, customer centricity,
operational excellence, globalization. It will focus on the intermediate performance
outcomes that are necessary to achieve these strategic outcomes. The journal will
publish research papers that tackle performance issues that have relevance at the
individual, team, function, organization and societal (policy) level. It will not be focused
on the effectiveness of people and organizations, but rather on the role of people
in the effectiveness of organizations. We also seek papers that are concerned with the
experience of workforces and the productivity and performance of employees, or that
address the impact of important management functions and processes. Papers should
be capable of contributing to strategic (and policy) thinking and identifying the long-term
performance issues that confront workforces and organizations, with findings that can
provide guidance on the best ways forward.

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Organization effectiveness in retrospect and prospect

There is a golden thread that connects people and their performance to organizational
effectiveness. This thread connects many issues. To help signal the territory and
the sorts of issues that we welcome to this new journal, we trace some of the main
developments in the study of organization effectiveness. As we look forward to an
important research agenda, we therefore also briefly look back. The study of
organizational effectiveness has a long and distinguished history. We can find many
echos of the debates and concerns today indeed from one perspective there nothing
new under the sun the path towards a broad and multi-disciplinary understanding
of organization effectiveness has been trodden by our predecessors. As we look
forward, it is important to recognize that we can learn from the established principles
of the past.
Organization effectiveness became more central to organization theory when in the
late 1950s and 1960s systems models took over from more goal-based ways of thinking
about it. Sociologists viewed organizational effectiveness within a systems model that
needed to jointly understand the interplay between productivity, flexibility and
an absence of organizational strain (Georgopoulos and Tannenbaum, 1957). Today we
give much attention to the need for organizations and their leaders to manage in the
broad context of strategic and business model change, balanced by concerns about
the sustainability of such strategies. Yet from the beginnings of the field of
organizational effectiveness, when Katz and Kahn (1966) argued that whilst senior
managers could attend to activities associated with internal issues of efficiency from an
economic perspective, it was evident that effectiveness was a political judgement made
about organizations best viewed externally. The key issue was how to align the two
views of an organization in ways that led to growth, storage, survival and control over
the environment.
As more systemic ways of thinking about effectiveness took hold, Friedlander and
Pickle (1968) said that organizational effectiveness should be seen as the intersection of
profitability, employee satisfaction and societal value, whilst Mahoney and Weitzel
(1969) argued that we needed to focus on the level of productivity in, support for,
reliability of and utilization of the organizations business model. Blake and Mouton
(1964) saw it needing to focus on the simultaneous achievement of high production and
high people centred enterprise, and for Gibson et al. (1973) organization effectiveness
had to be concerned with the alignment of structure, process and behaviour, best
judged in terms of short-run productivity, efficiency and satisfaction, intermediate
adaptability and development and long-run survival.
Today we give much importance to talent management models (Sparrow et al., 2014).
Many of the debates today about the importance of, but also limitations of, talent are
echoed in a finding by Lieberson and OConnor (1972) which showed that leadership
succession in large corporations bore only a limited relation to performance.
Indeed, organizational effectiveness as a topic had its beginnings in the contribution of
individuals to organizational success. Similarly, coming from a selection perspective,
it was argued that the success of such talent and therefore measurement of organizational
effectiveness was best seen in terms of an ultimate criterion, such as productivity,
net profit, mission accomplishment or organizational growth (Thorndike, 1949).
But organizational effectiveness requires the satisfaction of multiple constituencies
each having an influence on the priorities against which organizational performance
should be judged. Many of the debates we have about this today trace back to the
1970s, when more critical voices first began to be heard. For Hirsch (1975), a sociologist,

