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SDC Swiss-AIT-Vietnam Management Development Programme

c/o HCMC University of Technology, 268 Ly Thuong Kiet, Dist.10, Ho Chi Minh City, Vietnam Tel: (84-8) 865 08 80 Fax: (84-8) 865 08 81 E-mail: [email protected] /

[email protected]

Organizational Behavior and StructureFaculty: Dr. Arno Schircks

Session #9 and assignment for session #10

Session #9:• Review session #8: Chap. 11 “Power and Politics” and chap. 12

“Conflict, Negotiation and Intergroup Behavior”• New: Chap. 13 “Foundations of Organization Structure”

Assignment for session #10:• Prepare:

Individually• Read chapter 13• True/False• Multiple Choice Questions• Read Chap. 14 “Work Design”• For increasing your chance to get a good Final Exam grade

check your understanding in your LEARNING TEAM !

Each colour team• Case study: ‘International Equity Claims Department Work Design’• Please, prepare a presentation with powerpoint (beamer), installed and

ready before session #10 starts.

S A V

mailto:[email protected]

Organizational Behavior and Structure – session #9\Handouts

BASIC DEFINITION OF ORGANIZATION

ORGANIZATION

IS

A COLLECTION OF

• PEOPLE WORKING TOGETHER

• IN A DIVISION OF LABOR

• USING ALLOCATED RESOURCES

• IN AN EFFECTIVE AND EFFICFENT WAY

• TO ACHIEVE A COMMON GOAL.

Chap.13: “Foundations of Organization Structure” 2


KEY DIMENSIONS OF

AN ORGANIZATION STRUCTURE

1. The allocation of tasks and responsibilities, providing appropriate discretion

over methods and use of resources.

2. The designation of formal- reporting relationships, determining spans of

control of managers and supervisors.

3. The grouping of individuals into sections and departments , and the grouping

of departments into divisions or other major units.

4. The delegation of authority with associated procedures for performance

monitoring and evaluation, which may either be regular or may operate by

exception.

5. The design of communication and coordinating systems to provide

information and participation in decision-making.

6. The provision of reward systems, to motivate' individuals.

7. The establishment of decision-support system such as regular management

meetings, project teams and specialists posts or departments.

Source: C. Camall (I 990, 56)



WHY IS ORGANIZING IMPORTANT?

1. Clarity of individual performance expectations and specialized tasks.

2. Division of work, avoiding duplication, conflict, and misuse of resources, both

material and human.

3. A logical flow of work activities that can be comfortably performed by individuals

or groups.

4. Established channels of communications that enhance decision making and

control.

5. Coordinating mechanisms that ensure harmony among organization members

often engaged in diversified activities.

6. Focused efforts that relate to objectives in a logical and efficient manner.

7. Appropriate authority structures with accountability to enhance planning and

monitoring throughout the organizational hierarchy.


Effective organization of both human and material, -resources ultimately increases productivity.


GENERAL OBJECTIVES OF AN ORGANIZATION

EFFECTIVE Generating the postulated or requested benefits (fulfillment of agreed

mission).

EFFICIENT Producing the results with a minimum of outlay (productivity).

FLEXIBLE Capable of adapting promptly to internal a-id external changes.

TRANSPARENT Working, with clear and understandable structures and processes.

MOTIVATING Deploying employees in accordance with their capabilities and

personal desires, given them meaningful jobs and encouraging them to

give good performance and positive cooperation



PROBLEMS RESULTING FROM

INAPPROPRIATE ORGANIZATION

1. Low motivation and low morale of employees.

2. Delayed or poor decisions.

3. Conflict between departments.

4. Rising costs.

5. A tendency to stick to the rules and regulations, whether or not appropriate

action will follow.

