Individual and Organizational Productivity: Linkages and Processes
Paul S. Goodman, F. Javier Lerch, and Tridas Mukhopadhyay
This chapter addresses the nature of linkages between individual and organizational productivity. If changes are observed in individual productivity, to what extent are those changes observed in organizational productivity? What is the nature of the linkages between individual and organizational levels of productivity that facilitate or inhibit changes at one level being transferred to another level? How do changes in individual productivity contribute to organizational productivity?
Our goal in this chapter is to develop a set of conceptual tools with which to analyze the linkages between individual and organizational productivity. We consider changes at the individual level due to some form of intervention (e.g., new information technology) and trace those changes to changes in organizational productivity. In doing so, we focus on specific work settings and applications designed to increase individual and organizational productivity. We begin the chapter with some basic definitions and then turn to an analysis of factors that inhibit or facilitate the relationship between individual and organizational productivity. In the course of the analysis, we develop a set of propositions about organizational linkages. We conclude with an integration of the concepts and analytic steps developed and a discussion of research opportunities.
Three terms are central to the discussion in this chapter: productivity, linkages, and processes. Each is defined below.
As defined in Chapter 1, productivity is the ratio of output to input in a production process. Total factor productivity considers all inputs used to produce the outputs. Partial factor productivity refers to the ratio of output to a single input (Mahoney, 1988), for example, labor productivity. While measures of partial factor productivity are useful in certain contexts, they provide an incomplete picture for this analysis. Thus, the focus of this chapter is total factor productivity and how changes in individual productivity can contribute to total factor productivity.
Many meanings are attached to link and linkage. In its noun and verb forms, link refers to connecting, tying, or joining together. Implicit in the definition are the existence and the joining together of two or more objects. In this chapter, linkage is a structural phenomenon referring to the joining together of two or more objects.
In an organizational context, linkage can be described in terms of multiple dimensions. Linkages can vary in terms of content. There are technological, organizational, and social linkages. For example, two or more objects (e.g., people, organizational units) can be joined by machines or technological programs or routines. Similarly, objects can be joined by organizational procedures or mechanisms (e.g., a communication channel) or by social norms or customs.
Linkages can also be described in terms of directionality or organizational space. There are horizontal, vertical, and diagonal linkages. The question is, how do horizontal and vertical linkages help explain the relationship between changes in individual and organizational productivity?
Linkages can also vary in terms of complexity, that is, the number of links in any organizational context. The more linkages in an organization, the more complex the environment for tracing changes from individual-to organizational-level productivity. The degree of interdependence in a linkage condition also varies. One can conceptualize an organizational system in which all the objects are highly interdependent versus one in which objects are more loosely coupled.
To make this analysis manageable, we focus on a smaller set of linkage dimensions—specifically, technological-type linkages, the complexity of linkages, and the degree of interdependence in the linkage conditions. We selected these dimensions because they should help to explain how changes in individual productivity can contribute to changes in organizational productivity. In the closing section on research opportunities, we speculate about how our analysis of these dimensions may apply to other linkage dimensions (e.g., social linkages).
Our use of technological linkages as a major element in this analysis is consistent with the important role technology plays in defining organizational structure (Scott, 1990) and organizational effectiveness. Below, we illustrate the analytic value of technological linkages by examining three units of analysis: (1) organizational, (2) interrole, and (3) intrarole.
Thompson's (1967) typology of (1) mediating technology with pooled interdependence, (2) long-linked technology with sequential interdependence, and (3) intensive technology with reciprocal interdependence provides a way of thinking about linkages at the organizational level. In mediating technology with pooled interdependence, units (e.g., in a department store) are not linked. Increasing productivity in one unit is independent of productivity in another. Thus, productivity increases in one unit should be observed at the organizational level since the units are relatively uncoupled. In long-linked technology with sequential interdependence, such as in an automobile assembly plant, increasing productivity in one unit has consequences for other units. For example, if the productivity of the body shop in an automobile assembly plant increases, an increase in the productivity of the plant may not occur unless all the sequential operations increase their productivity. In intensive technology with reciprocal interdependence, such as in a bank, increases in productivity in one unit generate reciprocal changes in other units. The net effect of these reciprocal changes may or may not lead to increases in overall bank productivity.
Thompson's typology can be extended to include a relatively pure case of ''uncoupled" (Weick, 1982) or "additive" (Steiner, 1972) organizations. In such organizations, there is no interdependence among organizational members. We pose this option because Thompson's typology is about different forms of interdependence. For example, in mediating technology, there is some interdependence. We propose a continuum from no interdependence to complicated forms of interdependence as illustrated by reciprocal interdependence.
This organizational classification of technological linkages has implications for understanding how changes in individual productivity appear at the organizational level. Our first proposition, then, is as follows:
Forms of interdependence moderate the extent to which changes in individual productivity affect organizational productivity. The connections between changes in individual and organizational productivity are stronger in organizations with uncoupled systems or pooled forms of interdependence.
Both interrole and intrarole linkages have been well documented in the role literature (e.g., Kahn et al., 1964). Interrole linkages refer to connections among roles. The connections could be between roles within a group, between groups, between organizational units, or between people and machines. These linkages help one trace why changes at the individual level do or do not appear at the organizational level. They focus on linkages within a firm, whereas organizational linkages, discussed above, identify differences in the types of linkages that characterize firms. Given any organizational-type linkage, such as pooled interdependence, there should be many ways in which interrole linkages can be formed.