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organizational effectiveness was determined by two things: first, the alignment between
the organizations (internal) task environment and the institutional environment that
conditioned and set the context for industry profitability; and second, the way that the
external environment influenced senior management decisions over strategy. At the same
time and in the same journal, Steers (1975) reviewed 17 different models of organizational
effectiveness. He found little consistency, concluded understanding was rudimentary and
identified eight problems. Measures of organizational effectiveness were generally used in
isolation, with the most popular being productivity, profit or rate of return, employee
satisfaction and employee withdrawal or turnover (the latter two being seen as being
value-laden and less objective). Todays attention to the agile organization was evident
then ten out of the 17 models of the time used adaptability and flexibility as the main
criteria, followed in order of importance by productivity, satisfaction, profitability,
resource acquisition, an absence of strain, control over the environment, development,
efficiency, employee retention, growth, integration, open communications and survival.
It could be argued, based on these findings, that attempts to measure organizational
effectiveness are fruitless. The conclusion arrived at then (Steers, 1975), as today, was that
the effectiveness construct is so complex as to defy simple attempts at model
development. The bottom line questions, then, as now, were whose preferences should be
weighted most heavily in reaching a judgement about organizational effectiveness [y]
[and] whose preferences should an organization attempt to satisfy through the
distribution of performance outcomes (Zammuto, 1984, p. 606).
There were four ways of answering these questions. By the 1980s, the first 30 years of
thinking about organizational effectiveness had been shaped by shifts in the expectations
of the public and the areas of management attention. There were four ways in which
people thought about organizational effectiveness and judged its desirability.
As a forerunner to todays balanced scorecard thinking, the first answer was that it is
all relative, so ask the main stakeholders as consumers of the organizations performance
to each evaluate against their own criteria, and use a collated set (Connolly et al., 1980).
The second answer was a power one, which argued that there are dominant
coalitions at any one time who negotiate what the performance outcomes should be
(Pennings and Goodman, 1977), this negotiation reflects the relative power each has in
terms of control over strategic resources (Pfeffer and Salancik, 1978), and these
demands have to be met in order to ensure the survival of the organization.
The third answer took a social justice perspective (Rawls, 1971). Arguing that social
values determine organizational effectiveness, and place limits around what a society can
seek and the means by which it is attained, effectiveness must be judged by the extent
that it ensures equal distribution of key resources for self-respect such as liberty,
opportunity, income and wealth. The yardstick of organizational effectiveness was that
the organization passes the regret principle ( Keeley, 1978) i.e., it seeks to minimize any
level of regret that its constituents have over participating in the organization.
The fourth and final way of thinking about organizational effectiveness was to see it
in evolutionary terms. What is effective at one time becomes ineffective at others as the
context changes, so effective performance is that which increases the adaptability of
the organization the ability to satisfy a continual process of divergent definitions
of effective organizational performance over time (Zammuto, 1982). Researchers talked
about resilient organizations yes, a term back in vogue seen as those who could
survive because they had the foresight and capability to anticipate and prepare for the
future (Connors, 1979; Ross and Goodfellow, 1980). Organizational fitness needed to
be tested, which meant seeking sharpened skills and self-correcting responses.

