Day 3 Information Technology€¦ · Day 3 Information Technology: The Design of Organizations and ... Course name Organizational Design Variables ... affecting sales and

Professor Duane Truex III

Day 3 Information Technology:

The Design of Organizations and The Design of Work

Professor Truex Course name

The Information Systems Strategy Triangle

Business Strategy

Organizational Design Strategy

Information Strategy

What is the impact of the redesign on work and organizational stakeholders?

How may organizations be redesigned?


•  Consequences of the information processing view of the firm

•  Review traditional organizational designs •  Understand how IS allows organizational design

change •  Consider some alternative structures •  Examine the impact of IS work and on the way work

is done –  Explore:

•  the changing nature or work, •  IT’s impact on different types of workers and •  the rise of new work environments.

Today’s Learning Objectives

Galbraith’s Information Processing View of the Firm

( “Organizational Design: An information Processing View” by J.R. Galbraith, Interfaces v4 1974, pp. 28-36.)

•  "the greater the uncertainty of the task, the greater the amount of information that must be processed between decision makers during the execution of the task to get a given level of performance".

•  Firms can reduce uncertainty through better planning and coordination, often by rules, hierarchy, or goals.

–  "the critical limiting factor … is the ability to handle the non-routine events that cannot be anticipated or planned for".

–  When the "exceptions" become too prevalent, they overwhelm the hierarchy's ability to process them.


Design Strategies: Information Processing View of the Firm

•  Variations in organization design arise from strategies increasing planning ability and reduce the number of exceptional events. –  defines a continuity of organizational to reduce uncertainty:

1.  Creation of Slack Resources. These include extending delivery times, adding more money to the budget, and building inventory (all which have inherent costs). If a firm fails to actively create a higher level strategy to address uncertainty, this strategy will occur by default.

2.  Creation of Self-Contained Tasks. One strategy at this level is changing from functional to product groups. 3.  Investment in Vertical Integration Systems. Condensing the flow of information by building specialized

languages and computer systems can help analysis and decision making. 4.  Creation of Lateral Relationships. Moving the decision making power down in the firm to where the

information exists can reduce uncertainty at the decision level.

–  There are various strategies of increasing complexity to achieve this: 1.  Direct contact between managers across groups 2.  Liaison personnel between groups. 3.  Task Forces 4.  Teams 5.  Cross-group Managers (project managers, program managers, etc.) 6.  Linked Managers (with power over some cross-group resources) 7.  Matrix Organization

•  Strategies come at a cost in more "organizational investment" and administrative costs.



Organizational Design Variables What factors govern organizational design?

•  Business processes: the set of ordered tasks needed to complete key objectives of the business

•  Formal reporting relationships: the structure set up to ensure coordination among all units within the organization.

•  Informal networks: mechanism, such as ad hoc groups, which work to coordinate and transfer information outside formal reporting relationships.

•  Decision rights: authority to initiate, approve, implement and control various types of decisions necessary to plan and run the business.


Organizational Design Control and Cultural Variables

•  Planning: the processes by which future direction is established, communicated and implemented.

•  Performance measurement and evaluation: the set of measures that are used to assess success in the execution of plans and the processes by which such measures are used to improve the quality of work.

•  Incentives: the monetary and non-monetary devices used to motivate behavior within an organization

•  Values: the set of implicit and explicit beliefs that underlie decisions made and actions taken.

•  Data: the information collected, stored and used by the organization


INFORMATION TECHNOLOGY AND ORGANIZATIONAL

DESIGN

Traditional forms and new organizational designs


Flat Organizational Structure

Hierarchical Organizational Structure

Region Industry

Region 1 Region 2 Region 3

Ind. 1 Position for Ind. 1 in region 1

Pos. for Ind.1 in region 2


Ind. 2 Pos. for Ind.2 in region 1



Ind. 3 Pos. for Ind.3 in region 1



Matrix Organizational Structure

Hierarchical, flat and matrix organizational structures


In traditional hierarchical organizations

•  Managers must understand standard operating procedures for the org’s primary activities

•  Complexity is handled through organization or divisions and subdivisions and then individual jobs –  Complexity of the environment mimicked in the org. chart

(Ashby, 1956) –  Orgs s “assembly lines for decisions” (Toffler, 1985)

•  Control systems are in place to see work is done on time, properly and on budget.


Three roles IS plays in management control processes

1. IS enables the collection of information that may not be collectable other ways.

2. IS speeds the flow of information from where it is generated to where it is needed.

3. IS facilitates the analysis of information in ways that may not be possible otherwise.


New IT-enabled Organizational Forms

•  The “networked” organization –  Instead of rigid hierarchies, all parts of the

company are connected by formal and informal communications.

•  The “T-form” organization – Flattening by use of IT –  IT actually does the work formerly done by

people


The networked organization

United States

Brazil

Morocco Mexico

France


T-Form Organization

•  In the T-form organization, technology, especially the Internet plays an extensive role –  Structurally, it “feels” flat –  There is “unfettered access” to information –  Individuals use electronic means to communicate –  Work is often coordinated automatically –  Business processes are designed differently –  T-form org. networks have links to suppliers –  T-form orgs. may connect to customers electronically


Virtual Organizations •  IT has made it possible for an individual to work for an

organization and live anywhere •  Virtual organization structure is “networked”.

