Organizational Theory and Design

CORE ORGANIZATION SERVICE TECHNOLOGY

There are completely different features for the manufacturing and for the service technologies. Service technologies differs from manufacturing technologies because they have completely different features, and so they require a different organization design.

The fundamental features of the service technology are:

• Service technologies are different from manufacturing technologies and require different organizational design - education, banking
• Intangible output, so service firms tend to be customized, that is providing exactly the level of service required by the customer (no stocks of services and no stock has to be managed)
• Simultaneous production and consumption
• Labour and knowledge intensive
• Direct interaction between customer and employee (customer interaction is considered to be high)
• Importance of human element because of the feature of the service

ORGANIZATION THEORY AND DESIGN | Martina Marazzi

because of the feature of the production and delivery of the serviceQuality of service cannot be directly measured (just perceived and difficult to measure)Service and manufacturing technologies are very different, but they are supposed to coexist inside the same organization, therefore a huge investment in coordination is required.It is very important not to think at the lean philosophy applied only to manufacturing production, but also on services, so it is possible to think at lean services organizations.This is possible because the customers' expectations are rising and the quality of the services is growing, so we need to deal with super exigent types of customers' expectations have required that service firms must become lean too. And this is useful because the service factory has to cut waste and to improve the customer service, so they are supposed to have similar orientation in delivering the service.This is the reason why also the lean services factory isinvited to adopt the Kaizen, so a continuous improvement approach. The structural characteristic of the service organization compared to the features of the service organizations are: In terms of boundary roles (which are the organizational tools implemented by the organization to face the negative uncertainty applied to the environment), in the service firms we are supposed to have few separate boundary roles, while we are aware of the fact that there are many in manufacturing companies. This is because a service is intangible and cannot be passed along by boundary spanners). Geographical dispersion is fundamental because the service is supposed to be delivered closed to the customer (customer is supposed to interact with the person that is responsible for the delivery of the service). Decision making is decentralized in the sense that there are some standard procedures, and we can also see that formalization exists, but it is low, but the service provider is supposed to act with responsibility and.

autonomy to meet the need of the customer. In terms of human resources, the set of skills of employee is higher than the manufacturing service because the interaction with the customer is fundamental and there is an emphasis on the interpersonal skills which are much more important than the technical.

This is a list of the principal features of the service organization:

• Service organizations are not necessarily large - Often small locations, close to customers
• Service organizations require technical core employees - close to customer
• Service customers interact directly with technical employees
• The skills of technical employees need to be high - Employees need knowledge, awareness, and interpersonal skills
• Decision making is often decentralized

NON-CORE DEPARTMENTAL TECHNOLOGY

Up to now we have analysed service and manufacturing technologies, but until now we have analysed the technologies applied to

The organization conceived as a system, but we are aware of the fact that a system is composed of many organizational units. Now we need to shift our attention and to understand what happens in terms of technology in each organizational unit and we know that each organizational unit has some specificities.

Every department in an organization has its own production process and we analyze the technology of each organizational unit relying on 2 different dimensions:

Variety: frequency of unexpected and novel events that can interrupt the routine execution of tasks:

• It is high when the workers are supposed to work unrelated problems (e.g. emergency room inside a hospital)
• It is low when human resources are supposed to repeat a single act (e.g. assembly line)

Analyzability: ability to apply standard procedures:

• It is high when the work is mechanical, when the tasks and procedures are extremely codified and formalized
• It is low when the work requires a certain level of intuition

decisionmaking and judgement

So, while variety analyses the number of exceptions that occur in the production or the number of new events that can occur, analysability refers to the possibility of applying standard, codified procedures.

If we cross these 2 dimensions the result is a framework with 4 quadrants where we can find these 4 types of departmental technologies that have their own specific features:

Routine Technologies (tasks are supposed to be formalized, so the number of exceptions is extremely low, and the organization of the departments relies on objective and standard procedures)

Nonroutine Technologies (most difficult type of technology that can be met: it is not possible to have a high number of procedures that can be followed and there is a high number of exceptions)

Engineering Technologies (many tasks can be managed through codified procedures, but some problems can't be solved with use of existing formulas so human resources are required to use skills to)

Craft Technologies

42ORGANIZATION THEORY AND DESIGN | Martina Marazzi

(human resources are required to work with creativity)

The studies of the technolgy applied to departments were formalized by Charles Perrow.

In terms of department design, according to the type o of technology that we find in each department we can say that the overall design can be either organic or mechanistic, so the design characteristics vary depending on the expression of the structural dimension.

Once we have analysed the feature of the technology, we can define the appropriate structural dimension in terms of:

• Formalization
• Decentralization
• Employee skill level
• Span of control
• Communication and coordination

This is the framework we can use to understand the relationship between the department technolgoy and the management characteristics: we need to work on the alignment of the features of the technology with the features of the 43ORGANIZATION THEORY AND DESIGN | Martina

parallel). On the right side we can see the different types of interdependence that exist between departments. Low interdependence implies that departments can work independently, without relying heavily on each other. This type of interdependence allows for more flexibility and autonomy within departments. Managers can focus on optimizing the performance of their own department without being heavily influenced by other departments. High interdependence, on the other hand, means that departments heavily rely on each other for resources and materials. This type of interdependence requires close coordination and collaboration between departments. Managers need to ensure effective communication and cooperation among departments to ensure smooth workflow and avoid bottlenecks. Managing interdependence requires a balance between autonomy and collaboration. Managers need to identify the level of interdependence between departments and implement appropriate strategies to optimize workflow. This may include establishing clear communication channels, setting up cross-functional teams, and implementing systems for sharing resources and information. In conclusion, interdependence among departments is a crucial aspect of organizational workflow. Understanding and managing interdependence is essential for ensuring efficient and effective operations within the organization.reciprocal). Related to each form of interdependence we can identify different demands in terms of horizontal communication (so for each form of interdependence, as a manager, we are invited to analyze and apply different types of horizontal communication tools). Once we have analyzed the level of horizontal communication, we can define internally the type of coordination required. This means that there is a close relationship between the form of interdependence between the different organizational units composing the system. According to the form of interdependence, we can identify different levels of horizontal communication. Once we have identified the needs in terms of communication, we can implement different types of coordination tools. When the communication needed is low, we can see (and we already know) that standardization is more than enough. Formalization works, rules are important, as well as the importance of fixed procedures. Here, as a consequence of the high formalization andthe low communication needed, the priority for locating units close together is extremely low. Things change in the case of sequential interdependence: here the level of interdependence is growing and the demand for horizontal communication, so we need a medium level of communication; in this case we need to have plans, schedules, feedbacks and task forces are very useful for this type of coordination; in this situation the priority for locating units close together is growing, so we need to put these organizational units closer since the level of communication needed is rising. In case of reciprocal interdependence there is a high level of communication needed, and the coordination applies with mutual adjustments, relational coordination and teamwork; here formalization doesn't help because the level of communication required is extremely high; in this case there is a high need of locating units close together. So, at the end we

need to remember that, according to the level of interdependence between the different organizational units we can define the level of communication needed, and once we are aware of it we can define the right organizational tool to implement the right level of coordination required.

STRUCTURAL PRIORITY AND IMPLICATIONS

Organizations should be designed to address the different types of interdependence, so inside the same organization we can find different levels of interdependence between different organizational units and according to the level of interdependence, the organization must define the right organizational structure.

The fundamental rule is that reciprocal interdependence should receive