6. Lack of capacity to adapt to changing circumstances.

Source: C. Camall (1990:36)



ORGANIZATION COMPONENTS

1. COMPLEXITY

e.g.: multinational corporations:

geography, product, division…

the extent of differentiation within organization,

including e.g.: multi-national the degree of

specialization or corporations: geography, division

of labor, number of levels, or geographic division

setup.

2. FORMALIZATION

e.g.: bank, insurance company.

the degree to which organization relies on rules

and procedures to direct the behavior/ activities of

employees.

3. CENTRALIZATION

e.g.: government

Where the focus of decision making authority lies:

centralized (upward) or decentralized (downward).



ATTRIBUTES OF ORGANIZATION (1)

1. FORMAL STRUCTURES:

- Defines the basic division of labor. within the organization and identifies the

number of management levels in the hierarchy of authority.

- Are typically represented on an organization chart.

2. VERTICAL SPECIALIZATION:

- Is the hierarchical division of labor that specifies where formal authority is

located for various decisions.

- Chain of command exists to link lower-level workers with senior managers.

- Span-of-control is the number of persons reporting directly to one

supervisor.

- Line units and personnel conduct the major business of the organization;

staff units and personnel assist the line units by providing specialized

expertise and services.

- Managerial techniques (e. g. decision support and expert computer

systems) are used in order to reduce staff and increase operating

efficiency.

3. CONTROL:

- Is the set of mechanisms used to keep action and Outputs within

predetermined limits. It deals with:

- setting standards



ATTRIBUTES OF ORGANIZATION (2)

- measuring results versus standards

- and instituting corrective action

- Formalization refers to the written documentation of rules, procedures and

policies to guide behavior and decision-making.

- Standardization involves the creation of guidelines so that similar work

activities are repeatedly performed in a similar fashion.

- In highly centralized organizations, control is concentrated-at the top; in

more decentralized one, control is dispersed among workers at all levels.

4. HORIZONTAL SPECIALIZATION:

Is the division of labour that results is various work units or groups in the organization;

often is referred to as the process of departmentalization, by:

- function

- division

- matrix

5. COORDINATION:

- Is a means through which the behavior of multiple sub-groups in an

organization is linked together.

- Like the control process, coordination can be accomplished by a variety of

personal (common values, committees, task forces) and impersonal means

(written rules, policies, procedures; i\41S)



Chap.13: “Foundations of Organization Structure”

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Computer HW

Division


INTEGRATING MECHANISMS

A. Liaison Roles

B. Task Force or Team

C. Integrating Roles or Department

Chap.13: “Foundations of Organization Structure”

Research & Development

MarketingProduction

Sales

Production

Production

Research & Development

MarketingEngineering

Task Force

Integrating Role or Dept.

Computer SW

Division

Application Division

11


FORMS OF ORGANIIZATION

Customer-orientation by customer groups, industries,

markets, etc.

Result-oriented by products (production sites) and

services.

Functional orientation by main functions, i.e.,

research and development (R&D),

production, finance, marketing,

human resource, etc.

Geographical orientation by countries, regions. continent,

economic areas, etc.



THE DILEMMAS OF ORGANIZATION

1. Centralization VS. Decentralization

2. Efficiency VS. Effectiveness

3. Professional VS. Management

4. Control VS. Commitment

5. Change VS. Stability

6. Short-term VS. Long-term

etc.



ORGANIZATION COMPONENTS

4. COMPLEXITY

e.g.: multinational corporations:

geography, product, division…

the extent of differentiation within organization,

including ea.: multi-national the degree of

specialization or corporations: geography, division

of labor, number of levels, or geographic division

setup.

5. FORMALIZATION

e.g.: bank, insurance company.

the degree to which organization relies on rules

and procedures to direct the behavior/ activities of

employees.

6. CENTRALIZATION

e.g.: government

Where the focus of decision making authority lies:

centralized (upward) or decentralized (downward).