Intrarole linkages are within any role and its subtasks. It is possible that productivity increases in some subtasks may not affect (be linked with) the performance of other subtasks within that role. Attempts to improve individual productivity often focus on certain subtasks. Thus, it is important to understand how subtasks within a role are linked. We elaborate and present propositions on inter-and intrarole linkages later in this chapter.
Complexity and Degree of Interdependence
Complexity refers to the number of linkages. As the number of linkages increases, the connection between individual changes in productivity and organizational changes becomes more difficult to trace. For example, consider a case of sequential interdependence between A and B; B's productivity is a function of A's input plus other factors in B's production operation. As the number of operations (or links) be-
tween A and B increases, the number of factors that can change the nature of A's contribution also increases. As the number of links increases, there are more coordination activities and associated costs; more problems—organizational, technological, social—to be solved; and more random events. Therefore, our second proposition is as follows:
The connection between changes in individual and organizational productivity is stronger when the number of linkages is small. Given a particular form of interdependence (Proposition 1), the smaller the number of linkages, the stronger the connection between individual and organizational productivity.
The last linkage dimension in our set is the level of interdependence. High interdependence implies that changes in object A lead directly to changes in object B. We introduce the concept of level of interdependence because within any type of interdependence (e.g., sequential) there may be different levels of interdependence. The level of interdependence, as is the case with complexity, may help one better understand the connections between changes in individual and organizational productivity. In our analysis below of interrole and intrarole linkages, we expand on the concept of interdependence.
Understanding the linkages between individual and organizational productivity requires an examination of process, as well as structure. The discussion on linkages provides a way to characterize structure. Given different structural arrangements (e.g., pooled versus reciprocal), it is important to understand how processes facilitate changes in individual and organizational productivity. Because we elaborate the role of processes later in this chapter, we simply list the five processes here: (1) coordination, (2) problem solving, (3) focus of attention, (4) organizational evolution, and (5) motivation.
As discussed in Chapter 2, two logical conditions may explain why interventions at the individual level do not contribute to organizational changes. First, interventions may be introduced at the individual level, but no change, a marginal change, or only a temporary change in productivity results. This condition may be explained by the failure to implement the new technological or organizational change successfully. Another reason may be that the intervention was targeted to other or-
ganizational goals, such as improvements in employee or customer satisfaction, or to nonorganizational goals, such as increased personal power and prestige. In either case, one would not expect to see changes in individual and organizational productivity. The other logical condition concerns methodologic issues. Productivity changes may occur at the individual level but not be discernible at other levels because of problems in measurement at different levels of analysis or difficulties in identifying the lag structure in the changes.
Because the two logical conditions are discussed in Chapter 2 and elsewhere in this report, we simply acknowledge them here as alternative explanations for the relationship between individual and organizational productivity. We turn now to our analysis of factors that inhibit or facilitate a relationship between individual productivity and organizational productivity.
Intrarole Linkages and Negative Consequences
Earlier, we introduced the concept of intrarole linkages. Basically, a role is a bundle of linked subtasks. Interventions to improve individual productivity can have differential impacts on the subtasks. If an intervention increases individual productivity in some subtasks, it might have a positive impact, no impact, or a negative impact on other subtasks. From this concept of intrarole linkages, our third proposition is as follows:
If an intervention increases individual productivity1 in a given subtask but has a negative impact on productivity in other subtasks, the probability is low that the changes will contribute to changes in organizational productivity.
A study by Kraut et al. (1989) can be used to illustrate this proposition. The study examined the impact of a new computerized record system on the work lives and productivity of customer service representatives. The job of the customer service representatives fits the description of a task, or role, composed of a bundle of linked subtasks. The subtasks of these representatives involved providing information over the telephone to customers, making collection calls, handling emer
gencies with customer service, setting up credit card applications, and so on. While the new technology increased the productivity of routine tasks (e.g., handling incoming calls about current bills), it made less routine tasks (e.g., handling old bills or bills with missing information) significantly more difficult to perform. Information for these less routine tasks was less accessible under the new system. Although the study does not provide a way to balance the effect of productivity changes in these two types of subtasks or to trace any effects to the organizational level, it shows how interventions might increase productivity in one subtask, but decrease it in other subtasks. The consequence is that net organizational productivity changes are unlikely to occur.
Intrarole Linkages and Slack
The concept of slack is important in understanding the relationship between individual and organizational productivity. In this chapter, slack is an excess or unused resource (Scott, 1990). Technology interventions increase the amount of output for a given unit of labor input and thereby create excess time. The key question is, does the excess time remain as slack, or is it reallocated as an input to some other productive activity? Our fourth proposition is as follows:
If an intervention increases individual productivity in a subtask but that leads to increases in the level of slack2 in the role or broader production systems, the probability that the changes will contribute to changes in organizational productivity is low.
The slack concept can be illustrated in the context of the U.S. Postal Service. The production system for the Postal Service is a series of connected units organized to sort mail. Within any unit, sorting is performed by automated, mechanized, or manual means. The automation section has two classes of machines. One class reads addresses, sprays on a bar code, and sorts letters. The other class of machines reads bar codes and sorts the mail. Small crews staff each machine. Supervisors manage multiple machines, and a general supervisor manages the entire work area. A simple measure of productivity is the total number of pieces processed by time or by number of workers.
