Q

Loizos Heracleous and Sylvia DeVoge

This article suggests that (i) organisationdevelopment is uniquely positioned to fulfilcommonly accepted criteria of researchrelevance, and (ii) that closer interaction betweenorgamsational development and strategicmanagementls a potent and fruitful way to makestrategic management relevant topractitioners. An 'integrated organisationalmodel' is presented and its use in anorganisational development intervention isdiscussed. The process of applying the modeland learning from this and other ODint~rventions, illustrate how closer interactionbetween the fields of OD and strategicmanagement can help to bridge the gap ofrelevance between academic and practitionerconcerns. The findings also highlight usefullessons which merit careful consideration bytop management teams when developingstrategy, and planning and leading strategicchange. @ 1998 Elsevier Science Ltd. All rightsreserved

I. The Need for Relevance of the

Strategic Management FieldStrategic management is an applied field and as suchits survival and growth depends not only on its theor-etical sophistication and methodological rigour, butalso on its relevance to practitioners.1.z In spite of that.practitioners often do not perceive such relevance.3.4It has been argued that strategy research is pre-maturely stuck in a normal science straightjacket, isbased on out-dated concepts, relies too much onstatistical methodologies which often compromiserelevance for scientist rigour, and is characterised bya lack of prescriptive guidelines for practitionersbased on research findings.s

Research aiming to develop a research agenda forstrategic management in the 1990's has acknowledgedthe importance of practitioner viewpoints but hasonly utilised academic viewpoints for the devel-opment of this agenda.6 More recent research whichelicited practitioners' viewpoints and compared themwith academics' agenda has confirmed that the inter-ests of academics and practitioners are indeed sub-stantially different.7

The main aims of this article are-thus twofold:

These propositions will be illustrated by presentingan 'integrated organisational model' based on theaction research paradigm, and discussing its util-isation in an aD strategic intervention within anaction research framework. This model wasdeveloped on the basis of extensive research, a subset

1. to propose that organisation development (aD) isuniquely positioned to fulfil the criteria of researchrelevance82. to suggest therefore that closer interaction betweenorganisational development and strategic man-agement is a potent way to bridge the gap of rel-evance between academic and practitionerinterests in the strategic management field

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Pergamon Long Range Planning, Vol. 31, No.5. pp. 742 to 754, 1998@ 1998 El3evier Science Ltd. All rights reserved

Printed in Great Britain0024-6301/98 $19.00+0.00

PII: SOO24-6301(98)OOO79-X

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(traditionally enjoying more emphasis in the aD thanthe strategic management field) has increasingly beenrecognised as an invaluable strategic resource21,22 andparticular human resource practices have been shownto lead to improved long-term organisational per-formance.23.24 It has also been recognised in both thestrategy and aD fields that issues of power and poli-tics are central to organisationallife and should there-fore be given due consideration in both strategicmanagement processes25-27 and aD interventions.28,29

of which is discussed in the appendix. Experienceof the model's utilisation in several organisationaldevelopment interventions, has shown that it is apowerful tool for diagnosis, action planning andimplementation of strategic changes. This and otheraD interventions, moreover, have revealed severalimportant issues related to change management andthe perception of top management teams which meritfurther investigation, as discussed in section V.

III. Organisation Development and

the Relevance of Strategic

ManagementAfter a brief exposition of the action researchapproach as the primary methodological model of aD,we shall set out the five criteria for research relevancefrom the practitioner's frame of reference developedby Thomas and Tymon {1982).8 Based on thesecriteria, we will then discuss (i) how aD within anaction research framework is uniquely positioned tofulfil these criteria (ii) how closer interaction betweenaD and strategic management can help to bridge thegap of relevance. Organisation development is anapplication of be havioura I science knowledge relatedto system-wide planned change, aiming to increaseorganisational effectiveness and foster employeedevelopment.11.3o The primary methodological modelfor aD is action research.31 Kurt Lewin, the founderof action research, was concerned with the appli-cation of social science to pressing social problems ofhis time, suggesting that research capable of aidingthe improvement of social conditions was 'a type ofaction-research, comparative research on the con-ditions and effects of various forms of social action,and research leading to social action. Research thatproduces nothing but books will not suffice'.32According to Rapoport {1970, p. 499)33 'actionresearch aims to contribute both to the practical con-cerns of people in an immediate problematic situationand to the goals of social science by joint collaborationwithin a mutually acceptable ethical framework'. Fig-ure 1 portrays the cyclical process of action research:

