People and IT Essay
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Both employees of organizations and managers are today increasingly concerned about the capacity of organizations to adapt to rapidly changing environmental conditions. The rate of change in the technological, economic, political, and sociocultural environments is picking up speed, and organizations are, therefore, finding it more and more important to figure out how to adapt.
What is happening in a number of organizations is more fundamental still, however, in that either what the organization does is fundamentally dependent on information technology and/or its capacity to compete with other organizations in the field is fundamentally affected by the use made of information technology (IT).
Ever since at least 1958, when Leavitt and Whisler (1958) predicted that the use of IT would lead to the demise of middle management, researchers have speculated about the effects of IT on organizations.
Even though many of the early predictions have not come true, new kinds of information technology are now increasingly affecting how people work, often in ways that we are just beginning to understand.
As the cost of the underlying technology continues to drop, IT is almost certain to become more and more pervasive and may even make possible new kinds of work organization that we can as yet only barely imagine. This work discusses the relationship between the use of IT and people.
The paper reviews theories that can help analyze organizations, technology, and the link between the two. It also reviews the results of empirical studies of the use of IT to determine what changes have been made in the past and can be expected in the future. Our goal here is both to predict inevitable impacts and to discover possible outcomes, both good and bad. Our ability to develop technology itself is probably more advanced than our theories of organizations, but our understanding of the uses of technology is probably behind our understanding of organizations.
It is still difficult to identify the relevant dimensions of technology or to measure it, although it is clear that there are large differences between, for example, personal computers and mainframes. The task to which the IT is applied also makes a difference. For example, a payroll system has greatly different functions and is likely to have different effects than an electronic mail system does. An early common prediction was that the widespread use of IT would replace most routine workers, thus causing massive unemployment, and in fact, systems have often been cost justified on the basis of reducing the number of employees.
For instance, Lee (2000) cited a study of 33 companies in which 90 percent cut the number of employees (one company laying off thousands of workers) or increased their output with the same number of staff. The prediction of an overall reduction in employment due to the use of IT is difficult to support empirically, however, as most studies have, examined only a few firms or a few industries, and more comprehensive census data are difficult to interpret unequivocally. Furthermore, other factors may more strongly affect employment, thereby masking the effect of using IT.
In fact, it is interesting to note that IT may, in some cases, increase rather than decrease employment. For instance, Barney, Fuerst, and Mata (1995) listed several means by which the use of IT may affect clerical employment. First, computers might be used simply to replace clerks. Second, the use of IT may itself create some new jobs, such as that of data entry clerks or positions in the data-processing department. Third, the use of computers may make the firm more efficient, increasing the demand for its products and thus indirectly its total level of employment.
Finally, coordination may be viewed as a complementary input in the production process. For instance, if IT makes coordination more effective and less expensive, the demand for coordination and therefore for both IT and the clerks who provide it may increase. This analysis holds only for coordination functions, however, suggesting that clerks employed in production functions are more likely to be displaced by the use of IT. The total effect of using IT on the employment of managers may be less, as fewer managers are involved in production than in coordination.
The jobs of most managers are so far less affected by the automation of production functions than are those of clerks. In this case, the smaller number of production workers and the unchanged number of managers and other coordination workers indicate that the administrative intensity (the ratio of administrative to production workers) may actually rise if IT is used to automate production functions. The use of IT would affect the jobs of workers in production more than those in coordination, again increasing administrative intensity. A number of studies agree with this general prediction.
For instance, Kudyba and Hoptroff (2001) found that an increased use of computers is associated with higher levels of administrative intensity. One of Kudyba and Hoptroff (2001) original predictions is that the number of levels of hierarchy in organizations will decrease as computers are used to perform the functions of those middle managers. So far, however, there is no conclusive evidence that this prediction has been realized. Changes in levels of hierarchy seem to depend on the way the IT is used, and different studies have reported opposite findings.
