Organizational Theory Design and Change Fifth Edition Gareth

Organizational Theory, Design, and Change Fifth Edition Gareth R. Jones Chapter 9 Organizational Design, Competences, and Technology Copyright 2007 Prentice Hall 9 - 1

Learning Objectives 1. Identify what technology is and how it relates to organizational effectiveness 2. Differentiate between three different kinds of technology that create different competences 3. Understand how each type of technology needs to be matched to a certain kind of organizational structure. 4. Understand how technology influences organizational culture 5. Appreciate how technological innovation increase organizational effectiveness. Copyright 2007 Prentice Hall 9 - 2

What is Technology? n Technology: the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials into valuable goods and services. Copyright 2007 Prentice Hall 9 - 3

What is Technology? (cont. ) n Technology exists at three levels 1. 2. Individual level: the personal skills, knowledge and competences that individuals possess Functional or department level: the procedures and techniques that groups work out to perform their work and create value. Copyright 2007 Prentice Hall 9 - 4

What is Technology? (cont. ) n Technology exists at three levels (cont. ) 3. Organizational level: the way an organization converts inputs into outputs n n Mass production: the organizational technology based on competences in using standardized, progressive assembly process to manufacture goods Craftswork: the technology that involves groups of skilled workers who interact closely to produce custom-designed products. Copyright 2007 Prentice Hall 9 - 5

Technology and Organizational Effectiveness n Technology is present at all three stages in the value creation process: n n n Input: allows each organizational function to handle relationships with outside stakeholders Conversion: transforms inputs into outputs Output: allows an organization to distribute products and services to external stakeholders. Copyright 2007 Prentice Hall 9 - 6

Figure 9 -1: Input, Conversion and Output Processes Copyright 2007 Prentice Hall 9 - 7

Technical Complexity: Theory of Joan Woodward n Programmed technology: a technology in which the procedures for converting inputs into outputs can be specified in advance n Tasks can be standardized and the work process can be made predictable Copyright 2007 Prentice Hall 9 - 8

Technical Complexity (cont. ) n Technical complexity: the extent to which a production process can be programmed so that it can be controlled and made predictable n n High technical complexity: exists when conversion processes can be programmed in advance and fully automated Low technical complexity: exists when conversion processes depend primarily on people and their skills and knowledge and not on machines Copyright 2007 Prentice Hall 9 - 9

Technical Complexity (cont. ) n Woodward identified 10 levels of technical complexity that are associated with three types of production technology: 1. 2. 3. Small-batch and unit technology Large-batch and mass production technology Continuous-process technology Copyright 2007 Prentice Hall 9 - 10

Technical Complexity (cont. ) 1. Small-batch and unit technology n n Involves making one-of-a-kind, customized products or small quantities of products The conversion process is flexible, thereby providing the capacity to produce a wide range of goods that can be adapted to individual orders Is relatively expensive Scores lowest on the dimension of technical complexity. Copyright 2007 Prentice Hall 9 - 11

Technical Complexity (cont. ) 2. Large-batch and mass production technology n n Involves producing large volumes of standardized products The conversion process is standardized and highly controllable Allows an organization to save money on production and charge a lower price for its products Scores higher on the technical complexity dimension Copyright 2007 Prentice Hall 9 - 12

Technical Complexity (cont. ) 3. Continuous-process technology n n n Involves producing a steady stream of output Production continues with little variation in output and rarely stops Individuals are only used to manage exceptions in the work process Tends to be more technically efficient than mass production Scores highest on the technical complexity dimension. Copyright 2007 Prentice Hall 9 - 13

Figure 9 -2: Technical Complexity and Three Types of Technology Copyright 2007 Prentice Hall 9 - 14

Technical Complexity and Organization Structure n An organization that uses small-batch technology n n Impossibility of programming conversion activities because production depends on the skills and experience of people working together An organic structure is the most appropriate structure for this technology Copyright 2007 Prentice Hall 9 - 15

Technical Complexity and Organization Structure (cont. ) n An organization that production technology n n uses mass Ability to program tasks in advance allows the organization to standardize the manufacturing process and make it predictable A mechanistic structure (chap. 4) becomes the appropriate structure for this technology. Copyright 2007 Prentice Hall 9 - 16

Technical Complexity and Organization Structure (cont. ) n An organization that uses mass production technology n n n Tasks can be programmed in advance, and the work process is predictable and controllable in a technical sense Still the potential for a major systems breakdown An organic structure is the appropriate structure for this technology Copyright 2007 Prentice Hall 9 - 17

Figure 9 -3: Technical Complexity and Organizational Structure Copyright 2007 Prentice Hall 9 - 18

Technical Complexity and Organization Structure (cont. ) n Technological imperative n n The argument that technology determines organizational structure Aston studies found that: n n Technology is one determinant of structure Organizational size is a more important determinant of structure Copyright 2007 Prentice Hall 9 - 19

Routine Tasks and Complex Tasks: Theory of Charles Perrow n Perrow’s two dimensions underlie the difference between routine and nonroutine or complex tasks and technologies: n n Task variability Task analyzability Copyright 2007 Prentice Hall 9 - 20