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Today, in the wake of a global financial crisis, we question and challenge the
direction of business development and the financial and economic models that drive it.
Such challenges again follow an important intellectual heritage. By the late 1980s,
concern was growing over the failure of management and narrowness of the criteria
used to organizational effectiveness in practice, triggered mainly by challenges to US
competitiveness and poor growth in productivity. It was Hitt (1988) who first noted the
dual problem of there being a discrepancy between actual organizational health and
reported health in financial metrics, being created by an over reliance on financial
measures of performance and short-run profits on the one hand, but an equal
reluctance of academics to link any measures of organizational effectiveness to their
own research, ignoring or working on assumed models of effectiveness. Accounting
determined measures such as return on investment, assets, equity or assets and
earnings per share were highly inter-correlated but were subject to distortion, and did
not take account of risks to the reported finances. Whilst capital asset pricing models,
or shareholder return models, were argued to be a more reliable longer term way of
thinking about organizational effectiveness from a financial perspective, looking at the
securities market and adjusting the returns based on the risks and capturing long-run
performance potential, these too reflected a narrow stakeholder base. For Hitt (1988),
the financialization of organizational effectiveness measures was still creating sealed
boxes and closed loop thinking in addressing the problem.
At this point, as there is again now, there was a shift towards thinking about
organizational effectiveness by design. This question is as live today as it was then.
From an organization design perspective (Butler, 1991), organizations were seen as
being constrained by their environments and therefore had to set the criteria for
effectiveness via performance norms underpinned by essential values. It was
accepted that there may be competing or contradictory norms, but management have
the crucial task of translating the norms into an internal ideology which provides the
foundations for decision making and actions (Huber and Glick, 1996). Themes of
information and organization design also led us into risk and management cognition,
and from this the mindset and capital of top talent. Hodgkinson and Sparrow (2002)
argued the importance of mental models of senior managers.
Today it is evident that organization designs continually erode in their efficiency, so
a re-design capability is important an ongoing and crucial need (Lawler, 2005; Mohrman,
2007). As HR professionals move into the topic of HR design (Ruona and Gibson, 2004),
it brings with it renewed attention to a range of developments that have a bearing on
people and performance: the redesign of strategic organizational processes; the competing
value of information inside the organization and how structures can help make sure
managers attend to the most important information. Attention is being given again to
changes in the organization form defined as the combination of strategy, structure and
internal control and co-ordination systems that provide an organization with its operating
logic, its rules of resource allocation and its mechanism of corporate governance.
Meanwhile, as organizations are being designed around strategically important
information markets, strategists are highlighting the importance of the integration
mechanisms that bring together the varied knowledge of individuals to produce important
organizational solutions (Hansen and Haas, 2001; Bryan and Joyce, 2007).
Human resource management (HRM), people and organizational performance
Returning to the golden thread that links people and performance to organization
effectiveness, as researchers took an increasingly broad perspective on what is meant

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by effectiveness, psychologists too have begun to concern themselves with the most
important contributions that individuals make to organizational effectiveness
(Robertson et al., 2002). This work again presages todays interest in topics such as
employee engagement and advocacy, and employer brands (Albrecht, 2010; Truss et al.,
2013). As attention was given to the need to link employees more deeply to the
organizations products and services, processes and performance, the performance
criteria applied to effectiveness became more diverse, managerial but also reciprocal
(Rousseau, 1995). Sparrow and West (2002) noted these ranged from basic task
competence or proficiency, through to delivery of performance against efficient or
cost effective performance metrics, impacts on organizational competitiveness on the
basis of speed or time, the creation of internal or external customer perceptions
of added value, the challenge of longer term strategic risks or costs associated with
error or inappropriate organizational decision making, and the collateral damage
created by current actions in terms of the future constraints on actions that they might
create. Organizations needed to develop organizational cultures that created the
mental, emotional and attitudinal states that precede effective employee performance.
Once these states were established in a positive direction, then employees could
begin to exhibit a series of salient organizational behaviours, i.e. the behaviours
that actually generated effective performance. People were attracted to specific
organizational cultures, culture acted as a stabilizer of individual behaviour.
Psychologists there began to look at how organizations could use changes in work
system design and business process to modify employees work orientations and
responsibilities, and therefore the extent to which the appropriate mental, emotional
and attitudinal states could be seen as discretionary, or as an inherent part of the job
and organizational life.
The changes in the structure of employment, job stability and employment
outcomes and quality of the employment relationship that was by this time evident,
led to organizational psychology mobilizing interest in a range of new areas of
research (Herriot, 2001; Sparrow and Cooper, 2003). The initial conceptualization
of psychological contributions to organizational effectiveness being based around
commitment, absenteeism and turnover (Mowday et al., 1982; OReilly and Chatman,
1986; Meyer and Allen, 1991) had shifted focus. Sparrow and Cooper (2003) structured
attention to the employment relationship around eight issues. Driven by discussion
of the psychological contract and shifts in the nature of careers, and an increasing
individualization of the employment relationship, attention began to focus on the
importance of a series of individual-organizational linkages and bonds (Pierce et al.,
2001). In addition to the traditional interests in commitment, discussion picked up
questions of identification, internalization and psychological ownership.
The management of work-life balance, well-being and generational shifts in work
values were also becoming mainstream (Robertson and Cooper, 2011).
Finally, from the late 1980s onwards, we began to the systemic relationships among
HRM practices and their relationship to specific approaches that organizations could
use as they strove to gain competitive advantage (Schuler and MacMillan, 1984;
Schuler and Jackson, 1987). This perspective argued that HRM practices could not be
chosen based on technical merits alone. Rather, it should be in terms of their ability to
facilitate strategy implementation. From an organizational effectiveness perspective,
a key point of interest was to understand how HR practices might be differentiated in
relation to intermediate strategic performance outcomes, such as innovation, cost
(efficiency and effectiveness) or quality. Contingency models were used to identify the