–  Extensive collaboration takes place electronically, esp. e-mail •  Managers in a virtual environment monitor results, not

progress •  Forms are electronic, tech. support through a web

interface •  Business processes are also usually through the Web


Virtual Organization vs. the Virtual Corporation

•  Virtual organization refers to the extensive use of IS and electronic links to create an extremely flexible organization

•  Virtual corporation refers to a business

strategy for allying complementary businesses and allowing them to respond to customers as a single entity (also made possible through the extensive use of IS).


Achieving the ‘zero-time’ organization •  Instant value alignment: understanding the customer so well that the company

anticipates and is therefore ready to provide exactly what the customer wants

•  Instant learning: building learning directly into the company’s tasks and processes and making sure the requisite information is readily at hand when it is needed.

•  Instant involvement: using IS to communicate all relevant information to suppliers, customers, and employees. Making sure everyone is prepared to deliver their products, services or information instantly.

•  Instant adaptation: create a culture and structure enabling all workers to act instantly and to make decisions to respond to customers.

•  Instant execution: building business processes so that they have as few people involved as possible (no touch), electronically cross organizational boundaries and reduce cycle times so that processes appear to execute instantly.


HOW INFORMATION TECHNOLOGY IS CHANGING

THE NATURE OF WORK


New Ways to do Traditional Work

–  IT changes workers’ communication patterns –  Workers using mobile devices can send and receive

message and tap into databases, affecting sales and service tasks.

–  The cost and time needed to access information is dramatically lower, giving workers new tools.

–  Work has become much more team oriented an effect amplified by the Internet.

Q: Is info technology any different than any other technology change? E.g., the steam engine, telephone, radio, automated loom etc.

• How does IT change workers’ day-to-day tasks?


Creating New Types of Work

– knowledge managers, – systems analysts, – database and network administrators, – webmasters and web site designers.

•  IS/IT use has created many new types of jobs.

Can you identify other examples?


What does this mean for managers?

•  Sans co-location: How to manage a work force that is no longer in a single location.

•  Distributed outputs: Work is also more team oriented, making it more difficult to assess individual contributions.

•  Who/what supervises: –  electronic employee monitoring systems, automates the

supervisory process, –  may also hurt morale and undermine attempts to encourage

overall contributions to the organization.


Changes in employee supervision and evaluation

Traditional Approach

Personal. Manager usually present or relies on others to ensure employees are present and productive

Focus is on process through direct observation. Manager sees how employee performed at work. Subjective (personal) factors are very important.

Newer Approach

Electronic, or assessed by deliverable. As long as the employee is producing value, he does not need formal supervision.

Focus on output or target. As long as these are achieved, performance considered adequate. Subjective factors less important, harder to gage.

Supervision Evaluation


Work Has created millions of new jobs, some in entirely new industries. Commodification of some work has allowed for outsourcing. Working More work is team-oriented, enabled by communications Arrangements and collaboration technologies. Geographic constraints of some professions are eliminated, enabling telecommuting. Human New strategies are need to supervise, evaluate Resources and compensate remotely performed, team-oriented work. IT requires new skills workers often lack.

Summary of IT’s effects on employee life


IT and WHERE WORK IS BEING DONE


Telecommuting •  Telecommuting is purported to:

–  Lower corporate overhead since workers who are at home don’t take up office space lowering facilities costs

–  Give increased flexibility are more productive and express higher levels of job satisfaction

•  2/3’s of Cisco employees occasionally work from home. The policy has saved the company $1M in expenses, while workers prefer to set their own schedules and work in more comfortable surroundings.

Other impacts?

Might it allow the further ‘commodification’ and ‘temping’ of the work force?


ICT and driving factors on work

Shift to knowledge-based work Eliminates requirement that certain work be performed in a specific place.

New technologies Make remotely performed work practical and cost-effective.

Changing demographics and lifestyle preferences

Provides workers with geographic and time-shifting flexibility.

Driver Effect


Advantages and disadvantages of tele-sourced work

Reduced stress, heightened morale and lower absenteeism

Harder to evaluate performance

Geographic flexibility Employee may become disconnected from company culture

Higher personal productivity Telecommuters are more easily replaced by electronic immigrants

Housebound individuals can join the workforce

High level of self-discipline required

Employee Advantages Potential Problems


THE PRODUCTIVITY PARADOX

Q: Does IS/IT Investment Improve Worker Productivity?


Wrap Up •  IT changes work.

–  (Always has always will. Marx gets a big “I told you so.”)

•  The less skilled and less educated pay the biggest price

•  Virtualization and networks allow for more distributed work and place demands for collaborative information systems, organizational structures and the adjustment of business models


Study questions

•  Who benefits from technology change? •  Who loses? •  What is suggested for work design by the

increasing trend to anywhere, anytime computing?

Day 3 Information Technology€¦ · Day 3 Information Technology: The Design of Organizations and ... Course name Organizational Design Variables ... affecting sales and

Documents