Thomas and Tymon {1982)8 suggested 5 criteria ofresearch relevance based on a practitioner per-spective (Table 1). Action research (AR) as the pri-mary methodological model of aD is uniquelypositioned to fulfil these criteria for two main reasons:Firstly because it is carried out by definition in organ-isations rather than the laboratory or being basedsolely on conceptual research, and secondly becauseit upholds such guiding principles as the commitmentto joint diagnosis, action planning and implemen-tation with the practitioners concerned, and the con-

II. Linking Strategic Managementand Organisation DevelopmentThe barriers inhibiting closer interaction between thefields of strategic management and aD have been con-tinually eroded. It has been suggested for examplethat strategic management has a primarily externalfocus whereas aD has an internal focus,9 but this israther an oversimplification. It has been recognisedwithin the strategy field that unless broad strategicdirections become translated to internal operationalsystems, processes, structures, competencies and cul-tural norms then the desired strategic direction can-not be pursued effectively.lO The aD field has itselffrom its early days been concerned with 'long rangeefforts to improve an organization's problem-solvingcapabilities and its ability to cope with changes inits external environment'.ll It has since developed anumber of approaches relevant to system-wide, stra-tegic change.12.l3 Strategic change has in fact formedthe latest influence on the development <?f the theoryand practice of aD.14

Strategic management has been said to be mainlyconcerned with financial performance and survival,and aD mainly with interpersonal processes withinthe organisation.9 Recent meta-analyses of aD inter-ventions, however, have shown that aD can lead tolong-term improvements in worker productivity,lSo16and worker satisfaction and attitudes,17 thus pointingto the strategic value of aD in increasing organ-isational effectiveness. Strategic management and aDhave also differed in their emphases on 'hard'elements (structure, rewards) and 'soft' elements (pro-cesses, culture, interpersonal relationships). It hasincreasingly been recognised as critical, however,that both hard and soft organisational features shouldbe congruent and in support of a particular strategicdirection, if this direction is to be successfully

implemented.1Oo18Lastly, while the knowledge and skills of agents

within strategic management and aD have differed,9strategic management has increasingly incorporatedconcerns traditionally within the domain of aD andvice versa. For example, .strategic managementresearchers have focused on the human aspects ofstrategy; the social, cultural and political issues:19o2oEffective human resource management, moreover,

Long Range Planning Vol. 31 October 1998

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TABLE 1. Theeractitioner'-sNeed for,Relevance

Practitioner needs Definition

Descriptive relevance

Goal relevance

Operational validity

Non-obviousness

Timeliness

The accuracy of research findings in capturing phenomena encountered by thepractitioner in his or her organisational setting

The correspondence of outcome variables in a theory to the things the practitionerwants to influence

The ability of the practitioner to implement action implications of a theory bymanipulating its causal variables

The degree to which a theory meets or exceeds the complexity of common sensetheory already used by a practitioner

The requirement that a theory be available to practitioners in time to use it to deal withproblems

Strategic Management and Organisational Development

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cern to impart diagnostic and process managementskills to them for future use. More specifically:

0 Descriptive relevance: Action research takes placeby definition in the practitioners' organisationalsetting. The action researcher aims to help prac-titioners both with respect to particular issues theyencounter but more importantly with passing ondiagnostic skills and knowledge to them for reco-gnising and acting on similar issues in thefuture.33.34 Involving the practitioner in the wholeprocess of action research and especially in thediagnostic stage to arrive at a definition of theissues faced, means that the knowledge generatedby action research interventions is highly relevantto issues encountered by practitioners in their

organisational settings.

implementation which can draw from the knowl-edge and skills of the action researcher as well asthe local knowledge of the practitioners.