Supervisors in this production system have multiple subtasks to
perform. They assign people to jobs, do personnel paperwork, coordinate activities with other supervisors, change software programs on the automated equipment, and collect information about mail flows. The slack argument states that increases in the productivity of one subtask may increase the amount of slack within a given role and that increases in slack will not necessarily lead to increases in organizational productivity. If, for example, new information technology reduces the time it takes the supervisor to assign people or do paperwork and the new resource—supervisor time—remains as slack, there should be no increase in organizational productivity.
Intrarole Linkages and Core and Peripheral Activities
The distinction between core and peripheral activities occurs in a number of places in the organizational literature (e.g., Scott, 1990). Core activities represent the technological and managerial activities involved in transforming inputs into outputs critical to the organization's survival. Peripheral activities are indirectly related to the process of transforming inputs into outputs. This distinction between core and peripheral activities is somewhat arbitrary, however. Activities that may have been considered peripheral in a more traditional setting might be considered core in a new technological environment (Susman, 1990).
To clarify the distinction, we define core activities as those that, if ceased, would stop the other production activities of the organization in the short run. Consider an automotive assembly plant that typically has three major production activities—a body shop, a paint shop, and assembly areas. If one of these operations stops, the whole plant stops. If this was an advanced computer-integrated manufacturing (CIM) auto plant with "just-in-time" (MacDuffie and Krafcik, 1990) features, other activities such as logistics and material handling would be part of the core activities. Cessation of the logistic activities would shut down the plant. On the other hand, there are other activities in the plant, such as medical services, training, or public relations, that are important for the long-run survival of the plant (Parsons, 1951) but are peripheral activities. The cessation of such activities would not stop the core activities of the plant.
One can think about subtasks within a role in terms of the core and peripheral distinction. Core tasks can directly affect other production activities. Peripheral activities in a role may only indirectly affect production activities. Thus, our fifth proposition is as follows:
If an intervention increases individual productivity in periph
eral activities, the probability that the changes will contribute to organizational productivity is low.
Consider the role of the postal supervisor of the bar-code sorting areas. One major subtask in this role is the selection of sorting programs, which has a major impact on total productivity. This supervisor also has to complete a variety of forms for recordkeeping purposes, a peripheral task. Following the core-peripheral argument, if a technology is introduced to increase the productivity of completing forms, it would not have a direct influence on the number of pieces of mail processed. If, however, the technology helped to select sorting programs more effectively, the consequence would be a direct increase in the productivity of the bar-code sorting areas.
Interrole Linkages and Negative Consequences
Interrole linkages refer to connections among roles, whereas the discussion above focused on subtasks within a role. Changes in one role may have positive effects, no effect, or negative effects on other roles with which there is some degree of linkage or interdependence. With interrole linkages, the impacts can be through vertical, horizontal, or diagonal relationships. Our sixth proposition is as follows:
If an intervention increases productivity in a given role but negatively affects productivity in other roles, the probability that the intervention will contribute to positive changes in organizational productivity is low.
The Kraut et al. (1989) study of the impact of the introduction of a computerized record system on the work of customer service representatives also illustrates this proposition. The introduction of the computer-based system had positive consequences for routine tasks, but it had three negative consequences for the representatives' supervisors. First, supervisors previously evaluated the representatives' work by auditing completed transactions. With the new system, those transactions increased by a factor of 10. Second, the increased number of transactions to review increased the role stress of the supervisors. Third, the intervention shifted the focus of task knowledge away from the supervisors. They were "no longer experts in the operational detail of work" (p. 230). This shift in task knowledge increased the difficulty of problem solving and coordination for the supervisors.
The example above illustrates negative vertical impacts. Similar scenarios could easily be envisaged for environments in which interde-
pendence is more sequential, or horizontal. Increases in productivity in work group A increase the stress in the next work group B, which in turn reduces the productivity of group B.
Interrole Linkages, Constraints, and Slack
In interdependent roles, changes in one role can be mitigated by constraints in another. For example, if the productivity in one role or operation increases, a downstream operation may not have the capacity to absorb the new rate of inputs from the prior operation. In this case, the capacity constraint3 at the downstream operation would basically create slack and preclude any changes at the organization level. Our seventh proposition follows:
If an intervention increases productivity in a role or operation, constraints in subsequent interdependent activities may create slack and preclude increases in productivity at the organizational level.
Consider the case of the Postal Service. The automation section is dependent on a material-handling system, which in turn is connected to a delivery system. Sorted mail goes to a dock; from there it is transferred to other post offices, then to a mail carrier, and then finally to the mail destination. Constraints along this flow can reduce the impact of any productivity increases. For example, if the automation section increases productivity by processing mail in less time but the mail-handling or delivery system cannot handle the increased mail processing rate, the increases in the automation section will create excess inventory and slack and should not increase productivity at the facility level. This example illustrates a capacity constraint.
There are many other types of constraints. Consider, for example, the impact of major improvements in optical character reading that made it possible to process more handwritten mail by automation. (Existing automation can read only typed documents.) This would shift more of the incoming mail from the nonautomated to automated sections, which inherently can process more pieces per unit of time. One conclusion from this shift might be that organizational productivity would increase, but this is not necessarily so. If a union-management agreement mandated that the automated and nonautomated sections have the same number of workers, the constraints of the labor agreement
would mitigate any gain in organizational productivity. The shift of mail processing to the automated sections would only create slack in the nonautomated sections.
