TECHNOLOGICAL CHANGE  & ORGANIZATION

This post is autonomous but can be seen as a complement to my previous post technology & organization. I treat here the dynamic aspect of the relation between technology & organization in industrial companies.

When you compare companies across industries, it can be difficult to use the same factors. Offices & roles tend to be different yet labor & cost structures, firms’ development, and training policies can be analyzed. Furthermore, technical variables can be used such as density, flexibility & diversity of production, operations’ timespan, and initiation & control of programs.

As for understanding if a business is healthy & successful; one must look at the state of the industry itself, the position of the company within its own industry, its business development rate (people & plant), share price, and other factors like reputation or top management salaries.

The shift from unit to mass production means the ways of interacting evolve: where communication was rather

intra-functional, with superiors & subordinates, communication becomes more inter-functionally oriented, with other departments.

The change puts a heavy pressure on the production group as its network gets more complicated as production administration becomes split from operations supervision. Furthermore, due to the evolution of production methods, the amount & complexity of paperwork increases. As a result, production managers feel soon overloaded by more reporting & network activities and with less time to do them.

Subsequently, communication between production with marketing & development activities shrink as well

as supervision and management of subordinates. This lack of close involvement of the manager from shop floor activities may be resented by the personnel and create labor disputes. He may be sensed by the shop floor to shift from a role close to the work, like “us”, to a person with management status, like “them”. The rift grows wider as production managers are generally little trained in their new duties and what is expected from them.

In rationalizing the process, not only the content but also the context of the work is changed. It brings a decrease in the area of decision of individuals and trades direct coordination with reciprocal coordination involving various situational factors. Thus, supervisors unexpectedly become more troubleshooters and they get more focused on extinguishing their own crisis rather than on firefighting for others.

The caliber & skills of supervisors are thus critical to such a change of technology and must be well thought out before introducing such an evolution of production systems.

As we have seen in the previous post, development engineers, the elite in the organization before change, get threatened by the new rises of the production function, in number & power. Instead of restoring a balance between functions, the change increases frictions between development engineers, production planners & control staff as objectives conflict between departments.

The increase of differences brought by the new methods and new product portfolio raise the number of design changes which disrupt more heavily production. It is also a very powerful lever for the development engineers to reassert their diminished status over production workers.

That’s were the control staff gets in the discussion: they start to see design changes as loopholes & excuses.

The drawing office and inspection group seem to part more with the development engineers despite that the inspection group grows in number (but not in prestige).

In order to limit such status issues, the status structure of the company needs follow closely the critical functions. Furthermore, promoting skilled craftsmen from the shop floor and rationalizing production with ERP systems surely help production planning.

Companies come to batch production when they want to capture value in the overall supply chain and start to sell product they used to sell in bulk. It is quite typical for chemical companies.

Generally the packaging activity is separated from the production process, exacerbating the differences between the old process & the new batch systems. The two groups are thus struggling for power. Their relationship with the CEO brings the conflict into the executive suite.

The consequences for the CEO are that his agenda is heavily pushed around. The executive gets swamped in technical issues far more than he used to. Disagreements rise around him, taking a toll on his availability. Consequently, routine plant visits and time spent with union officials may shrink, inducing factory accident rate to increase and labor climate to deteriorate.

When the packaging activities become under control, their heads usually push the idea that they could be more effective if the plant operations were under their control, heightening the conflict with the plant managers.

Worst problems occur when new HR managers with experience of large batch systems are brought in to flatten the arising conflict. Indeed, their lack of experience fails them to understand the basic differences between plant & assembly lines. Furthermore, industrial relations become loopholes in the control system, the personnel manager having closer contact with the plant operators than the plant managers.

Automation is likely to resolve more problems than it creates.

Technical progress is frequently linked with a more sophisticated management, rational attitude to complications rather than an emotional one, and a better understanding of threats.

Besides, people respond almost robotically to crisis without suffering the pressures related with the effects of batch production.

The low turnover apportioned to labor costs favors easier bargaining & wage negotiations. Small working groups, limited spans of control, and high ratios indirect to direct workers help to build strong cooperation at every level

between superior & subordinate, making conflict and innovation easier to manage.

When a new plant is built or an existing plant is modified, it is usually necessary to perform a severe training program and to review the wage structure at both operators & management levels.

The process industry is quite flexible as it recognizes expert knowledge but not specialists; having eventually the possibility to integrate in other jobs people seeing their responsibilities diminishing.

In this technical change, time is on management’s side. It can take advantage of the long construction period to make the people concerned conscious of the compensating advantages they are getting from the changes almost before they sense the drawbacks.