TECHNOLOGY AND STRUCTURE

TECHNOLOGY THEORISTS

1. Joan Woodward2. Charles Perrow3. James Thompson

Joan Woodward

In the early 1960’s Woodward demonstrated thatorganization structures adapt to their technology.

In categorizing companies into three groups sheidentified that production run sizes were linkedincreasing levels of complexity and technologicalsophistication.

Technology Categories

Unit Production: The production of items in single units and small batches

Mass Production: The production of large-batch manufacturing

Process Production: The production of continuous -process products such as oil and chemical refiners

Prod

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WOODWARD: TECHNOLOGICAL INFLUENCE ON ORGANIZATIONAL

DESIGN

1. The more complex the technology – going from a Unit

to a more Process system – the greater are the number of managerial personnel and the levels of authority

2. The more complex the technology, the larger is the number of clerical and administrative personnel

3. The span of control of first-line managers increases from Unit production systems to Mass production

systems and then decreases from Mass production systems to Process production systems

MASS PRODUCTION TECHNOLOGY & DESIGN

UNIT & PROCESS TECHNOLOGY & DESIGN

COMPUTER-INTEGRATED MANUFACTURING

Since the work of Woodward, there have been significantadvances in production technology, which include the use

of robots, numerically-controlled machine tools, and many applications of the computer to remote control of

equipment.

These advances have been called by a variety of names including: advanced manufacturing technology, agile

manufacturing, smart factories, and flexible manufacturing systems.

Computer-Integrated Manufacturing

Typically the results of three sub-components:

1. Computer-assisted design (CAD). Computers are used to assist in drafting, design and engineering of new parts. Allows significant variation in specifications with minimum of redesign cost.

2. Computer-aided manufacturing (CAM). Computer- controlled machines are used in materials-handling, fabrication, production, and assembly. Allows fast switching between product runs and variations.

Computer-Integrated Manufacturing, cont’d

3. Integrated Information Networks (ERP): A computerized system links all aspects of the firm – accounting, marketing, purchasing, inventory control, etc. The most common are called Enterprise Resource Planning programs. Most known are by SAP, People- Soft and Oracle. Use a common database, and allow managers to integrate their decision making more effectively.

Prod

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flexibility

Customized

StandardizedBatch SizeSmall Unlimited

Small Batch

MassProduction

ContinuousProcess

MassCustomization

FlexibleManufacturing

NEW CHOICES

OLD CHOICES

Comparison of Organizational Characteristics of Mass Production vs

CIM

Structure Mass Production CIM

Span of control Wide NarrowHierarchical levels Many FewTasks Routine, repetitive Adaptive, craftlikeSpecialization High LowDecision Making Centralized DecentralizedOverall Bureaucratic, mechanistic Self-regulating, organic

Charles Perrow

Focus is on departmental technology and departmental structure (usually outside the technical core)Each department has a production process with a distinct technologyIncludes units such as HRM, R&D, legal, engineering, QC, finance, etc.

DIMENSIONS OF TECHNOLOGY

Task Variety: number of exceptions in the work. Frequency of unexpected and novel events that occur in the conversion process.

Problem Analyzability: degree to which work activities and problem solving activities are analyzable. Analyzable problems can be solved with procedures and standardized technical knowledge. Non-analyzable problems must be dealt with by wisdom, experience and intuition.

PERROW - CONCLUSIONS

1. Departments do differ from one another and can be categorized by their workflow technology.2. Structural and management processes differ based upon workflow technology.3. Managers should design departments so that requirements based on technology can be met.4. Explains differences in departmental structures in mixed-type designs.

JAMES THOMPSON – TECHNOLOGY

SYSTEMS THEORIST

SYSTEMS MODEL OF ORGANIZATION

Departmental Interdependence

Interdependence mean the extent to which departments depend on each other for resources or materials to accomplish their tasks.

Low interdependence means the departments can do their work independently of each other and have little need for interaction, consultation or exchange of materials.

High interdependence means the departments must constantly exchange resources.

Types of Interdependency

• Pooled Interdependency

• Sequential Interdependency

• Reciprocal Interdependency

Pooled Interdependency

Pooled interdependence is the lowest form of interdependence among departments. In this form,work does not flow between units. Each contributesto the common good of the organization, but does its work independently.

Examples: McDonald’s restaurants, branch banks, independent sales units based upon territory or product lines.

Mediating Technology

Pooled interdependence is associated with organizationsemploying a Mediating Technology. A MediatingTechnology provides products or services that mediateor link clients from the external environment and, indoing so, allows each department to work independently.

Banks, brokerage houses, real estate offices all mediatebetween buyers and sellers, but the offices workindependently within the organization.

Mediating Technology II

To achieve coordination, mediating technologies rely onboth a measure of categorization and a degree ofstandardization. Organizations with mediating technologiesare, in general, moderately flexible to changing productdemands and typically cope with uncertainty by increasingthe number of units served. Since mediating technologycombines the outputs of different units by usingpredetermined categories and standard rules and procedures,it is usually less costly than long-linked technology whichrequires a certain amount of planning (scheduling) acrossseveral tasks to ensure proper work flow.