In these examples, the constraints are embedded in the organizations. External events, random or nonrandom, could also influence how changes at one level of an organization affect another level. For example, severe weather conditions can affect the processing of mail. In some areas, smog alerts can limit the use of trucks and, hence, the delivery process. Such events are temporary shocks that can create constraints and, in turn, mitigate the effects of any increases in individual productivity on organizational productivity.
Interrole Linkages and Core and Peripheral Activities
Our fifth proposition, presented in the discussion of intrarole linkages, states that if an intervention increases individual productivity in peripheral activities, the probability that the changes will contribute to organizational productivity is low.
The core-peripheral distinction is also relevant for interrole linkages. An organization is composed of core and peripheral activities embedded in roles with various linkage arrangements. The decision to target individual productivity changes in core or peripheral activities has consequences for changes in organizational productivity.
In the Postal Service example, there are three core production sorting operations—automated, mechanized, and manual. In addition, a large number of support, or peripheral, activities (e.g., training, community relations) are necessary for the long-run survival of the system. Consider an intervention that increases productivity in any of these peripheral activities. For example, improving the productivity of the community relations staff (intensity of community contact) may not contribute to the productivity of the mail processors. Increases in the productivity of the training department staff may not have an impact on organization-level productivity.
Increases in any of the core production activities, on the other hand, should have a direct impact on organizational productivity. Consider the bar-code sorting operation, which is the last production area in the automation section. There is only one link (material handling) between this production area and contributions to organizational productivity. Increases in the productivity of the bar-code sorting operation, then, directly contribute to increases in productivity if the material-handling function has the capacity to move the increased rate of mail processing.
A set of five organizational processes can facilitate changes in individual productivity having an impact on changes in organizational productivity. The basic hypothesis is that the removal of inhibitors and the activation of these processes strengthen the relationship between individual and organizational productivity.
The inhibitors and facilitators are equivalent in their critical importance. The two concepts are both conceptually independent and interrelated. Inhibitors mitigate or block changes at the individual level from affecting other levels. Facilitators (1) remove inhibitors, (2) create the conditions under which individual productivity will have a positive impact on organizational productivity, or (3) accelerate the effect of individual productivity on organizational productivity.
Inhibitors can be identified by focusing on the individual level and asking what factors at that level prevent productivity increases from increasing productivity at other levels? Facilitators, on the other hand, are derived by focusing on the organizational level and working to the individual level. What are the critical drivers of organizational productivity and how might they contribute to the connection between individual and organizational productivity?
Five Facilitative Processes
In this section we briefly define the five critical facilitative processes. We then present two examples that help to anchor these abstract processes to concrete organizational environments. The examples focus on characteristics of high-productivity organizations. They demonstrate how the linkages between individual and organizational productivity can be identified by "working backward" from the organizational to the individual level. The five processes are defined below:
Coordination refers to a signaling system for interdependent conditional activities (March and Simon, 1958). Coordination can be characterized in terms of type (e.g., by plan or by feedback), scope (the activity to be coordinated), and temporal requirements.
Problem solving encompasses monitoring changes in organizational performance, diagnosing causes, and initiating corrective actions to return the organization to some state of equilibrium.
Focus of attention refers to processes that make certain outcomes (e.g., productivity) and instrumental paths to those outcomes more salient.
Organizational evolution refers to a process whereby basic struc
tural changes are introduced as part of a continuous cycle of change and adaptation. In the context of a control chart, the problem-solving process (item 2) identifies performance drifts outside the control chart and returns the organization to a steady state. Organizational evolution, on the other hand, redesigns the basic parameters and processes inherent in the control chart and moves the organization to a new equilibrium.
Motivation refers to processes that generate energy and the direction of energy in any system.
Combinations of the five processes appear in theoretical and empirical papers as important predictors of organizational productivity (e.g., Goodman et al., 1988; Hackman, 1987; Lawler, 1982). They are also important in understanding the linkage between individual and organizational productivity. Our eighth proposition is as follows:
Individual productivity contributes to organizational productivity when (1) the five processes of coordination, problem solving, focus of attention, organizational evolution, and motivation are operative and (2) the processes are congruent and reinforcing.
Example 1: Lean versus Mass Production Systems
Table 3-1 compares the characteristics of lean production and mass production systems. Both systems involve long-linked technology and complex sets of linkages (MacDuffie and Krafcik, 1990). However, the lean production system differs substantially from the mass production system in terms of levels of interdependence. The absence of buffer areas, for example, means that downtime in any point of the system will shut down the total system. The lean production system also differs from the mass production system in its use of multifunctional versus specialized technology, short versus long production runs, lack of repair areas versus designated repair areas, and so on.