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essential role behaviours that needed to be engineered amongst employees, with HRM
practices configured and packaged differently to support these role behaviours.
By the late 1990s, researchers began to use an architectural metaphor to highlight
the locus of value creation in strategic HRM (Becker and Gerhart, 1996; Lepak and
Snell, 1999; Wright et al., 2001; Wright and McMahan, 1992; Becker and Huselid, 2006;
Kang et al., 2007). The language of HR architecture was used to reflect a combination
of systems, practices, competencies and skills needed to develop and manage an
organizations strategic human capital (Becker and Huselid, 2006). As this work
developed, research began to focus on the different intermediate strategic performance
outcomes (e.g. innovation, customer centricity, lean management) that were central
to organizational effectiveness. These performance outcomes were understood to
emphasize different internal business processes in terms of competitive advantage
(Lepak and Snell, 2007). Hence, an important agenda is one of understanding the skill
sets that become critical for value creation across these different outcomes. Similarly,
we need to understand which sets of skills, competencies, knowledge and delivery
mechanism enable the HR architecture to exert strategic influence over the execution
of organizational strategy (Jackson et al., 1989; Barney, 1991; Wright and McMahan,
1992; Huselid, 1995).
An example of attempts at more strategic application would be talent management,
defined as the process through which employers anticipate and meet their needs for
human capital (Cappelli, 2008). Coming from a strategic talent pools perspective,
research notes that decisions around talent are rarely optimal (Boudreau, 2010;
Boudreau and Jesuthasan, 2011). For Cascio and Boudreau (2010), the answer to these
problems is to use a risk optimization, management and mitigation framework to look
at HR strategy and strategic workforce planning (SWP). Human capital strategies
have to be built on the reduction of uncertainty, elimination of bad outcomes and
insurance against bad outcomes. Whilst cautioning against the illusion of
predictability, this might still include efforts at increased precision in predictions
about future supply and demand for skills, or the application of quality-control tools to
important HR processes (such as talent management) to achieve the same low-defect
rigour seen in engineering and operations processes.
Flowing from such developments, another important area of research now is to
show how organizational effectiveness can be aided by practices associated with
human capital management. The word capital reflects a concept from economics
which denotes potentially valuable assets (Nahapiet, 2011). These include a number
of evolving practices. One of these is human capital (or workforce) analytics or
accounting, which typically blend techniques such as forecasting principles and
scenario planning to create forecasts of the current and future workforce. This in turn
is evolving towards SWP, which attempts to identify the characteristics of human
capital needed to achieve important strategic objectives, and create insight into relative
value of specific talent to the execution of an important strategies, alongside necessary
investments and actions needed to avoid any loss of value.
What should be evident from all the historical perspectives outlined above is that they
all bring cross-disciplinary insights into the process of linking people, performance
and organizational effectiveness. We see now the need to combine perspectives from
decision sciences, supply chain management, operations management, consumer
behaviour, innovation, strategic management and its attention to the resource-based
view of the firm, dynamic capabilities, business models and strategy as practice. We see
a broadening of analysis beyond human capital into related interests in social capital,

intellectual capital and political/reputational capital. In order to be clear what the real
problem is, we see the need to link analysis across time, and to place the novelties and
contexts of today into the structures of the past. This has implications for the style of
research that is now needed.