RELATIONSHIP BETWEEN TECHNICAL COMPLEXITY

AND STRUCTURAL CHARACTERISTICS

Structural Characteristics

TechnologyUnit

production (1)

Mass production

(2)

Continuous process (3)

• Number of management level

• Supervisor span of control

• Direct/indirect labor ratio

• Manager/total personnel ratio

• Workers' skill level

• Formalized procedures

• Centralization

• Amount of verbal

communication

• Amount of written

communication

• Overall structure

• 3

• 23

• 9:1

• Low

• High

• Low

• Low

• High

•

• Low

•

• Organic

• 4

• 48

• 4:1

• Medium

• Low

• High

• High

• Low

•

• High

•

• Mechanistic

• 6

• 15

• 1:1

• High

• High

• Low

• Low

• High

•

• Low

•

• Organic

Note: 0) relies heavily on human operator, e.g., custom electronic equipment and

custom clothing.

(2) long production runs of standardized parts, e.g., automobiles assembly

lines.

(3) the entire process is mechanized, e.g., oil refineries, nuclear power

plants

Source: Joan Woodward 0965)



LINE/STAFF FUNCTIONS

INTERNAL EXTERNAL

LIN

E U

NIT

Se.g.: PRODUTION

Transforming raw

material and information

into products and/or

services

e.g.: MARKETING

Linking clients and/or

suppliers to the

organization

ST

AF

F U

NIT

S

e.g.: ACCOUNTING

Assisting line units in the

technical areas of

budgeting and fiscal

control

e.g.: PUBLIC-RELATION

Linking the organization

to its environment

through the conveyance

of a positive public

image



LINE/STAFF FUNCTIONS

Exp: Manufacturing enterprise

Line Staff

Mission/Responsibility

Business objectives

accomplishment

Support and assistance to

line in achieving set

objectives

Function

- Development

- Manufacturing

- Marketing &services

Other functions:

- Finance &planning

- Personnel &

communication

- Business support, etc.

Activity

Perform/manage product

revenue & profit

generating activities

- Advice, prepare

guidance, control

- Planning

- Service

Authority Hierarchical power Authority of ‘ Knowledge’

Decision process

Decide, supervise &

implement decision

Plan, propose, concur,

assess, criticize, follow-up



STAFF UNITS IN FORMAL STRUCTURE

An organization with minimal staff

An organization with many staff at the top

An organization with many staff at the middle

CHARACTER- Centralized - Decentralized

ADVANTAGES:- Reinforces the expertise &

managerial scope of the top- Expands top management

capabilities

- Expands action capacity of middle management

- Promotes independence/self management

DISADVANTAGES: - Heavy overhead at headquarter- Bureaucratic- “Empire building” syndrome

- Policy/strategy integrity- Coordination/control/synergy- “Run away” syndrome



CENTRALIZATION VS. DECENTRALIZATION (1)

• TREND

⇒ Centralize key issues such as finance, business development, acquisition,

corporate strategy, and management development (decline period).

⇒ Decentralize operational / profit accountability to the unit (growth period).

• CENTRALIZATION:

1. Coordination is more straight forward.

2. Senior management has a broader perspective on developments within the

organization and maintains conformity with established policies.

3. Centralization of control and procedures provides a way of assisting the various

functional areas in the organization to maintain an appropriate balance.

4. Centralization can allow rationalization of managerial overheads by avoiding

duplication of activities or resources.

5. Top managers are seen to have proved themselves by the time they reach a

senior position.

6. Crises often require strong leadership to cope with external and internal

pressures.

• DECENTRALIZATION:

1. Delegation can reduce the amount of stress and overload experienced by senior

management, especially when operating in large-scale, complex organizations.

2. Many believe that the motivation of employees will increase with a higher degree

of discretion and control that they can apply to their work.

3. Large or growing organizations need managers who are able to cope with

uncertainty because of the volume of complex tasks that have to be performed.

4. Delegation generally allows for greater flexibility by providing for less rigid

response to problems at the operative levels in the organization-



5. By establishing relatively independent submits within an organization, delegation

can result in improved controls and performance measurements. Accountability

can be identified.