The linkage structure in the lean system requires different process configurations than the mass system does in order to enhance individual and organizational productivity. First, because the lean system is a very tightly coupled and fragile system, it requires a special form of coordination. The coordination is by both plan and feedback. To run this system, an elaborate a priori specification of activities, timing, and obligations is needed. At the same time, the ability to respond quickly to environmental change is needed. For example, in an automobile plant we studied, seats for the cars are scheduled to arrive an hour before they are to be used and in the order in which they are to be used. Meet-
TABLE 3-1 Characteristics of Lean and Mass Production Systems
Lean Production Systems
Mass Production Systems
General purpose, multifunctional automated technology
Highly specialized equipment and jobs
Complex, multivendor equipment
Short production runs, different products
Long production runs
Highly interdependent system
Downtime immediately stops system
Downtime effects moderated by buffers
No repair areas
ing this critical path requires elaborate programs specifying obligations, activities, and timing between the vendor and the plant. In addition, real-time information systems are needed to depict the plant's schedule to the vendor so the vendor can immediately react to changes (coordination by feedback) in the plant's schedule.
Second, the coordination must be systemwide. The lean production system is totally integrated so the coordination process must cover all factors of production, both internal and external to the system. Coordination for the lean production system also has to be tightly coupled temporally; there is no room for slack in this system. Changes in interdependent subsystems must be signaled immediately.
Third, since demands for coordination are high in lean production systems, there are constant pressures to simplify organizational activities in order to lower the costs of coordination.
Fourth, the lean production system's use of short production runs also affects coordination requirements. Special coordination switching programs are needed to permit quick and flexible reconfiguration of factors of production to create new products.
Fifth, the fact that downtime in any subsystem of the lean production system shuts down the total system further affects process requirements. When downtime occurs, specific processes are needed, such as a fast and effective problem-solving process. Effective problem solving in this context is affected by the nature of the technology. In the lean production environment the technology is typically complex and computer based, any one piece of equipment is the product of multiple ven-
dors, and so on. Thus, effective diagnosis and problem solving require multiple types of knowledge and skill.
The lean production system example demonstrates that specific process characteristics are required by different linkage arrangements. Coordination is important in any organization, but the coordination process in a lean system differs from that in a mass production system. In the latter, buffers reduce the need for real-time-based coordination or systemwide coordination. Long production runs reduce the need for coordination switching programs. All organizations similarly require problem-solving processes, but the lean production system requires much faster problem-solving processes than does a mass production system.
Facilitative processes do not exist in the abstract; rather, they are embedded in organizational mechanisms and policies. In their analysis of highly productive lean production systems, MacDuffie and Krafcik (1990) noted that such systems have fewer job classifications and more multiskilled workers because both help to simplify coordination in a system demanding a high level of coordination. In a single job skill environment, for example, production activities and maintenance activities are separate and require coordination. In a multiple job skill environment, an individual can perform production and maintenance activities, which reduces coordination costs. Thus, as demands for coordination increase, one response is to simplify the number of objects requiring coordination. More-productive lean production systems adopt such coordination mechanisms, whereas less-productive lean production systems do not.
MacDuffie and Krafcik (1990) also noted that highly productive lean systems provide intensive training in problem solving and have one or more designated problem-solving teams. How do these mechanisms translate into processes? If one combines intensive training, problem-solving teams, and multiskilled work forces, the result is a problem-solving process that is capable of responding quickly and tackling complex problems—a requirement of the lean production system. In other words, the problem-solving process reduces the inhibitors discussed above.
All lean production systems are not highly productive, however. Other critical mechanisms are not as directly driven by the nature of the linkage system. For example, highly productive lean production systems tend to provide employment security and reduced status barriers. Employment security can directly affect motivation and commitment to the organization. Reduced status barriers can also affect motivation and indirectly enhance coordination. In addition, contingent reward systems at the individual, group, and organizational levels focus attention on the links between individual and organizational performance and also affect motivation. These mechanisms induce greater
levels of motivation and focus of attention, which should facilitate changes at the individual level having a positive impact on organizational productivity.
In the MacDuffie and Krafcik (1990) analysis, problem-solving teams are used for proactive as well as reactive change. In the proactive context, the teams create new structural alternatives aimed at helping the organization to evolve and become more productive over time. For example, the proactive teams might find new ways to improve equipment or production processes. Such actions would tend to accelerate the transfer of productivity increases at the individual or group level to the organizational level.
We conclude this example by noting that (1) the linkage context in the lean production system requires specific processes of coordination and problem solving; (2) those processes are created by different combinations of organizational structures or mechanisms (e.g., fewer job classifications, a contingent reward system); and (3) other processes, such as motivation, focus of attention, and organizational evolution, are less dependent on the linkage context but contribute to organizational performance. High-productivity lean production exhibits coordination and problem-solving activities that fit the linkage conditions, places a focus of attention on productivity improvement, possesses qualities of high motivation and commitment, and implements evolutionary processes to create structural improvements over time.
In this section we use gain-sharing programs to illustrate how organizational interventions can affect individual and organizational productivity. Gain-sharing plans are designed at the organizational unit (e.g., a plant) and provide employees additional compensation based on unit-level improvements in costs or productivity. We focus on one type of gain-sharing program—the Scanlon plan. We selected the Scanlon plan because one of the panel members (Goodman and Moore, 1976; Graham-Moore, 1983) studied an installation that has used the plan successfully for over 17 years and because more empirical data are available on the effects of Scanlon plans than on other types of gain-sharing plans (Graham-Moore, 1983; Schuster, 1984). Our interest is not in whether Scanlon plans are successful. Rather, we use one example of a successful installation to illustrate how the five facilitative processes may contribute to the connection between individual and organizational productivity.