0 Non-obviousness: Common sense theories (or cog-nitive maps) of practitioners are themselves notobvious and require particular methodologies tobe determined.37 Action research interventionsoften involve a comprehensive diagnosis of thesocial/cultural aspects of social systems which aresubconscious and taken for granted22 and there-fore not immediately obvious to the actorsconcerned. They can act, however, as very potentbarriers or facilitators to change and thus surfacingthese social/cultural aspects and considering theirimplications for the particular strategic directionan organisation wishes to pursue is necessary forthe success of system-wide strategic inter-ventions.18 aD theories do contain a wealth ofnon-obvious insights, as even a cursory consider-ation of important aD works can reveal.12.31.33.35

0 Timeliness: The timeliness of aD theories derivesfirstly from the fact that the action researcher inter-venes in a social system when its members deter-mine the need for change themselves. Secondly,from the fundamental aim of organisational devel-opment of passing on to practitioners diagnosticand process management skills so that prac-titioners can avoid or resolve future issues them-selves in a timely fashion.33.35

Q Goal relevance: As a corollary of high descriptiverelevance arising from both the location of AR inthe field and practitioner involvement in the ARprocess, the outcome variables in theoriesdeveloped or elaborated are more likely to cor-respond to the issues practitioners wish to influ-ence. Such issues include, for example, how toimprove leadership, communication processes,group and inter-group effectiveness, and per-formance management,33 how to intervene andmanage change,lZ.35 or how to create a learning

organisation.13.zz

Q Operational validity: Knowledge derived from ARinterventions has high operational validity for twomain reasons. Firstly, because it has emerged fromthe field and not from the laboratory or purelyconceptually. Secondly, because the actionresearcher and the practitioners jointly conductaction planning and implementation and there-fore take into account the particular contingencyconditions of the social system under consider-ation.34 The actors' commitment to achievingchange is also increased through involvement inthe whole AR process.36 The ability of the prac-titioner to implement the action implications of atheory is increased, therefore, through the contentof the theories which exhibit high descriptive andgoal relevance, as well as through the process of

* This model was developed for use in system-wide, strategic

organisational development interventions with the criticalrequirement that it should address the practitioners' needs withinan action research context. Therefore organisational effec-tiveness is included as the end result of the intervention, inaccordance with the aims of both practitioners and the CD field.Given the above, the step of specifying learning deriving fromthe intervention with respect to existing behavioural scienceknowledge, is not explicitly portrayed in the model but shouldnonetheless be conducted by the action researcher and fed backto the social system and to behavioural science (e.g. as theauthors aim to do in this paper).

IV. An Integrated OrganisationalModelOne example of an aD model which is relevant topractitioner concerns and which has been used inseveral action research interventions is the' integratedorganisationalmodel' portrayed in Figure 2.

The aD process shown in the model draws fromthe action research paradigm, which includes thestages of diagnosis, action planning, implementation,and monitoring and evaluation. Because this modelwas developed with the main aim of being utilised instrategic, system-wide interventions its contentincludes categories which are empirically highly rel-evant to organisations (e.g. the specification of exter-nal direction and internal characteristics supportingthis direction, the seven 'levers' included in themodel, and the end goal of increasing organisationaleffectiveness). *

The 'integrated organisational model' (10M) bearssimilarities in content to other models such as Weis-bord's (1976)38 'six-box organisational model' and the'Burke-Litwin model of organisational performanceand change',3! which contain strategic, leadership,structural, cultural, systemic and processual vari-

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facilitate and encourage practitioner involvementin the whole process of intervention;

.it is based on extensive research which links eachof the content variables to definable measures oforganisational effectiveness. Substantiating thelinkages to organisational effectiveness was seen ascritical by the developers of the model, since a com-mon primary aim of both organisational devel-opment and of practitioners is to actually make adifference through their interventions and mana-gerial activities (to increase organisational effec-tiveness). A subset of the research on which themodel is based is discussed in the appendix.

Diagnosis

.Set External Direction:Vision and strategy

.Set Internal Direction:Critical Business Results

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Organisation,Team & Job

Design

Reward &Recognition

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V. Applying the 'Integrated--

Values& Culture

\

.to gather information on such issues as the internalsituation of the organisation and the views of thetop management team;

.to introduce the process based upon the 'integratedorganisational model' through which a deeper jointdiagnosis, action planning, implementation, andmonitoring of the strategic change program wouldbe conducted.

