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7 DECOMPOSING THE PRODUCTIVITY LINKAGES PARADOX
Pages 161-192

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From page 161...
... Typically, the ultimate justification for work in such areas as personnel selection, training, equipment design, motivation, task design, group structure, and feedback systems is that it will help the organization function better. The paradox suggests the possibility that "successful" interventions can actually have no effect on organizational functioning in that the positive effects of the intervention are somehow being absorbed or negated somewhere in the organization.
From page 162...
... The firm comprises a production division, a marketing division, and such other divisions as personnel, maintenance, purchasing, and accounting. The production division includes a design unit and a manufacturing unit.
From page 163...
... . An individual in the design unit might produce the output of an idea for one aspect of the new product's design.
From page 164...
... In the example, a linkage occurs when the outputs of the individuals must be combined to produce the inputs the design unit uses to produce a new product design. Another linkage occurs when the outputs of the design unit must be combined with those of the manufacturing unit to produce a product of sufficient quality to meet customer needs.
From page 165...
... First, they are natural and unavoidable aspects of organizational functioning. Second, they all reduce the one-to-one correspondence between the outputs of one subsystem and the outputs of a broader subsystem.
From page 166...
... The second class of measurement issues comes to the fore when there are actual errors or conflicts in the measurement of organizational performance. This class of measurement issues is much more critical to organizational functioning than the first class and much more problematic for decomposing the productivity paradox.
From page 167...
... There are five major purposes in measuring organizational performance, each of which has very different implications for what is measured (Pritchard, 19921. The first purpose of measuring is to compare large aggregations of organizations to each other.
From page 168...
... The management information system is concerned with the overall functioning of the organization or its major subsystems and deals with macro measures, such as the profitability of the total organization or the contribution of different units to some type of overall effectiveness. The measurement information is rarely given to Towerlevel personnel in the form of feedback.
From page 170...
... The plans developed by the design unit, for example, must be manufacturable at a reasonable cost. In addition, a major resource acquisition process occurs when the person in charge of the di`rision must acquire resources from top management.
From page 171...
... The management information purpose encompasses individual behavior, the performance of the technology, how well supervision is done, the effectiveness of coordination of the individual units, and the effects of resource acquisition. Measuring total organizational performance typically includes all the factors shown in Figure 7-3, including those outside the organization.
From page 172...
... Thus, the measure must allow the performance of individual designers to be aggregated to produce the performance of the design unit. An analogous measure must be developed to summarize the performance of individuals in the manufacturing unit.
From page 173...
... If the objectives of units that must work together are inconsistent, improving one or all units' ability to meet their own objectives does not improve the broader subsystem's performance. For example, suppose the design unit receives new, more advanced CAD equipment and it indeed helps designers to do their work better.
From page 174...
... to achieve its objectives will result in improvement in measures of broader organizational functioning only if that subsystem's objectives are consistent with the objectives of units with which it must coordinate to produce the broader subsystem's outputs. · The greater the inconsistency in the objectives of units whose outputs must be coordinated to produce the outputs of the broader subsystem, the greater the possibility of a productivity paradox.
From page 175...
... That is, one must not only measure aspects TABLE 7-1 Causes and Solutions to the Productivity Paradox Cause Solution Structural Factors Intervention Side Effects Measurement Effects Different Measurement Purposes Measurement Conflicts Conflict between Local Objectives Inconsistency Across Organizational Levels Measure Intervention Effects More Carefully Measure Intervention Effects More Broadly Aggregate Consistent Measures Resolve Conflicts and Replace Measures Resolve Conflicts and Replace Measures
From page 176...
... For example, if a new CAD system is introduced, one should not only measure the quantity and quality of designs produced by the individual and groups using the new equipment, but also measure the overall outputs of the broader design unit. Measurement Effects The next major set of causes comprises direct measurement effects that could produce the paradox.
From page 177...
... If the design unit produces elegant designs and the manufacturing unit requires simple, easy-to-make designs, some effort is going to be lost. This is an example of a conflict among coordinating subsystems.
From page 178...
... Assume that the design team developed the following list of indicators for the three products: Maintain high production · percentage of boards completed: number of boards completed divided by number of boards received meeting production priorities: number of high-priority boards completed divided by the number needed 2. Make high-quality boards .
From page 179...
... The example here is abbreviated to simplify the explanation. When the design team reaches agreement on a unit's products and indicators, it presents the list to upper management for review and approval.
From page 180...
... It also seems to produce contingencies that are reliable and useful over time (Pritchard et al., 19891. In the example contingency, the design team determined that the best possible amount of boards passing inspection is 100 percent.
From page 181...
... Put another way, once a certain level of effectiveness is reached, it may be more beneficial to focus on improving another area than to continue working on an area of performance that is already very good. For instance, if the unit producing circuit boards has completed a very high percentage of boards, it may be better to work on improving its only modest attendance even though attendance is not as important overall.
From page 182...
... Quality Percentage Passing Inspection I I I Attendance Percentage of Maximum Hours Worked Overall effectiveness = +97 FIGURE 7-6 Sample feedback report.
From page 183...
... The group with the highest percentage-of-maximum score is the highest-performing work group. This comparison is valid even if the groups have different indicators because the contingency process scales all indicators on a common metric, overall effectiveness.
From page 184...
... TOWARD A COMPOSITION THEORY OF LINKAGES While it is important to decompose the productivity paradox and suggest solutions for dealing with it, the larger objective must be kept in sight: learning about productivity linkages. The paradox is only an example of the importance of studying and understanding linkages between organizational subsystems.
From page 185...
... What is needed in addition is more conceptual work that will enable researchers and practitioners to understand better the nature of organizational linkages. Specifically, a sound theory of aggregation is needed, that is, a theory for how organizational levels are related to each other and how that affects organizational productivity.
From page 186...
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From page 187...
... For example, degree of interdependence could be operationalized as the correlation of mean individual output and total group performance over time. If personnel in the group are truly independent, their individual outputs can simply be summed to arrive at total group output.
From page 188...
... For example, one could compare the expected gain in performance at the group and organizational levels from (1) improving personnel selection, (2)
From page 189...
... As a first step, improvements in outputs at the most molecular level must be shown to have occurred because of an intervention, and then those improvements must be traced through the various organizational linkages to the broadest organizational level. The idea would be to measure each explanatory factor as identified in the linkages taxonomy, along with the amount of loss of output across the linkage.
From page 190...
... This represents waste, and to the extent it exists, its elimination will improve organizational functioning. Thus, the next step in the research program would be to use interventions to change the factors that are decreasing the translation of outputs across levels and assess the effectiveness of the interventions.
From page 191...
... 1990 Measuring and Improving Organizational Productivity: A Practical Guide. New York: Praeger.
From page 192...
... Ekeberg 1988 The effects of feedback, goal setting, and incentives on organizational productivity. Journal of Applied Psychology Monograph Series 73(2)


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