Theory of Charles Perrow (cont. ) n Task variability: The number of new or unexpected situations that a person encounters while performing a task n Is low when a task is standardized or repetitious n Task analyzability: The degree to which is needs search activity and develop new knowledge to solve a problem n Is high when the task is routine Copyright 2007 Prentice Hall 9 - 21

Theory of Charles Perrow (cont. ) n Four types of technology n n Routine manufacturing: characterized by low task variability and high task analyzability Craftswork: low task variability and task analyzability Engineering production: high task variability and task analyzability are Nonroutine research: characterized by high task variability and low task analyzability Copyright 2007 Prentice Hall 9 - 22

Figure 9 -4: Charles Perrow Copyright 2007 Prentice Hall 9 - 23

Theory of Charles Perrow (cont. ) n When technology is routine, employees perform clearly defined tasks – work process is programmed and standardized Mechanistic structure n Nonroutine technology requires the organization to develop structure that allows employees to respond quickly to manage exceptions and create new solutions Organic structure. Perrow sustain that an organization should move from a mechanistic to an organic structure when tasks become more complex and less routine Copyright 2007 Prentice Hall 9 - 24

Table 9 -1: Routine and Nonroutine Tasks and Organizational Design Copyright 2007 Prentice Hall 9 - 25

Task Interdependence: Theory of James D. Thompson n Task interdependence: The manner in which different organizational tasks are related to one another affects an organization’s technology and structure n Three types of technology 1. 2. 3. Mediating Long-linked Intensive Copyright 2007 Prentice Hall 9 - 26

Theory of James D. Thompson (cont. ) 1. Mediating technology: a technology characterized by a work process in which input, conversion, and output activities can be performed independently of one another n Based on pooled task interdependence n Each part of the organization contributes separately to the performance of the whole organization Copyright 2007 Prentice Hall 9 - 27

Theory of James D. Thompson (cont. ) 2. Long-linked technology: based on a work process in which input, conversion, and output activities must be performed in series n Based on sequential task interdependence n 1. Actions of one person or department directly affect the actions of another Slack resources: surplus resources that enable an organization to deal with unexpected situations Copyright 2007 Prentice Hall 9 - 28

Theory of James D. Thompson (cont. ) n Intensive technology: a technology characterized by a work process in which input, conversion, and output activities are inseparable n Based on reciprocal task interdependence n n The activities of all people and all departments are fully dependent on one another Specialism: producing only a narrow range of outputs Copyright 2007 Prentice Hall 9 - 29

Figure 9 -5: Task Interdependence and Three Types of Technology Copyright 2007 Prentice Hall 9 - 30

From Mass Production to Advanced Manufacturing Technology n Mass production is based on: n n Dedicated machines: machines that can perform only one operation at a time and that produce a narrow range of products Fixed workers: workers who perform standardized work procedures, thereby increasing an organization’s control over the conversion process Copyright 2007 Prentice Hall 9 - 31

From Mass Production to Advanced Manufacturing Technology (cont. ) n Mass production: n n Try to reduce costs and to protect its conversion processes from the ambiguity of the environment Makes an organization inflexible n n Fixed automation Expensive and difficult to begin manufacturing a different kind of product when customer preferences change Copyright 2007 Prentice Hall 9 - 32

Figure 9 -6: Work Flows Copyright 2007 Prentice Hall 9 - 33

Advanced Manufacturing Technology: Innovations in Materials Technology n Advanced manufacturing technology: Technology consists in innovations of materials and knowledge that change the work process of traditional mass-production organizations n Materials technology: Includes machinery, other equipment, and computers n Organization actively seeks ways to increase its ability to integrate or coordinate the flow of resources between input, conversion, and output activities Copyright 2007 Prentice Hall 9 - 34

Advanced Manufacturing Technology (cont. ) n Computer-aided design (CAD): an advanced manufacturing technique that greatly simplifies the design process n Computers can be used manufacture products to design and physically n Computer-aided materials management (CAMM): an advanced manufacturing technique that is used to manage the flow of raw materials and component parts into the conversion process, to develop master production schedules for manufacturing, and to control inventory n Flow of inputs determined by customer demand Copyright 2007 Prentice Hall 9 - 35

Advanced Manufacturing Technology (cont. ) n Just-in-time inventory (JIT) system: Requires inputs and components needed for production to be delivered to the conversion process just as they are needed n n n Input inventories can then be kept to a minimum CAMM is necessary for JIT to work effectively Increases task interdependence between stages in the production chain. Copyright 2007 Prentice Hall 9 - 36

Figure 9 -7: Just-in-Time Inventory System Copyright 2007 Prentice Hall 9 - 37

Flexible Manufacturing Technology n Technology that allows the production of many kinds of components at little or no extra cost on the same machine n n Each machine is able to perform a range of different operations Machines in sequence able to vary operations so that a wide variety of different components can be produced. Copyright 2007 Prentice Hall 9 - 38

Computer-Integrated Manufacturing (CIM) n An advanced manufacturing technique that controls the changeover from one operation to another by means of commands given to the machines through computer software n n Depends on computers programmed to: n Feed the machines with components n Assemble the product from components and move it from one machine to another n Unload the final product from the machine to the shipping area. Use of robots integral to CIM. Copyright 2007 Prentice Hall 9 - 39