• CRITERIA FOR CONSIDERATION:

1. The objectives, strategy and technology of the organization.

2. The ability of senior management to develop and implement a new management

structure.

3. Timing, particularly taking account of other changes in the environment or within

the organization.

4. The skills and attitudes of employees and their commitment to the organization.

5. The size of the organization, including size of divisions and/or units.

6. The geographic dispersion of the organization.

7. Time scales and decision making. Technological, safety or other reasons can

mean that some decisions must be made quickly, and locally.

8. Relevant external issues such as legislation or central government requirements.



ORGANIC Vs MECHANISTIC ORGANIZATION

Organic

Organization

Mechanistic

Organization

Hierarchy of authority Decentralized Centralized

Rules and procedures Few Many

Division of labour Loose Precise

Use of managerial

techniques

Minimal Extensive

Coordination and control Informal and

personal

Formal and

impersonal

Source: T. Burns & G. Stalker (The management of Innovation)



MECHANISTIC VS. ORGANIC

ORGANIZATIONAL CONTROL

Organization

Outcomes

Mechanistic

approach

1960s-1970s

VS.

Organic

Approaches

1980s-1990s

1. Contextual/variables

Environment Certain Uncertain

Technology Routine Nonroutine

Size Large Small

Goals Efficiency Effectiveness

Culture Employees-taken

for granted

Employee-centered

2. Internal outcomes

Structure Functional

centralized

Teams, decentralized

Control mechanism Bureaucratic Clan

Communication Formal information

system

Face-to-face

Innovation Infrequent Frequent

Interdepartment

relationships

Cooperation Conflict

Decision making Rational analysis Trial-and-error



WHEN SHOULD YOU USE IT?

1. The Simple Structure :

• the organization is small or in formative stage of development.

• the environment is simple and dynamic.

• the organization faces high hostility or a crisis.

• the senior executive is also the owner.

• the number of employees is few.

• the senior executive wants to hoard power or has power thrust upon him

by his/her subordinates.

2. The Machine Structure:

• large size organization; simple and stable environment.

• the technology contains routine work that can be standardized.

3. The Professional Structure:

• large size organization; complex and stable environment.

• routine technology internalized through professionalism.

4. The Divisional Structure:

• large size organization; simple and stable environment.

• when an organization chooses a diversification strategy (multiproduct or

multi-market organization)

• when it diversifies, conflicts along the horizontal dimensions between

functions becomes great, necessitating a change in structural design -

(size, technology, environment).

5. The Adhocracy:



• associated with strategies of diversity, chancre and/or high risk, requiring

the flexibility

• the technology is non routine and complex

• contains little formalization, relying on the expertise of professionals.

• requires high coordination and integration of specialized and

heterogeneous skills.

• the environment is dynamic and complex.



STRUCTURAL CHARACTRISTICS

Mechanistic

structure

Organic structure

Tall

organization

Flat

organization

Centralized

decision-

making

Decentralized

decision-

making

Standardizat

ion

Mutual

adjustment

Source: Jones (1995:266)


Manufacturing Sales R&D






OPERATION LEVEL

MANAGERIAL LEVEL

STRATEGIC LEVEL

Conceptual

Computer

Human

Technical

Conceptual

Computer

HumanTechnical

Conceptual

Computer

HumanTechnical

TOP MANAGEMENT

MIDDLE MANAGEMENT

FIRST-LEVEL MANAGEMENT

OPERATING EMPLOYEES

BASIC MANAGEMENT SKILLS

MANAGERS & LEVELS OF MANAGEMENT


MECHANISTIC vs. ORGANIC ORGANIZATION

Mechanistic Organic1. Tasks are broken down into

specialized, separate parts.

1. Employees contribute to the

common tasks of the department.

