Running head: Organizational Design and Technologies

Organizational Design and Technology Nicholette Inman Org 6503: Organizational Theories and Systems University of the Rockies Professor Shelton November 28, 2011

ORGANIZATIONAL DESIGN AND TECHNOLOGIES

Abstract Organizational technology has different meaning to various organizational theorist, however, to Jones, organizational technology implies that various skills and tasks combine together to create organizational technology. With global competition increasing and various jobs being outsourced, businesses have to improve their performance, goods, and services in order to achieve their desired success (Dillingham, n.d.). Three theorists, Woodard, Perrow, and Thompson, have established their own theories on how technology leads to the overall efficiency of an organization, as well as how the structure of an organization can be influence by advanced technology. Four companies will be analyzed according to these theories and their organizational structures will be compared to other similar and different organizations.

ORGANIZATIONAL DESIGN AND TECHNOLOGIES

Organizational Design and Technology Over the years, technology has advanced in tremendous ways that has had both positive effects on the global society. The use of technology in corporations has caused companies to create new ways of producing and implementing their goods and services. As technology advances, so does customer expectations on the quality of the goods and services they receive, as well as how they receive them. According to Jones (2010), he defines organizational technology as the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials, problems, and new ideas into valuable goods and services (p.240). In other words, what technology means to organization is the different channels of the business that work together cohesively to bring success and efficiency of the organization. Companies are constantly finding new ways to better serve their clientele and either gain or retain the top spot in their industrial market. The use of technology in their daily activities has become popular over the years. Technology in the workplace was designed to make the people and organizations more knowledgeable, efficient, and profitable (Kiernan, 1995). In order to get to the top or stay there, an organization has to provide quality and efficient service. When considering Jones (2010) definition of organizational technology, it is evident that there are different factors that works together to make it efficient. The value creation process of an organization helps to determine the quality of goods and service to be produced. In the three stages of the value creation process, input conversion-output, technology is utilized to add to that value. Skills and procedures are examples of uses of technology in the input stage to manage stakeholders interests and relationships. In the conversion stage, technology can be used by

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combining machines, techniques, and procedures that transport inputs into outputs. In the output stage, technology is utilized to distribute services to stakeholders (Jones 2010). There are three approaches to increasing the effectiveness of technology in an organization. The external resource approach utilizes technology to manage and control stakeholders. Technology can be utilized to open the communication channels between the organization and its stakeholders to ensure that all parties are in agreement with the services and products provided. Internal systems approach is used to increase the innovation, product development, and reduction in development time for goods and services. As technology increases, the way goods and services are produces adapt which leads to more creativity and new products being developed. Technical approach is used to increase efficiency and quality, while reducing costs. Machinery is utilized as a way to produce goods and services in a way that can be automated and pre-designed to allow little chance for mistakes or variability. There are three different theorists who believe that technology has a direct influence on the optimal structure of an organization. Although their theories are different, they each related to the efficiency that technology presents to increasing the bottom line of an organization. Joan Woodward was a British academic who made a stamp on what technology is to organizational success. Her extensive comparative study looked at the impact of technical complexity on structural characteristics of manufacturing firms. When procedures become standardized and work is predictable, technology is programmed. Woodwards theory of technical complexity theorized the extent of programming, controlling, and predictability as the complexity that distinguishes technologies (Jones, 2010). High technical complexity entails the conversion process being programmed and automated in advance which makes the work predictable and

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standardized. Low technical complexity entails the conversions process relaying on technical skills of the workers, not machines, which makes quality and consistency difficult (Jones, 2010). The study focused on the relationship between organizational structure and organizational performance by measuring a firms comparative performance relative to its industrys peers and compared this indicator to its structural dimensions of span of control, hierarchy levels, and management style (Technology Typology , n.d.). There are three classifications of technology within the ten levels of technical complexity: small batch and unit technology, large batch and mass production, and continuous process production. Small batch and unit technology produces small quantities or customized products. Since the conversion process if flexible, there is the ability to produce a wide range of goods that are adaptable to individual orders. However, this level is low on the technical complexity dimensional scale and can be expensive for the organization (Jones, 2010; (Technology Typology, nd). Large batch and mass production technologies produce standardized and identical products based on routines and standard procedures. Machines are utilized to increase technical efficiency as the tasks are programmed into the machines, which lead to controlled production (Jones, 2010). Companies who utilize large batch and mass production techniques are able to decrease their production costs while creating a mass market. Compared to small batch and unit technology, this level is higher on the technical complexity dimension. In continuous process technology, production is nearly all automated and mechanized with almost no manual involvement. There is minimal variability for this level and the greater the technical efficiency, the more stabilized and predictable the production will be. This also leads to lower production costs. Continuous process technology is at the height of the technical complexity dimension (Jones, 2010, Technology Typology, nd.).