In this analysis, we argue that the structure of the Scanlon plan generates processes that facilitate changes between individual and or-
ganizational productivity. In particular, we highlight three processes—focus of attention, organizational evolution, and motivation. These processes are important drivers of the relationship between individual and organizational productivity, independent of the specific linkage condition.
Most Scanlon plans have three structural elements—a philosophy, a committee structure, and a bonus system. The Scanlon plan philosophy articulates the advantages of labor-management cooperation. It advocates tapping the knowledge base of labor and management—joint problem solving through shared information leads to productivity improvements. The committee structure exists to generate and evaluate productivity-related suggestions and to coordinate intra-and interdepartmental activities. The bonus system rewards all participants for improvements in productivity.
What are some of the facilitative processes generated by the Scanlon plan, and how do they help one understand the relationship between individual and organizational productivity? As noted, the specific Scanlon installation studied has been successful for more than 17 years (Graham-Moore, 1983). The first major process, the focus of attention, is critical. The committee structure focuses employees' attention on productivity improvement. Committee members solicit ideas from all employees on how to improve productivity. They help employees formulate proposals and then follow up on the status of each proposal. The bonus system is also designed to focus attention on productivity improvements. Employees can make suggestions for improving all aspects of work, but only changes that lead to improvements in organizational productivity are rewarded. Thus, whether changes are introduced at the individual, group, or organizational level, they must contribute to organizational productivity for the bonus system to pay off. The key idea is that there are many organizational outcomes (e.g., productivity, satisfaction) and many ways to influence those outcomes. The focus-of-attention process selects one outcome (in this case, productivity) and makes clear that all activities, whether individual, group, or organizational, must contribute to that outcome. Focus of attention, then, is one process that should facilitate the connection between individual and organizational productivity.
The second major process of interest is organizational evolution. This refers to a continuous improvement process whereby the organization evolves over time. As noted above, there is an elaborate committee system to generate productivity-related ideas. An analysis of initial productivity suggestions in a Scanlon installation usually reveals a reactive orientation to solving problems. That is, employees generate ways to solve problems with the existing system. This is similar to the
use of problem solving in the lean production system example. However, over time, the problem-solving orientation becomes more proactive in nature. Employees try to find new ways to reconfigure the basic factors of productivity (e.g., technology, organizational arrangements) in order to control and improve the organization's production process. For example, one suggestion by a team in the Scanlon installation led to a change in a labeling process that saved the company a million dollars a year.
The committee system is the mechanism for soliciting, selecting, and implementing suggestions. The key aspects of the organizational evolution process are that it is continuous and it occurs at all levels of analysis—individual, group, and organizational. The assumption is that changes in individual and organizational productivity come about when there are continuous efforts to improve productivity at these levels of analysis. The function of organizational evolution is to accelerate the effect of increases in individual productivity on organizational productivity. One-shot interventions are unlikely to have much effect; mechanisms that generate continuous productivity improvement processes are more likely to sustain organizational productivity.
The Scanlon plan also evokes motivational processes. The most obvious source is the bonus system, which rewards productivity improvements. This type of contingent reward system increases motivation at the individual, group, and organizational levels. However, the committee system provides forms of employee involvement that are also motivators. Evaluation studies of successful Scanlon plans (Schuster, 1984) report positive employee involvement, greater communication opportunities, and organizational identification. The key idea is that the Scanlon plan increases the motivation for productivity improvement.
In this example, we have emphasized the processes of focus of attention, organizational evolution, and motivation because these processes are necessary for continuous changes in productivity at the individual, group, and organizational levels. Changes in individual productivity should contribute to organizational productivity when the three processes are operating together in a complementary fashion (i.e., when the processes are congruent and self-reinforcing). The motivational system in the Scanlon plan energizes the organization and focuses attention on organizational productivity. The focus-of-attention mechanisms also keep the focus on organizational productivity and direct organizational evolution along the lines of organizational productivity improvement.
The Scanlon plan also stimulates the two other processes that enable changes in individual productivity to contribute to organizational productivity—coordination and problem solving. The philosophy of the
plan typically represents a set of shared beliefs among organizational participants. The more the philosophy is shared, the more it serves as a coordination mechanism. The committee structure, as noted, also serves as a coordination mechanism. Problem-solving activities also take place within the committee structure.
Implications of Examples
What can be learned from these two examples? First, the processes were key in creating high-productivity systems. Second, in the lean versus mass production example, the configurations of the coordination and problem-solving processes necessary for high productivity are unique to the linkage context; in the Scanlon plan example, the coordination and problem-solving processes are more generic. Third, the processes serve at least three functions: (1) removing inhibitors (problem solving); (2) creating an environment in which individual productivity can increase organizational productivity (good coordination, high motivation, focus on productivity); and (3) accelerating the connection between individual and organizational productivity (organizational evolution). Finally, in both examples, it was the operation of all the processes in a congruent and reinforcing manner that led to high productivity.
The central question initiating this chapter was, how do changes in individual productivity contribute to organizational productivity? We have analyzed the organizational conditions that enable individual changes in productivity to contribute to organizational productivity.
There is no model, in the formal sense, that identifies those organizational conditions that predict the covariation of individual and organizational productivity. Rather, there is a set of concepts and analytic steps one can use in (1) diagnosing why individual productivity changes do or do not contribute to organizational productivity changes and (2) structuring an organization so that increases in individual productivity will contribute to organizational productivity. These concepts and analytic steps are also tools for explaining and predicting the relationship between individual and organizational productivity.
