Organization theory and design: Lecture 15

Organizational Level Service
Technologies
• Changing focus from production to service

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Differences Between Service &
Manufacturing Technologies
Manufacturing

Service

Tangible product

Intangible

Inventory

No inventory

Capital asset intense

Lab/Knowledge intense

Little direct customer
involvement

Much more

HR less important

Most important

Quality measured directly

Perceived

Long response time

Short

Site mod important

Site extremely important
2


Differences Between Service &
Manufacturing Technologies
Examples:
• SERVICE: airlines, hotels, consultants,
health care, law firms
• PRODUCT & SERVICE: fast-food
outlets, cosmetics, real estate,
stockbrokers, retail stores
• PRODUCT: soft drink companies, steel
companies, automobiles, mining, food
processing plants

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Designing Service Organizations
Structure
Boundary
spanners

Service
Few

Product
Many

Decision making Decentralized Centralized
Formalization

Lower

Higher

Employee skills

High

Lower

Skill emphasis

Inter personal Technical

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Departmental Technology
• Departments often have characteristics
similar to service technology, providing
services to other departments within the
organization.
• Each department has its production
process that consists of a distinct
technology
• Framework used on the understanding of
departmental technologies was developed
by Charles Perrow.
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Framework
Uses Two Elements:
1. Variety:
–

1.

Task variety, frequency of unexpected and novel events that
occur in the conversion process, if they are high Variety is
high

Analyzability:
–

–
–
–

When the process is analyzable, the work can be reduced to
mechanical steps and participants can follow a set pattern to
solve problems.
The reference for solutions is SOPs, manuals, text books, etc.
Not so if the problem has low analyzability
Here the reference for solution is much less explicit and lies in
implicit or tacit transfer of knowledge which is built through
accumulated experiences.
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Framework
VARIETY
•
To what extent would you say your work is routine?
•
Do most of the times people solve the problem/issue
the same way?
•
Are members performing repetitive activities in doing
their jobs?
ANALYZABILITY
•
To what extent is there a clearly known way to do the
major types of work you normally encounter?
•

To what extent is there an understandable sequence of
steps that can be followed in doing your work?
•
To do your work, to what can you actually rely on
established procedures and practices?
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