ORGANIZATIONAL DESIGN AND TECHNOLOGIES

Charles Perrow is another theorist who developed the classification scheme based on the knowledge required to operate technology. Perrows contingency theory suggested that an organizations success in their respective markets as well as their effect structure depends greatly on the type of technology (Technology Typology, n.d.). This typology consisted of two separate levels: task variability and task analyzability. Perrow believed that unpredictable events occurred when technical complexity was extremely high, which made problem solving difficult (Jones, 2010). Task variability is the number of unexpected situations that arise throughout an individuals task. In situations where the tasks are standardized, the task variability is low. Task analyzability is the degree to which search activity is needed to solve a problem, and is high when the task is routine (Jones, 2010). Perrow distinguishes four technology categories as routine, a lack of exceptions and depth of comprehension; craft, a lack of exceptions and unpredictable outcomes that are hard to analyze; engineering, many exceptions and its depth of comprehension; and non-routine, many exceptions and poor comprehension (Technology Typology, n.d.). To Perrow, there was an importance in the diversity of technologies demonstrated throughout organizations. In his opinion, technology helped to determine uncertainty in organizations, thus, the higher the uncertainty, the more difficult it is to predict tasks and organizing those tasks (Technology Typology, n.d.). James D. Thompson is the final theorist to be discussed who compared the relationship between tasks, tasks interdependence, and its impact on technology and structure (Jones, 2010). People and departments in organizations with high task interdependence rely heavily on each other, whereas, low task interdependency indicates that people and departments work separately from one another. In Thompsons theory, he identified three types of technology, all of which are

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related to task interdependence: mediating, long-linked, and intensive. Mediating technology allows inhabitants of an organization to work independently from one another, and each part of the organization contributes separately to the whole organization. Long-linked technology is the process of input, conversion, and output that is performed in a series of events. This sequential task interdependence requires the actions of one task to rely on that of another (Jones, 2010). Intensive technology indicates that the process of inputs, conversions, and outputs are inseparable from one another. The departments and tasks are completely dependent on the failure or success of one another. The more complex the task, the less technical it becomes, which adds to the cost since the tasks cannot be preset (Jones, 2010). Thompson went on to decipher three different mechanisms that are present when different technologies are utilized. Pooled tasks interdependencies are mediating technologies in which the progress of one unit is interdependent of the progress of another unit. Coordination between units is minimal and the rules and the standards provide enough information to align activities accordingly. Sequential task interdependence are tasks performed in sequential order. Earlier tasks determine the progress of workers down the line. There is a demand for coordination to prevent the progress from slowing down, and planning and scheduling is needed. Reciprocal task interdependence is when the scale of the task is too large for one unit and the units have to work together to produce the goods and services. Communication between the units have to be open in order to make the work progression simultaneous (Technology Typology, n.d.). The concepts of these theorists can be seen in various forms of organizations and their use of various technologies. How a company utilizes technology to enhance their efficiency depends greatly on the structure of the company and their goals that they want to achieve. While