In this section we integrate the major concepts and analytic steps for creating organizational conditions that enable changes in individual productivity to contribute to organizational productivity.
The most obvious step is to begin with differences in organizational-level technological linkages. At the beginning of this chapter, we introduced a typology of organizational technology and forms of interdependence, which ranged from uncoupled systems to systems with reciprocal interdependence. The basic point is that differences inherent in organizational types provide insight into the covariation between individual and organizational productivity. In organizations with mediated technology, pooled interdependence, and similar output among different levels (e.g., individual, group), one would expect closer relationships between changes in individual and organizational productivity than in organizations with long-linked technology, sequential interdependence, and different output produced by different units.
The inherent complexity of the linkages and the degree of interdependence within organizations are other antecedent factors. When analyzing organizational linkages, describing their complexity and interdependencies would be a useful way to begin to identify inhibitors. For example, as linkage complexity increases, so does the probability of the existence of inhibitors to the relationship between individual and organizational productivity.
Removal of Inhibitors
In an earlier section, we identified a set of inhibitors, including the following:
negative consequences for some objects that are linked to operations or other objects that have achieved increases in productivity;
slack—the inability to use excess resources to reduce inputs or increase other outputs;
constraints—the inability to absorb increases in productivity from a prior linked operation; and
focusing productivity improvements on peripheral, rather than core, tasks.
Each of the inhibitors was discussed above, and the consequences of their removal should be evident. The key point here is that the removal of these inhibitors creates the conditions necessary for a positive connection between changes in individual and organizational productivity.
Creating Effective Processes
Given a particular linkage system, removing the inhibitors and creating effective processes are key to the connection between individual and organizational productivity. The processes are important because they can remove inhibitors, create the conditions necessary for individual productivity to have an effect on organizational productivity, or accelerate the effect of individual productivity on organizational productivity.
We view the processes (and the identification of inhibitors) as conceptual tools with which to analyze the connection between individual and organizational productivity. The research problem addressed in this report is not one for which there is well-defined theory or a cumulative body of empirical findings. Also, developing a model that would cut across different organizational contexts seems an unmanageable task. There are too many organizational types and combinations within types to permit the development, at least now, of some generalizable theory. The development of contingency-based theories in this complicated context also seems unmanageable. Therefore, our goal in this chapter has been to identify a set of processes; apply those processes to specific settings so as to gain a better understanding of why individual productivity does or does not contribute to organizational productivity; and from those studies, begin to generate a body of empirical findings. This, in turn, will lead to more theory development.
What are the critical processes? How can they strengthen the relationship between individual and organizational productivity?
Coordination is a critical process, but the varying technological linkage conditions in organizations demand different levels and types of coordination. In lean production systems, for example, there are high demands for coordination. Such systems place a major premium on systemwide coordination (versus local coordination) and very close temporal coordination. Failure to create these conditions means that any changes in individual productivity will not contribute to organizational productivity. Effective coordination along these dimensions will enhance organizational productivity.
We have also argued that the processes are created by organizational structures and mechanisms. Thus, as demands for coordination increase, multiple, congruent structures and mechanisms for generating the required coordination should emerge. In lean production sys-
tems, these multiple structures/mechanisms include multiskilled workers, fewer job classifications, and a contingent reward system.
Effective Problem Solving
The linkage condition in an organization also influences the problem-solving process used to identify inhibitors of organizational performance and initiate corrective action. The linkage condition and the technological environment in lean production systems require very fast response time. In addition, the problems in such systems (versus mass production systems) may be more complex, and the identification of cause and effect relationships may be more difficult because of the tight coupling of components in lean production systems. The challenge, then, in this condition, is to develop a problem-solving process that matches these linkage conditions (i.e., a problem-solving process with fast response time and access to sophisticated knowledge and skills).
An effective problem-solving process creates an environment in which changes in individual productivity should more easily be reflected in organizational productivity. On the other hand, in an organizational system in which performance is allowed to drift outside established parameters and corrective action is slow or ineffective, there will be many conditions that inhibit a positive relationship between individual and organizational productivity.
Focus of Attention on Productivity
Organizations are complex systems with multiple outcomes. Given the turbulence in organizational environments, many conflicting forces affect what outcomes are salient. If the interest is in increasing individual and organizational productivity, the focus of attention must be kept on productivity and the paths to increased organizational productivity. The Scanlon plan's bonus and committee systems are good examples of ways to focus attention on productivity improvements. If the process of focusing attention on productivity causes all organizational participants to work on paths related to organizational productivity, the relationship between individual and organizational productivity will be stronger.
The process of organizational evolution can accelerate the effect of individual productivity on organizational productivity by performing two functions. First, it can focus on learning and change over time.
Some of our examples of individual and organizational productivity have been static in nature. Given a specific change in individual productivity, for example, we have explored the conditions under which the change will contribute to organizational productivity. This point of view focuses on a single change rather than continuous changes over time. We conceive of the process of organizational evolution as creating continuous cycles of change whereby individual change contributes to organizational productivity, which in turn creates more individual productivity changes.