2. Tasks are rigidly defined. 2. Tasks are adjusted and redefined

through employee teamwork

3. There is a strict hierarchy of

authority and control, and there are

many rules.

3. There is less hierarchy of authority

and control, and there are few rules.

4. Knowledge and control of task are

centralized at the top of

organization.

4. Knowledge and control of tasks are

located anywhere in the

organization.

5. Communication is vertical 5. Communication is horizontal.

Source: Quoted in Draft (1992:83)



ORGANIZATION CONFIGURATION

CHARACTERISTIC SIMPLE STRUCTURE

MACHINE BUREAUCRACY

PROFESSIONAL BUREAUCRACY

DIVISIONAL STRUCTURE

ADHOCRACY

SPECIALIZATION Low High functional High social High functional High social

FORMALIZATION Low High Low High within

divisions

Low

CENTRALIZATION High High Low Limited

decentralization

Low

ENVIRONMENT Simple and

dynamic

Simple and

stable

Complex and

stable

Simple and

stable

Complex and

dynamic

GENERAL

STRUCTURAL

CLASSIFICATION

Organic Mechanistic Mechanistic Mechanistic Organic



THE TOP-MANAGEMENT HIERARCHY

Ownership Shareholders

Trusteeship

Executive

Committee

Board

of Directors

Salary

Committee

Chair of Board of Directors

Corporate Management Chief Exec. Officer

President

Exec. Vice Presidents

Senior Vice Presidents and Vice Presidents

Divisional Management General Manager or Divisional Managers

Functional management Functional Managers



GENERAL STRUCTURAL CLASSIFICATIONNETWORK

STRUCTURE

♦ ADVANTAGES:

- Enables highly flexible and adaptive responses to dynamic environments.

- Enhances each member organization's distinctive competence.

- Brings resources and competencies to bear on tasks that are too complex and

large for single organization to perform.

- Can produce synergistic results.

♦ DISADVANTAGES:

- Can be very difficult to manage lateral relations across organization.

- Motivating members to relinquish autonomy to join the network cart be

troublesome.

- Sustaining membership and benefit can be problematic

♦ CONTINGENCIES:

- Highly complex and uncertain environment

- All size organizations

- Complex technologies involving high interdependencies across organizations

- Goals of organization specialization and innovation

OVERVIEW OF MANAGEMENT +


Designer

Organization

Broker

Organization

Supplier

Organization

Distributor

Organization

Producer

Organization


ORGANIZATION THEORY

Closed system

(classic theory)

Open system

(contemporary theory)R

atio

nal

vis

ion 1. Scientific

management:

- Measurability

- Rationality

- General normative

rules

Authors: Weber, Taylor,

Fayol, etc.

3. Contingency approach:

- Adaptation to the external

environment (certainty and

stability)

- Adjustment to technological

and social characteristics in

internal environment

Authors: Chandler, Laurences,

Lorsch, Perrow, Galbraith,

Mintzberg.

Nat

ura

l, o

rgan

ic v

isio

n 2. Human relations:

- Visionists

- Motivation

- Expectation

Authors: Likert, Mc

Gregor, Argyris,

Selzwick

4. Organization development

+ “excellence” literature

Task structure approach

Transition management

Human resource management

Authors: Bennis, Nelsen,

Beckhardt, Peters& Waterman,

Authos & Pascale, Tichy, Grove

+ Organizational culture



MECHANISTIC/OGANIC DESIGN HYBRIDS


FINANCE

Customer Affairs

PERSONNEL

MARKETING

LEGALMARKETINGLEGAL

Legislative Liaison

Public Relations

Purchasing

FINANCE

PERSONNEL

OPERATIONS

R&D

OperationsEngineering

(often grouped by product or service)

An organic core protected by a mechanistic shell

A mechanistic core wrapped by an organic shell


COREPORATE STRUCTURES FOR GROWTH STRENGTHS AND WESKNESSES

STRENGTH WEAKNESSES

- Closed contact between CEO and operations- Simplified mechanisms for control- Clear definition of responsibilities- Opportunity for focused competencies