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each company has different strategies and uses for technology, their overall concept of technology can be seen in similar structured organizations. When we consider the technical complexity, task variability and analyzability, as well as the task interdependence, we are able to discover the similarities as well as differences amongst a life insurance company, a drive thru coffee shop, a video gaming production company, as sell as solar technology company. A large life insurance company is a financial institution that issues life insurance policies to policy holders and insures the lives of individuals (Smith, 2011). The many employees in this firm provide intangible services to their customers specified to the customers particular needs. While the policies can be adjusted and customized to suit their customers, the company life insurance policy is standardized throughout the organization. In this organic structure, the hierarchy is flat with a narrow span of control. The technical complexity of the life insurance company is the small batch or unit technology as the products are customized to the particular clients. As personal skills have a greater importance than machines, there is a low technical complexity level. In this company machines are not heavily utilized and cannot be programmed in advance. Decisions making is decentralized and managers have a narrow span of control. Both task variability and task analyzability are high in this organizational structure. Situations arise every day when dealing with the different life insurance policies; however, employees are able to refer to their company standards and procedures in order to solve these problems. As the tasks can be performed independently from other tasks, and each part of the organization contributes to performance independently. Task interdependence is low in this type of organization (Jones, 2010). Drive-thru coffee shops are very popular for different age groups. Regardless if you are meeting a client for a business meeting or taking a break from shopping with a close friend,

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coffee shops offer a cozy ambience that enables their customers to relax and enjoy their surroundings. The products in the coffee shop are mass produced and each store location distributes the same goods and services. The hierarchy of the shop is tall with a wide span of control. The decisions that need to be made are centralized throughout the organization. Tasks to be completed in the shop are routine with minimal variability and high analyzability. The tasks are completed in sequential order and the process is repetitive throughout the work day (Jones, 2010). Video game production companies are very popular with both older and younger generations. This company is similar to the coffee shop in that its products are mass produced and distributed throughout the various retails shops. The manufacturing of the products are routine and an assembly line styled machines are able to produce rapid products. The hierarchy is tall and the span of control is wide. The decision making is centralized in this mechanistic structure. The task variability is low and the task analyzability is high. This organizations long linked technology follows sequential tasks throughout the production process as the activities of one workers tasks directly impacts another workers (Jones, 2010). The last company to be analyzed is the solar technology company. This organizations structure is organic with a flat hierarchy. The span of control for managers and supervisors is narrow amongst the workers. With a continuous processing technical complexity, there is little variation to the tasks to be completed and efficiency is enhanced. With this processing the tasks are completely automated and mechanized. This organization has a high variability and a low analyzability. Technology is intensive and relies on reciprocal task interdependence, meaning that the work in one department is inseparable from another department. This causes the tasks to be impossible to program.

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Technology has been a constant influence on organizations for hundreds of years. Without the advancement of technology in our society, many of the goods and services that we are able to receive and purchase would not be available. Businesses, both large and small, are finding innovative ways to utilize technology to increase the efficiency of organizations and to make them more knowledgeable, efficient, and profitable (Kiernan, 1995). The technology that is adapted can range from the simple to the extreme, depending on the needs of the company and the outcomes that they desire. Through the various theories of technology in the workplace, we are able to understand how technology can increase the bottom line of an organization, as well as determine the various levels of technology that would be consistent in different organizations.

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References Business Mate. (2009, November 25). Mechanic Vs. Organic Organizational Structure. Retrieved from Business Mate: http://www.businessmate.org/Article.php?ArtikelId=44 Dillingham, B. (n.d.). Organization Technology LLC. Retrieved from Organization Technology: http://www.organizationtechnology.com/organizationtechnology.com/Welcome.html Jones, G. (2010). Organizational theory, design, and change (6th ed.). Upple Saddle River : Prentice Hall. Kiernan, V. M. (1995). The Impact of Technology on Organizational Transformations. Retrieved from Mindsrping: http://www.mindspring.com/~kiernan/mgt6107.html#Impact Smith, A. (2011). Life Insurance Organization Structure. Retrieved from Ehow: http://www.ehow.com/about_6637545_life-insurance-organization-structure.html Technology Typology . (n.d.). Joan Woodward's Model. Retrieved from Technology Typology: http://www.provenmodels.com/39/technology-typology/woodward Technology Typology. (n.d.). Charles Perrow's Model. Retrieved from Technology Typology: http://www.provenmodels.com/41/technology-typology/charles-b.-perrow Technology Typology. (n.d.). James D. Thompson's Theory. Retrieved from Technology Typology: http://www.provenmodels.com/40/technology-typology/thompson