The diagnostic phase utilised the following data sour-ces:

.Interviews with the Managing Director and witheach of the seven members of the top managementteam;

.A half day pre-workshop with the Managing Direc-tor and the top management team;

.Observation of behaviour of top management teamand other employees;

.Internal documents related to the existing change

programs;.Published annual reports of the company.

All these were interpreted in the context of the organ-isation developers' in-depth knowledge of the sector,based on extensive experience of conducting organ-isation development interventions in this sector.

abIes. The 10M differs from these other models, how-ever, in three main ways:

.it incorporates relevant content variables within aprocess of application of the model, drawn fromaction research;3o.39

.it is designed to strike a balance between com-prehensiveness of relevant content variables andsimplicity of portrayal of these variables in order to

Strategic Management and Organisational Development

Organisational Model' in a UKCommercial BankIn 1996 Hay Management Consultants was ap-proached by the asset finance division of a UK Com-mercial Bank, when around 30 internal changeprojects were already under way; the internal changeinitiative was characterised by ambiguity and con-fusion which had prompted top management to seekexternal help. Initially there was a diagnostic phase,the main objectives of which were

QTABLE 2. Stages in Action Research

Phases ActivitiesA.

Agree VisionB. Agree StrategicObjectives

C. Define StrategicObjectives

D. Agree Measures

Outputs

.Set External Direction

(Strategic Objectives)

Guiding Questions

.What is our vision for thefuture?

.What do we want toachieve externally?

.How do we define ourstrategic objectives? Whatare the measures?

.Vision statement.4-6 statements of

strategic objectives.Elaboration and

measures of strategic

objectives

.Set Intern(Critical SFactors)

.What internal results are A. Brainstorm CSF's .A list of CSF'S percritical to achieving strategic B. Agree Priority CSF's strategic objectiveobjectives? C. Agree merged list of .3-4 prioritised CSF's per

.What are the measures of CSF's strategic objectivesuccess? D. Prepare a CSF matrix .Merged list of CSF's

linking Strategic Objectives. CSF matrixto CSF's

.Integrated ChangePlanning

.What organisation leverswill get us the internalbusiness results we want?

.How do these relate toeach other for an integrated

change plan?.What are the priorities?

What change programs dowe stop, add, keep?

A. Clarify and describe CSF's .Description statementsB. Plenary review for each CSFC. Re-cap .Agreed description ofD. Input: Organisation levers CSF's

and Integration .List of outcomes requiredE. Brainstorm impact of to achieve each CSF

levers to CSF's .Merged list of outcomesF. Plenary review and required for CSF's

consolidation of leveroutcomes required toachieve CSF's

.Action Planning andImplementation

.Change management

.Change leadership

.Integrated monitoring

Workshop 1 was essentially a team-building inter-vention aimed at helping the top management teamclarify its vision for the future, its strategic objectivesand the measures for these objectives. The outputfrom this workshop included the following visionstatement:

Three workshops were held with the MD and thetop management team, with the following themes:

1. Set internal and external direction2. Integrated change planning3. Development workshop on leading change

Table 2 gives an overview of the main phases of theorganisation development intervention, the questionsthat were used to guide joint diagnoses, direction set-ting and action planning, the main activities andlastly the outputs of the first two workshops.

Although it is the primary task of top managementto think strategically, there is extensive evidence tosuggest that top management teams often get caughtin fire-fighting, operational issues and do not devoteenough time to developing a competitive strategy andthe internal arrangements to support this strategy, orto learn how they might go about performing this taskmore effectively.4O,41 The need for strategic changewas reactively sensed by top management in this case,for example, when external data revealed that marketshare was declining and internal data showed that theorganisation's cost base was too high.

The Vision:a We aim to be the dominant provider of asset fin-

ance in our chosen markets.

a We want to be feared and admired by our com-petitors, and we want our competitors to bench-mark us.

a We wish to remain a desirable place to work,characterised by honesty and integrity.

a We aim to achieve sustained, long-term pro-fitability and customer satisfaction.