Sequential InterdependenceSequential interdependence exists when the outputs of onedepartment become the inputs of another in serial form.This is a higher level of interdependence than pooledrelationships. The preceding unit must complete its taskscorrectly in order that the latter unit may successfullycomplete its tasks. It creates a higher need for horizontalintegration mechanisms.

Sequential interdependence is associated with Long-LinkedTechnologies..

Long-Linked Technology

Long-linked technology is usually associated with largeorganizations that utilize sequential task organization, such as assembly lines to accomplish their tasks.

Examples include the manufacture of automobiles,heavy appliances, mechanical assemblies, some foodpreparation processes, etc.

Long-linked technologies require high levels of coordination between tasks to be efficient.

Long-Linked Technology II

In long-linked technology procedures to complete a unitof work are highly uniform and must be performed in aspecified serial order.

Organizations based upon long-linked technology generally achieve coordination through planning(scheduling) and typically seek to offset significantenvironmental uncertainty through vertical integration.

Reciprocal InterdependenceReciprocal interdependence is the highest level of inter-dependence. Reciprocal interdependence exits when theoutput of one unit serves as the input for a second unit,and the output of the second unit serves as the input forthe first unit.

Reciprocal interdependence occurs in organizations withintensive technologies.

Intensive Technology

Intensive technologies provide a variety of products orservices in combination to the client. A new productdevelopment company is an example, where design,engineering, manufacturing and marketing all must work combine all their resources to suit a customer’sproduct needs.

Intensive technology, because of its reciprocal inter-dependencies, requires the highest level of managementrequirements. Reciprocally interdependent units worktogether intimately and must be closely coordinated;thus, a horizontal structure is appropriate.

Intensive Technology IIIntensive technology coordination requires high levels ofhorizontal communication and adjustment. Managers from multiple departments are often involved in face-to-face communication.

Intensive technologies secure coordination through mutualadjustment. They generally increase their tolerance for uncertainty by ensuring the availability of a variety ofspecialized services and skills in order to be prepared for any contingency. Intensive technologies are typically themost expensive to coordinate.

STRUCTURAL PRIORITIES

Thompson posited a series of propositions regarding thestructural priorities necessary to account for the differentlevels of interdependency among units.

1. Under norms of rationality, organizations group positions minimize coordination costs.

1A. Organizations seek to place reciprocally interdependent positions tangent to one another, in a common group, which is (a) local and (b) conditionally autonomous.

Structural Priorities II1B. In the absence of reciprocal interdependence, organizations subject to rationality norms seek to place sequentially interdependent positions tangent to one another, in a common group which is (a) localized and (b) conditionally autonomous.

1C. In the absence of reciprocal and sequential interdependence, organizations subject to norms of rationality seek to group positions homogeneously to facilitate coordination by standardization.

Structural Priorities III2. When reciprocal interdependence cannot be confined to intra-group activities, organizations subject to rationality norms seek to link the groups involved into a second- order group, as localized and conditionally autonomous as possible.

3. After grouping units to minimize coordination by mutual adjustment, organizations under rationality norms seek to place sequentially interdependent groups tangent to one another, in a cluster which is localized and conditionally autonomous.

Structural Priorities IV4. After grouping units to solve problems of reciprocal and sequential interdependence, organizations under norms of rationality seek to cluster groups into homogeneous units to facilitate coordination by standardization.

4A. When higher-priority coordination requirements prevent the clustering of similar positions or groups, organizations seek to blanket homogeneous positions under rules which cut across group boundaries, and to blanket similar groups under rules which cross divisional lines.

Structural Priorities V4B. When organizations employ standardization, which cuts across multiple groups, they also develop liaison positions linking the several groups and the rule-making agency.

4C. Organizations with sequential interdependence not contained by departmentalization rely on committees to accomplish the remaining coordination.

4D. Organizations with reciprocal interdependence not contained by departmentalization rely on task-force or project groups to accomplish the remaining coordination.

Summary of Structural Priorities

1. Reciprocal relationships are the highest level of inter- dependence, and should receive first priority by being grouped close together in the organization so managers have easy access to one another for mutual adjustment. These units should report to the same person and should be physically close to minimize time and effort in coordination.

When such units cannot be located close together, the organization should design coordination mechanisms, such as cross-functional teams, project teams or intranets to facilitate required coordination.

Summary, cont’d2. The next priority is given to sequentially interdependent units or tasks. Once reciprocal relationships are taken care of, or not present, sequentially interdependent units or tasks should be grouped together under a common superior, and as physically close to one another as possible.

If a common superior, or physical proximity, is not possible the interdependence should be coordinated through committees or task-forces.

Summary, cont’d

3. The final priority should be given to pooled inter- dependencies. If the interdependence cannot be handled by forming homogeneous groups under a common superior or close physical proximity, standardization across units should be implemented with liaison individuals to handle required cross- communication between the units.

Comparing Technology

Contributor Technology Routine Non-Routine

Woodward Mass, Process Unit Perrow Routine, Craft, Engineering Non-Routine Thompson Long-linked, Intensive Mediating