- Too many routine responsibilities- Neglect of strategic issues- Inability to manage diversity- Lack of coordination between functions

- Ability to concentrate on specific business- Ease of measurement of unit performance- Freedom to add or divest businesses- Scope for management to focus on strategy

- Confusion over focus of responsibility- Conflict between goals of divisions- Repetition of functions between divisions- Complexity of inter-divisional coordination

- High level of decentralization- Freedom to react to market changes- Ability to customize strategies- Accountability for each business

- Relinquishing of strategic control- Difficulty of coordinating different units- Lack of authority over financial management- Conflict between corporate and division goals

- Prevention of overlap of functions- Direct contact instead of bureaucracy- Increase in managerial motivation- Development of managerial skill

- Delay in decision-making due to confusion- Lack of clarity about responsibilities- Difficulty in tracking profitability of each product- High degree of conflict over priorities

- Offsetting of individual business’ losses- Spread of risk for holding company- Ability to outsource capital and technology- Reduced cost of central overheads

- Unavailability of skills at group level- Dilution of focus and synergies- Difficulty of strategic control- Risk of secessions and takeovers

- Concentration on core competence- High degree of flexibility- Lowering of costs and complexities- Opportunity to leverage outsourced skills

- Lack of control over many functions- Unhealthy dependence on partners- Need for high degree of cooperation- Over-narrowing of expertise


THE FUNCTIONAL STRUCTURE

THE MULTI DIVISIONAL STRUCTURE

THE SBU STRUCTURE

THE MATRIX STRUCTURE

THE MULTI-COMPANY STRUCTURE

THE NETWORK STRUCTURE


INTERNATIONAL EQUITY CLAIMS DEPARTMENTCASE-STUDY SHEET

The Claims Department of International Equity Life Insurance Company processes

death-benefit claims on the deaths of policyholders. The procedure includes ensuring

that the policy is in effect, checking the eligibility of the beneficiaries, processing the

necessary paperwork, and authorizing the payment of the death benefits in

accordance with the terms of the policy.

The department staff includes one manager (at a salary of $42,000 per year), three

assistant managers (at $27,500 each per year), eighteen claim representatives (at $2

1,000 each per- year), and five clerk-typists (at $17,000 each per year). The manager

is responsible for- the overall operation of the department. The assistant managers

not only supervise and train the claim representatives and the clerk-typists but also

work with the staff to resolve problem claims. All authorizations for payment of

benefits must be checked and approved an assistant manager. In addition to typing,

the clerk-typists' responsibilities include distributing and filling paper work. Organized

as a "pool," they work on a “first-come, first-serve” basis.

As claim inquiries or materials related to a claim are received, they are put in the in-

basket of one of the claim representatives. This is done in such a way that the

representatives have equal work loads.

For each claim the representative first checks to see whether a file has been started.

If so, the representative writes a work order asking a clerk to retrieve the file from a

central file room. If no file likes been started on the claim, the representative obtains a

file number from an assistant manager and starts a file.

Then the representative takes whatever claim action is necessary, such as checking

eligibility, adding completed claim forms to the file, and so on. Once the

representative decides what needs to be done and fills out any necessary paperwork

by hand, the file of materials is given to a clerk-typist so that the handwritten



paperwork can be typed. After all handwritten paperwork has been typed, the file is

returned to the representative for proofreading and signing. The representative then

gives the file to the clerk-typist to mail typed materials as necessary and to return the

file to the central file room. (No fares are kept at the representative's work station.)

This process is repeated for each new action that has to be taken on that claim. Each

action requires that the file be retrieved from and returned to the central file room.