Four strategic objectives were developed and con.nected to 2-3 critical success factors each:

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Strategic Objectives

Vendor FinanceMinimise the leakage points in primary Bank channelsand seek to dominate the provision of asset finance tothe customers of our chosen vendors

Critical Success Factors

A. Able to identify material leakage points through

dealershipsB. Have tailored relationship (package services)

offerings to capture dealer distribution business (Bankand non-Bank)

C. Includes the most innovative product

2. Bank Personal Car FinanceDominate the provision of Personal car finance to theBank's personal customers

D.

The most effective and efficient processing systemin the world

E. The most efficient way to identity, retain andcapture our personal customers for car finance(integrated with bank sales process)

3. Bank Commercia! Agri CustomersDominate the provision of asset finance to the Bank'scommercial customers

F.

Most efficient and effective customer sensitive(world class) sales processG. The best sales support training (integrated withBranch)H. The smartest and most suitable credit policy andassessment processes/criteria for our markets

I. Must have good 'PR' with the Bank-world classcommunication-sell/market our crucial position withthe Bank

J. Have a climate which reinforces the Bank's values

4.

FranchisePerceived (and in fact) by the Bank as adding customervalue to the Bank's franchise:-Bring something to the party-Consistent with the Bank's vision and values

Because of the clarity provided by asking the rightquestions, the number of internal change programsalready under way was reduced by around 50%; thechange programs which remained were then rede-fined according to the focus provided by the processesof diagnosis, setting internal/external direction, andintegrated change planning.

Then CSF 'owners' were assigned for each criticalsuccess factor. They had the responsibility for fulfil-ling the CSF, which would in turn achieve the stra-tegic objectives. This and other aD interventions haveshown that individuals should not be responsible forchange projects per se, but for CSF's, as will be dis-cussed below.

The 'integrated change planning' phase involveduse of the 'integrated organisational model'

.to stimulate thinking about what actions should betaken, by thinking through the change levers por-trayed and how they related to the CSF's, i.e. whatactions should be taken to fulfil the CSF's

.to remind the top management team that theelements of social systems are interdependent, sothat changes in one sub-system (e.~. work processesand business systems) necessitates changes to othersub-systems (e.g. individual and team competenc-ies, and reward and appraisal systems).

Essentially, as was shown in Table 2, the main ques-tions asked at this phase were:

.what organisation levers will get us the internalbusiness results we want?

.how do these relate to each other for an integratedchange plan?

.what are the priorities? What change projects do weterminate or initiate based on the- above?

ResultsThe results achieved by integrating aD in the strategicchange process were:

.top management had a clear, relevant and usefulway of thinking about how to clarify their strategicdirection and how to effectively manage the tran-sition, by going through the four main phases ofsetting external direction, setting internal direction,integrated change planning, and action planningand implementation (see Table 2);

.this decision process which is characterised by clearguiding questions, group activities and productionof desired outputs, provided crucial clarity to man-agement on the strategic objectives, critical successfactors linked with each objective, and actionsrequired to achieve each CSF;

.the clarity provided meant that unrelated and waste-ful change projects were eliminated, and energy was

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focused on the ones clearly related to the CSF'sand strategic objectives, leading to more focused,effective and efficient change management;

.the group activities involved in the whole decisionprocess were in themselves productive team-build-ing interventions, increasing the integration andeffectiveness of the top management team as awhole.

The lessons from this and other aD interventionshave important implications for senior managers:

.do not assume or take for granted that your topmanagement team as a whole has a shared visionand a clear strategic direction for the future, becausethe odds are that it does not;

.set aside enough time to discuss and debate stra-tegic, long-term issues looking at the big picture,instead of focusing exclusively on operationalissues;

.when having such debates, use frameworks whichcan direct the debate and make it more focused onrelevant issues and productive (e.g. the processdescribed in Table 2, and the 'integrated organ-isational model', Figure 2). Make sure that there isopen, constructive interaction as opposed to, forexample, someone having a pre-determined idea ofwhat the result of the debate should b,e and directingit to that end;

.beware of the common mistakes of confusing stra-tegic objectives with measures for these objectives,or critical success factors with actions needed tofulfil these CSF's;

.ensure that your change projects are clearly focusedon the actions required to achieve CSF's, and elim-inate any projects that are unrelated. Unrelated pro-jects arise when trying to establish required actionsdirectly from strategic objectives instead of estab-lishing CSF's for each objective;

.assign clear accountabilities to project managers,not so much for delivering change projects on time,cost and specification, but for achieving the CSF'slinked to each project, since this makes individualsclear about what needs to be achieved to reach the

strategic objectives.