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The style of research

Building on these areas of interest, in this journal we seek research that has
a performance connotation, either by including hard performance data or by focusing
conceptually on key processes and capabilities considered central to performance.
The issues that are of interest in thinking about the performance context of any topic
might include:
(1)

The implicit models of performance within the phenomenon being examined.

(2)

The broad direction of causation that is argued exists between the topic and
performance.

(3)

The performance range that is created by the topic. We might think of three
different and increasingly more complex performance outcomes: proximal
performance outcomes (e.g. task performance, contextual performance,
commitment, satisfaction, turnover intentions); intermediate performance
outcomes that capture the delivery of a strategy (e.g. customer service or value
proposition, innovative behaviour, understanding of a broader business model
and performance context); or distal or organisational performance outcomes,
e.g., measures of quality or financial performance.

What are the important antecedents that bring the topic about, and therefore what is
the most appropriate fulcrum around which organizational performance interventions
will pivot and should be designed?
The journal will carry a range of papers synthetic and state-of-the-art reviews,
conceptual pieces and critiques of existing theory and practice, and empirical studies of
both quantitative and qualitative method on performance and people management
process issues. We are keen to attract papers that have a reflexive, evidence-based
style, rather than focusing on a theoretical-only dialogue. We seek research data and
insights of specific relevance and utility to HR academics and practitioners, functional
specialists and academics involved in research that has strong people management
implications from cognate fields (e.g. marketing and customer services, operations
management and work systems). We also invite applied research based on new ideas
and emerging trends that have the potential for impact and address real-world needs
(research linked to current and emerging practices).
In this opening issue, we have five excellent contributions that help to establish our
agenda and the research style. The first paper, from Susan Mohrman and Ed Lawler,
reflects the perspectives of some of the first scholars who argues for an integration
between HRM and organizational effectiveness. It focuses on the need to design
organizations for sustainable effectiveness. They note that we are another moment
in history when the choices we make about building sustainable global economy will
need system-wide changes, and will require deep changes in organizational design.
The three papers each come from different HR traditions, and signal important areas
that we wish to be active in. The paper by Randall Schuler and Susan Jackson,
embedded in the link between strategic context and source of competitive advantage,
employee role behaviours and organizational effectiveness, reminds us that the debate

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10

about HRM can be seen in the context of HR strategy. The paper by Robert Kase, Jaap
Paauwe and Sasa Batistic examines the intellectual structure of the HRM-performance
debate more broadly how HR as a strategic function and its HR systems contribute to
superior organizational performance and how competition of business models and
rapid technological change is once more altering the people-technology equilibrium.
The paper by Wayne Cascio and John Boudreau builds on the human capital management
traditions within organizational effectiveness. In todays world, those researching the
contribution that human capital can make to organizational effectiveness need to
incorporate learning from the field of risk management as they argue, risk-mitigation
may overshadow risk-optimized decisions. They examine the concepts of uncertainty,
risk and opportunity, again drawing links back to the importance of mental models,
as noted in the earlier work on management cognition and organization design. Finally,
the paper by Jim Quick, Ann McFadyen and Debra Nelson from an organization
health and well-being perspective focuses on high-risk employees, and the way that HR
professionals can advance health, well-being and performance while averting danger
by identifying and managing high-risk employees, anticipating their needs and actions
before damage is done.
We welcome those who wish to join in the agenda of this journal and look forward to
a rich and informative academic and practitioner dialogue.
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Further reading
Arthur, J.B. (1994), Effects of human-resource systems on manufacturing performance and
turnover, Academy of Management Journal, Vol. 37 No. 3, pp. 670-687.
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Corresponding author
Professor Paul Sparrow can be contacted at: p.sparrow@lancaster.ac.uk

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