The second function of organizational evolution is that it focuses on structural change. That is, it attempts to change the factors of production, the linkages, the organizational parameters, and other basic elements of the organization as a means of creating greater opportunity for productivity increases at the individual and organizational levels. Our assumption is that the long-term relationship between increases in individual and organizational productivity is dependent on the evolution of the basic structural elements of the technology and the organization.
Motivation is a necessary condition for productivity increases in any organization. In the context of organizational linkages, motivation can be thought of as serving two functions. First, the motivational process should be synergistic with the other facilitative processes. Coordination, problem solving, focus of attention, and organizational evolution are the critical processes for enhancing the connection between individual and organizational productivity. Thus, a motivational system must be designed to reinforce those processes. To have a fast-response, problem-solving process with access to complex skills, a motivational system is required that will evoke these skills in a timely manner. In order to focus attention on productivity improvements, the motivational system should also reward such improvements.
Second, the motivational system must also reinforce congruent behaviors across individuals, groups, and the organization as a whole. To increase organizational productivity, then, a reward system is needed that motivates individual and group behaviors that are consistent with organizational productivity.
Understanding more about the linkages between individual and organizational productivity has profound theoretical and policy impli-
cations. The concepts introduced in this chapter point to a number of exciting research opportunities.
The set of concepts we have proposed about different types of linkages (e.g., organizational, interrole) and mechanisms (e.g., negative consequences, slack) can be used to examine why increases in individual productivity do not contribute to increases in organizational productivity. In our analysis we treated the concepts one at a time, but their interactions have yet to be explained.
Research is needed to examine how different linkage situations generate inhibitors. What types of interventions or productivity changes will more likely evoke slack or negative consequences under different linkage situations? Would slack more likely be generated under forms of serial or reciprocal interdependence? Given the generation of slack, would it have different consequences for the relationship between individual and organizational productivity under different linkage conditions? The answers to these questions are not yet known. Nor is much known about how linkage conditions moderate the effects of different inhibitors on the individual-organizational productivity relationship.
To simplify our analysis, we focused primarily on formal technological linkages. However, the analysis should be extended to other areas, such as social linkages. Social linkages refer to informal arrangements among roles, groups, or organizational units. Consider two organizations whose production processes are characterized by serial interdependence. In one organization a set of norms have developed that encourage competition and noncooperative behavior among units. In the other organization norms that facilitate cooperation and helping behavior dominate. While the technological linkages are the same in both organizations, the relationship between changes in individual and organizational productivity would be explained by the nature of social linkages. Future research should explore the interactions among these different types of linkages.
We have also proposed that processes are key to the individual-organizational linkage. Given certain structural configurations, the processes influence the extent to which changes at the individual level have an impact at the organizational level. In our analysis, we treated the processes as independent although they must be self-reinforcing and congruent. Thus, research is needed to explore interactions among the processes. In the Scanlon plan example we presented, the processes of focus of attention and motivation are highly linked in the structure of the plan. Can the impact of focus of attention be isolated? Do focus of attention and motivation interact, or is their relationship additive? Are the interactive effects among the processes a function of the linkage conditions? Would the interactive effects among focus of attention,
motivation, and coordination be greater in long-linked versus mediating technology?
We also treated the problem-solving and organizational evolution processes as independent in our analysis. The role of these processes, however, is probably conditioned by the complexity and uncertainty of the technology and the environment. In organizations with complex and unstable technologies and operating environments, we would expect problem solving and organizational evolution to play a greater role in linking individual and organizational productivity than in organizations operating in more stable environments. The key is that elaboration of the relationships among processes provides opportunities for new theoretical development on the linkage between individual and organizational productivity.
Our analysis, for presentation purposes, has been separated into a discussion of inhibitors and facilitators. An important key to understanding the linkage between individual and organizational productivity is to explore the relationship between the processes and the concepts dealing with the inhibitors. However, we do not want to imply a simple framework that calls for removing the inhibitors and then activating the facilitators. Rather, we see these activities as feeding on each other and enhancing the relationship between individual and organizational productivity. For example, we have argued that slack created through individual productivity increases can inhibit subsequent increases in organizational productivity. We also argued that organizational evolution is a necessary process for enabling changes at the individual level to appear at the organizational level. The concepts of slack and organizational evolution can be self-reinforcing. Slack can create conditions (or resources) for more intensive evolutionary processes of feedback learning and structural change, which in turn could increase the probability that individual productivity increases would contribute to organizational productivity increases. Thus, slack, instead of having inhibitive effects, can have a facilitative effect when coupled with evolutionary processes. The interesting research task is to explore other intersections between inhibitors and facilitators.
In focusing on the individual-organizational link, we have not explored how changes in individual productivity may affect other organizational outcomes. For example, the conditions that enable changes in individual productivity to increase organizational productivity may actually decrease other performance criteria, such as quality, efficiency, or long-run adaptability. Research is needed to determine the functional or dysfunctional consequences of how other criteria change as individual and organizational productivity are more closely linked.
Finally, the focus of this chapter has been solely on productivity as
an indicator of organizational performance. Research is needed to expand the analysis to other performance criteria. A central question is how the theoretical framework we applied to productivity applies to other factors, such as quality, cost, adaptability, customer satisfaction. Would the inhibitors we identified explain why changes in quality at the individual level do not have an impact on organizational quality? Would the five facilitative processes influence quality in the same way we have hypothesized productivity changes are transferred from the individual to the organizational level?
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