VI. Implications for ManagementThe aD processes portrayed in Figure 2 and Table 2,as utilised in this and other aD interventions haverevealed several important characteristics of situ-ations relevant to top management teams, changemanagement, and the aD process itself:

.often top management teams do not share a commonvision and strategic objectives;

.top management teams often confuse strategicobjectives with measures. When asked to developstrategic objectives they come up with measuresinstead, e.g.: instead of posing 'vendor finance' as astrategic objective, the top management teamreferred to achieving 'higher volume' or 'marketshare', which are measures for the objective. Theyalso confuse critical success factors with actions,e.g.: instead of posing 'able to identify material leak-age points through dealerships', the top man-agement team referred to the need to install an ITsystem which is an action needed to achieve theCSF;

.top management teams tend to try to link strategicobjectives directly with actions without developingCSF's. Trying to establish required actions from stra-tegic objectives leads to numerous unrelated changeprojects, whereas change projects based on CSF'sfocus on what needs to be achieved to reach the fullarray of strategic objectives;

.top management teams tend to assign loose 'stated'accountabilities of change, e.g. the only point of realaccountability for change in this case had been withproject managers (accountable for time, cost anddelivery to specification). By establishing account-abilities directly based on the CSF's developed,however, individuals were clear about what neededto be achieved to reach the strategic objectives;

.the theoretical content/process distinction is prac-tically debatable. To be a process consultant35.36 ismore productive than being just a content expertwithout much knowledge of organisationalprocesses. Experience of several aD interventionshas shown, however, that being knowledgeableabout both content and process while carrying outaD interventions is highly useful. Content knowl-edge enables the organisational developer to chal-lenge practitioners' assumptions and proposedactions if it is appropriate to do so.

The Need for Closer InteractionWe have suggested that closer interaction betweenthe aD and strategy fields can help to bridge the gapof research relevance by providing insights on issuesemerging from practice rather than the laboratory orpurely conceptually, within a process whose guidingprinciples render it uniquely positioned to claimpractitioner relevance. The 'integrated organisationalmodel' presented portrays the process and the organ-isational levers used to stimulate thinking so as todetermine appropriate actions to be taken to fulfilCSF's and thus reach the strategic objectives set.Application of this model at the asset finance divisionof a UK commercial bank has:

.illustrated generic processes of strategic changeplanning and implementation which would be rel-evant in any strategic change program (setting exter-nal direction, setting internal direction, integratedchange planning, and action planning and

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implementation); the 'integrated organisationalmodel' being particularly useful in the 'integratedchange planning' phase;

.clarified how strategic objectives are linked withcritical success factors and the critical focus thiscan provide in any change program, with less time,money and energy being wasted on ill-definedchange projects which are not connected with par-ticular critical success factors;

.discussed how in this and most other strategic aDinterventions in the authors' experience, there arecommon detrimental features of the thinking of topmanagement teams as well as their management ofstrategic change programs, which severely jeop-ardize such programs.

These features merit further investigation, not onlybecause of their intrinsic importance, but most impor-tantly because substantial experience of carrying outaD interventions suggests that similar features arepresent in the majority of organisations in whichinterventions were conducted, irrespective of indus-try or sector. This means that they are highly relevantto the needs and concerns of practitioners who haveto develop and implement strategy. Some of the abovefindings are vital to understanding managers' stra-tegic thought: if further research supports the find-ings, for example, that top managers routinelyconfuse strategic objectives with measures and CSF'swith actions, what are the implications of this criticalfact for both the strategic management field and mana-gerial education and development? Such aD findingscould be very productively studied by the strategyfield, e.g.a What is the population validity of aD findings

such as the above in different industries andnational cultures? This could be determined byquantitative studies utilising large samples oforganisations, building on the qualitative findingsof aD interventions.42

a What are the implications of such findings for thestrategic management field, management edu-cation and organisational developer training?