The claim representative has the key role in this process. He or she determines

whether the deceased person has a valid policy; verifies the details of the policy,

including payment amounts; identifies the paperwork that is to be sent to

beneficiaries; and checks returned paperwork and has it filed. When the papers are in

order, the representative prepare a request for payment and sends it to Financial

Disbursement . A variety of problem can arise during this process, such as death of

one or more beneficiaries; and the claim representative must handle such problems.

Each week two claim representatives are designated as "on call," which means that

they handle phone inquiries. While they are on call, their work on mail inquiries is

reduced. "On-call" assignments are rotated weekly among the eighteen claim

representatives.

Last year the department processed 13,000 claims, a 10-percent increase over the

number processed in the previous year. Each claim takes an average of forty-three

days to process from the time of initial inquiry to the date that payment is authorized.

Management concern about the operations of the Claims Department has been

increasing. This concern centers around three areas:

1. Over the past two years, customer complaints have increased.

Customers say that claims take too long to process; some claims get "lost"

or do not receive follow-up; and too many mistakes are made on routine

claims. A recent study found that there were approximately 1.2 "errors" per

claim. These errors included misplaced files, lost forms, and mistakes in

recording.



2. Employee turnover is 35 percent per year. This is felt to be too high

and too expensive in view of the fact that claim representatives must be

trained extensively in claims procedures and insurance-policy language.

Although management feels that the work is interesting and challenging,

exit interviews indicate that this opinion is not shared by the workers.

3. The average salary cost for processing a claim-$45-is too high. This

cost has to be passed on to the customer.



INTERNATIONAL EQUITY CLAIMS DEPARTMENT

WORK SHEET

You are a team of managers from International Equity Life Insurance Company. Your

superiors in top management have asked your team to redesign the work of the

Claims Department. They, are hopeful that you will find a way to serve customers

better, which means that the claims will be processed faster, without error, and at a

lower- cost. They are also hopeful that the expensive turnover in personnel will be

lowered significantly.

In your discussions with top management you have been assured that (1)

adequate funds will be made available for new equipment, if needed; and (2)

comparable jobs will be found in the company for any employee who is replaced or

who chooses to leave the Claims Department because of this reorganization.

Your team will be given a designated period of time to redesign the Claims

Department and to prepare a five-to-ten minutes presentation of the new design for

the total group. Consider choosing one person to record the salient points of the

design and to make the presentation. In your presentation you should accomplish the

following:

1. Describe the organizational structure of the new design. Be specific

about the number of employees, their roles, and the supervisory rela-

tionships that will be necessary.

2. Describe the work flow - the steps to be taken with a claim from initial

inquiry to final payment.

3. Describe how the new design will reduce employee turnover. (How will

it be more motivating to employees? How will it lead to a better quality of

work life?

4. Compare the new design with the current design using the table that

appears below. The data for the current design is taken from the case-

study sheet. You will have to estimate the data for some measurements in

your new design.



Current Work Design New Work Design

Total Number of Employees 27

Annual Payroll Cost $587,000

Average Time to Process a

Claim

43days

Average Number of Errors

per Claim

1.2

Annual Employee Turnover 35 percent

Salary Cost per Claim $45



INTERNATIONAL EQUITY CLAIMS DEPARTMENT GUIDELINES FOR WORK DESIGN

1. Invent the process from the customer's perspective.

2. Determine key process measurements, such as number of errors and average

time to process a claim. Set ambitious goals for these elements under the new

process.

3. Determine what internal stakeholders (employees and management) need

and want with regard to the work and the work environment. Here are some

examples:

♦ Interaction with others;

♦ Identifiable, complete pieces of work;

♦ Autonomy;

♦ Variety;

♦ Task significance; and

♦ Feedback from others and from the work itself.

4. Design the whole work system, not just individual jobs. Have people do more

than one task.

5. Reduce or eliminate activities that do not contribute directly to what customers

need and want. (For example, consider tasks such as checking the work and

transferring files.)

6. Add or reconfigure technology, such as automation, procedures, tools, equip-

ment, and facilities.


Documents

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