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Indian Institute of Management, Ahmedabad

Organization Design, Competences and Technology


What is Technology: Combination of skills, knowledge, abilities, techniques that
people use to convert or change raw materials into valuable goods and services.

Technology exists in an organization at three levels:-

a) Individual level: Technology is the personal skills, knowledge and abilities at


this level

b) Functional or departmental level: Procedures and techniques that groups work


out to perform their work constitute technology.

c) Organizational level: Way an organization converts inputs into outputs (ex –


mass production or craftwork)

Technology and Organizational effectiveness

Technology is present at basically all the following 3 functionally separate levels


of an organization:-

a) Input level: Skills, procedures, techniques that all organization use to handle
relationship with outside world comprise of technology at input level.

b) Conversion stage: Technology of machines, techniques and work procedures


that transform inputs to outputs comprise of technology at conversion stage

c) Output size: Technology that allows the organization to sell their


product/services to the external stakeholders

Next we discuss the three major theories which connect the type of technology
used in an organization to the optimal organizational design and structure
suitable to that type of technology.

Technical Complexity: Theory of Joan Woodward

Programmed Technology: Technology in which process for converting inputs into


outputs can be specified in advance so that the work can be standardized and
work process can be made predictable.

Technical complexity: A measure of extent to which a production process can be


programmed so that it can be controlled and made predictable.

According to Joan Woodward, technical complexity of a production process is an


important factor in determining organization structure. Higher technical
complexity implies that the conversion process is programmed in advance and
process is automated. Lower technical complexity implies that the conversion
process depends upon people and their skills and not on machines

John Woodward segregated technical complexity into 3 categories:-

a) Small Batch and Unit technology


• Produces wide range of customized products for individual customers
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• Technology is expensive to operate as work process is unpredictable and


product is customized

b) Large batch and Mass production technology


• Increased level of complexity for higher efficiency

• Standardized products at lower costs are produced here

• Tasks are programmable and hence the work is controllable and provides
for the organization to save production costs.

c) Continuous process technology


• Highest form of complexity, employee involvement is very low and there is
higher use of machinery

• Tasks are highly programmable and production is continuous with little


variation in output and rarely stopping

Woodward claimed that as the technology becomes complex, the


organization structure becomes taller and more hierarchy is introduced.
With lower complexity, conversion depends upon people and their coordination
and hence organization is relatively flat. For mass production technology the
influence of first line of supervisor is increased and the hierarchy structure
becomes taller. For continuous technology, it is very important to monitor and
control and hence it has the tallest hierarchy.

Routine tasks and Complex Tasks: Theory of Charles Perrow

Difference between routine and non-routine/complex tasks is basically the


difference between the task variability and task analyzability

Task Variability: It is a measure of number of exceptions, new or unexpected,


that a person encounters while performing a task. It is low when the task is
highly standardized or repetitious.

Task Analyzability: Degree to which search activity is needed to solve a problem.


More analyzable a task, more routine it is as the procedure for completing it
have been worked out or programmed in advanced.

Based on task variability and task analyzability, technology can be divided into
four different categories each with a specific organization structure:-

a) Routine Manufacturing: It has low task variability and high task analyzability.
Examples: Mass production. Mass production is representative of routine
technology. In mass production settings, tasks are broken down into simpler
steps and there are standard procedures to follow in case of exception

b) Craftwork: It has low task variability and low task analyzability. Here the
procedure is not standardized and there are no standard procedures in case of
exceptions

c) Engineering production: It has high task variability and high task analyzability.
Here number of exception that worker may find is high but solution is easy.
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d) Non-routine research: It has high task variability and low task analyzability.
Examples- research, teaching in class etc.

This theory suggests that an organization should move from a mechanistic


to an organic structure as tasks become complex and less routine. As
the tasks can be standardized with routine technology, organization
hierarchy is tall and decision making is centralized. In case of non-routine
technology, organizations needs to keep a flat structure in order that employees
can respond to changes faster.

Task Interdependence: Theory of James D. Thompson

Task interdependence: Manner in which organization tasks are related to one


another.

James indentified 3 sets of technology each with a different form of task


interdependence:-

a) Mediating technology

• Technology characterized by a work process in which input, conversion


and output activities are performed independently of one another.

• Here it is easier to monitor, control and evaluate performance of individual

b) Long linked technology and sequential interdependence


• Technology characterized by work process in which input conversion and
output activities must be performed in series

• High coordination required. Sometimes to reduce the level of coordination


the organization employs slack resources (i.e. extra/surplus resources)

c) Intensive technology and reciprocal interdependence


• Technology characterized by work process in which input, conversion and
outputs are inseparable.

• Example – hospitals, soccer game etc.

As tasks become more and more interdependent, they become lesser and lesser
routine and less programmable.

From Mass production to Advanced Manufacturing Technology (AMT)

Traditional Mass Production is based on dedicated machines (machines that can


perform only one operation at a time), use of fixed workers and large stock of
inventory. AMT – is innovation in technology that changes the work process of
traditional mass production organizations.

AMT: Innovation in Material Technology

Companies can reduce costs and production time with the help of following
technologies
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a) Computer Aided Design (CAD)


• Advanced manufacturing techniques that greatly simplifies design process

• Can bring benefits of small batch & customized manufacturing to the large
batch manufacturing organizations

b) Computer Aided Material Management


• Advanced manufacturing techniques that is used to manage the flow raw
materials and components parts into the conversion process in order to
reduce time and efficiency.

• Increases the task interdependencies and coordination required

c) Just-in-time inventory systems


• A system that requires inputs and components needed for production to
be delivered to the conversion process just as they are needed, so that
inventories are at a minimum

• Increases task interdependence and bring flexibility to the manufacturing


process

• Also increases the technical complexity of the process

d) Flexible manufacturing technology and Computer integrated manufacturing


• Technology that allows the production of many kinds of components at
little of no extra cost on the same machine

• Each machine is flexible to perform multiple operations