U. S. Department of Commerce (1998), for example, discussed firms that are reducing bureaucratic functions with computers and thus trimming the number of levels of hierarchy. Another commonly discussed possibility is that centralizing decision making is inherently desirable to managers and that decentralization takes place only because no single person can control the necessary resources (e. g. , information, employees) because of limitations in humans’ information-processing capacity. These constraints force managers to delegate control over some decisions in order to focus on more important issues.
The use of IT may lessen these constraints in two ways: first, by providing easier access to and facilitating more complete analyses of data regarding the firm’s operations and, second, by providing a mechanism to program jobs and to control workers. The use of IT may thus permit decisions to be made at a higher level and ensure their implementation by subordinates. Alternatively, a manager may want to encourage the decentralization of decisions in order to increase workers’ autonomy. Some authors have predicted that IT will encourage greater participation in decisions by lower-level workers.
IT provides ways to control the premise of the decision, by allowing more equal access to data or by controlling the way in which a decision is made, and to monitor the results, by providing quicker feedback. Given the ability to ensure that decisions are made consistent with their wishes, managers may be willing to delegate the actual decision. Systems used to provide individual support may also encourage decentralization, as they enlarge an individual’s capacity to analyze data or enforce the use of common decision analysis tools.
IT can also support lateral ties between low-level workers, allowing them more easily to exchange information and thus coordinate their own activities. Another possible impact of using IT is the development of more differentiated or segmented jobs. Differentiation is difficult to define or measure precisely. Researchers in this area have measured, for example, the number of job titles used in a given organization or the number of different departments. It seems certain that using IT will require some new jobs and departments, such as a data-processing or telecommunications group, if only to manage the complex technology.
Using IT in newspapers did lead to the creation of new specialties, such as data-processing manager. It is less clear how using IT will affect other functions in an organization. IT could lead to a reintegration of some tasks (e. g. , handling all aspects of issuing a letter of credit, instead of a single step in a multistep process). Such a reintegration would minimize the differentiation between jobs or departments. Or a higher level of functional specialization could raise the degree of differentiation.
The use of IT can affect the level of formality in an organization in many ways. Most older centralized transaction-processing systems are inflexible. Because such systems can do things in only one way, rules are needed to limit actions to this process. The system itself embodies many rules about how the job should be done, again substituting the use of rules and regulations for individual decision making. A system may also make it easier to spot errors and identify their sources, thus further controlling work.
Using IT may encourage the evaluation of outcomes instead of process and make the enforcement of rules both easier and less necessary by more quickly providing feedback about the outcomes of actions, thus decreasing formality. Finally, because smaller organizations are typically less formal, IT may lessen formality by reducing organizational size. The use of IT for individual support or for communications may well have different effects. On the one hand, using telecommunications to allow workers to work at home resulted in less personal interaction and therefore more formal evaluations.
On the other hand, using IT could lead to less formalized interactions. IT can affect the pattern and content of organizational communications in many ways. First, the use of IT may lead to changes in the structure of an organization, leading to new patterns of communication or changes in the content or quantity of existing kinds of communication (U. S. Department of Commerce 1998). Integrating jobs, a possible outcome of using IT, can lead to fewer needs for communication, as a single person can do the job with no need to communicate with co-workers.
For example, storing transaction data in a commonly accessible data base may make requests for information unnecessary. Such changes may also affect the level of social interactions. Some researchers claim that by integrating tasks, the use of IT eliminates the need and opportunity for workers to interact. For example, Ahituv and Giladi (1993) in a study of using electronic mail, discovered a decrease in the amount of face-to-face communication. Social isolation will be further increased if workers can work at home instead of in an office.
On the other hand, the use of IT can lead to more frequent personal contacts, suggesting that different uses of IT will have very different effects. Second, IT may be used to provide new media for communication, such as electronic mail or computer conferencing, again leading to new patterns of communication. These kinds of systems have been somewhat more heavily studied, and some important characteristics of these systems have been identified. For example, computerized media may be preferable to other kinds of communication because they can be faster and cheaper.