These findings also illustrate how closer interactionbetween the aD and strategy fields can lead to morefruitful inter-disciplinary linkages for both the aca-demic and practitioner communities. Strategic man-agement can address new problem areas emergingfrom practice or can elaborate existing theories basedon practice,42 thus helping to bridge the gap of rel-evance between practitioner and academic concerns.

size and capital intensity. The more turbulent a firm'senvironment, moreover, the more it can benefit from stra-tegic planning.44 Firms higher on a planning continuum of:Short-term forecasting --+ Budgeting --+ Annual planning--+Long-range planning --+ Strategic planning, were shown toachieve higher la-year total returns to investors both rela-tive to their industry and in absolute terms.45 The degree offormality of strategic planning was also positively cor-related with higher financial performance.4G.47.Leadership: Leadership is included as the core of themodel because of its critical role in organisations. Lead-ership actions were shown to strongly influence employeecommitment, job satisfaction, and reduce role ambiguity.4BLeadership is central to managing change, and effectiveleadership in the context of change varies with respect tosituational contingencies.49-51.Management processes and systems: Investment in high-performance human resource management practices isassociated with lower employee turnover and greater pro-ductivity and corporate financial performance.23.24 Thehigher the employees' perceptions of a company's com-mitment to its human resources, the more their attitudestowards company values are improved and their job sat-isfaction increased. 52 Use of more sophisticated staffing

practices is associated with higher levels of annual profitand profit growth.53.Organisation, team and job design: Job redesign wasshown to increase functional behaviours and decrease dys-functional behaviours by employees,54 and job enrichmentinterventions were shown to be effective at reducingemployee turnover .55 The relevance of several criteria ofteam effectiveness derived from the literature was con-firmed empirically.56.57 Lastly, organisation performance ishigher when organisation/environment alignment is higherand vice versa.56.Work processes and business systems: Organisationalvariables (emphasis on human resources and goalaccomplishments) were shown to be twice as important aseconomic factors (industry profitability and firm size) asdeterminants of performance. 59 Spending on information

systems and on IS labour was shown to produce a net mar-ginal product of 67% assuming a service life of seven years,and a net marginal product of 48% assuming a service lifeof three years.6o Re-engineering which defines processes tobe redesigned broadly and which utilises several 'depthlevers' can lead to dramatic cost reductions.61.Values and Culture: Several studies have shown that cer-tain cultural characteristics lead to higher organisationalperformance, e.g. 'constructive' cultures which encourageinteraction and ways of approaching tasks that will helpemployees meet their higher-order satisfaction needs, andwhich are characterised by achievement, self-actualising,humanistic-encouraging and affiliative norms62 as well asmore homogeneous cultures which value adaptability.63 Inaddition, the higher the employee's commitment to theorganisation and overall job satisfaction, the lower theirintent to leave the organisation.G4 The higher theindividual/organisation fit, the higher the organisation'seffectiveness.65.Individual and Team Competence: Employee com-petencies are critical for improved organisational per-formance. Eleven high-performance managerialcompetencies were identified and validated.66 Employeetraining to enhance individual and team competencies wasshown to lead to higher productivityG7 and performance.GB.Reward and recognition: It is vital that performanceappraisal systems reward desired behaviours and arecongruent with the organisation's human resource and com-petitive strategies, among other things.G1.69-71 There is as

Appendix: The IntegratedOrganisation Model.Strategic Planning: The presence of strategic planningpositively influences firm performance. irrespective of firm

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751

N.B. Because of space limitations. only a selective expo-sition of the research on which the integrated organisationalmodel is based is given. For a full bibliographicallist of theresearch please contact Dr Loizos Heracleous, Departmentof Business Policy, Faculty of Business Administration,National University of Singapore, Singapore 119260.

much as a 127% potential variability in employee per-formance in high-complexity jobs72 which the reward sys-tems can capitalise on by enhancing employee satisfactionand commitment. Reward systems featuring pay-for-per-formance were shown to lead to higher employee sat-isfaction73 and profit sharing was shown to lead to higherproductivity.74

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