Furthermore, computerized communication has a low incremental cost per message; that is, it costs the sender about the same to send a message to one person as it does to two; if the system supports mailing lists, it may be as easy to send mail to hundreds of people, specifying only the name of the list. This form of bulk mailing eliminates the need for secretaries to duplicate and mail multiple copies of memos. Finally, electronic mail or conferencing are asynchronous: Only one of the recipients needs to be present at a time, making communications easier to arrange (e. g. , across time zones).
By thus reducing the cost of communications, IT may make coordination less expensive, with the possible results just enumerated. Such uses of IT will be necessary to allow organizations to deal with the more complex and more turbulent post-industrial environment, with more available information. The ability to address communications by other than the name of the recipient (e. g. , to a mailing list for electronic mail or to a specific conference for computer conferencing) means that a sender may not know the person with whom he or she is communicating, but only the area of interest.
Computers can be used to support this sort of communication. By providing new communications channels, computerized media may facilitate the formation of “weak” (acquaintance) ties. People become aware of one another and one another’s work, even though they have not met in person, thereby suggesting that the computer system allows these contacts to develop more easily. Easier formation of weak ties may also lead to a shift from hierarchical to “all-channel” communications in companies.
Some studies have shown an initial increase in vertical communication, followed by a shift to more evenly distributed communications as new horizontal links are formed and the formal reporting system begins to decline in (relative) importance. One way that IT can affect the vertical distribution of power in a firm is by changing who has access to information. For example, a computer system may provide an easier way to monitor the results of subordinates’ actions and to speed the flow of information upward in the company, thus centralizing power.
IT can also be used to decentralize, thus moving power down in the organization. For example, a universally accessible data base can reduce top management’s monopoly on companywide information. The use of IT may thus change the basis of power by making information a less scarce resource. To the extent that vertical power is thereby equalized, other sources of power will become more important. The use of IT can also change the balance of power between groups at the same organizational level of a firm.
For example, a common computer system may lead to greater data sharing and thus power equalization between groups at the same level. This cooperation may then lead to greater coordination, allowing better performance, as the two groups can jointly optimize, rather than each trying to do the best it can alone. As we mentioned, using IT can greatly increase the power of the group that controls the technology. IT may become critical to the firm’s operation: most banks, for example, would be completely unable to function if their computer systems failed.
The group controlling the computer systems may also control access to data, a potentially scarce resource. The IT group thus may be in a position to mediate between other groups, for example, by setting corporate standards for computer equipment or software, thus defining the functions available even to users of personal computers. In the information-processing view, IT has a major effect, by providing cheaper coordination and thus making coordination-intensive forms more practical.
A company might take advantage of economies of scale by creating larger functional departments, using IT to provide the necessary coordination among different groups. For example, different divisions of a company could all use data stored in one centralized data base, rather than each having partial information or passing information among themselves. Alternatively, a company could use marketlike structures, again coordinated by using IT. Airlines, for example, now provide an electronic marketplace for selling tickets. The era into which we are now entering will see qualitative changes wrought by information technology.
No longer will information technology be simply overlaid onto existing business; it will now be used to restructure the enterprise. This restructuring is taking place between as well as within organizations. The boundary between customer and supplier is becoming difficult to define as electronic integration blurs the distinction. Within organizations, distinctions between information technology and production technology and between information workers and production workers are becoming increasingly difficult to maintain. The electronic communications system occupies the critical path.
Communication by electronic means is essential to interorganizational integration and can proceed only at the pace permitted by communication technology. As we have seen, there appear to be few inevitable results of the use of IT and many possible outcomes, depending on factors such as the organizational context, the type of IT used, and management’s motivations. Furthermore, the effects of IT are not deterministic: similar systems can and do have widely different effects, depending on the particulars of the organization and the intentions of the managers who deploy them.
IT has come to play an important role in virtually all large successful organizations in relation to computerized accounting systems, word processing, filing information in databases, modelling the future of the business through spreadsheets, maintaining stock control, and so on. But most of this would only indicate that IT was an important service function like personnel or accounts. Even so, it is worth pointing out that in order to compete on equal terms with other firms – performing with equal efficiency and economy – IT has become an essential tool of modern management.