Document created: 18 August 03
Air University Review, January-February 1975

Computer Impact on the Organization

Major Glenn F. Pribus

The rapid growth of computer use in business, government, and the military services has led to much speculation concerning the impact computers will have on the using organizations. Early investigation on the organizational impact of the computer by academic researchers suggested that the conventional hierarchical pyramid would be replaced with new organizational patterns. It was felt that there would be a significant change in traditional organizational concepts including structure, middle management roles, centralization versus decentralization, and the interrelationships between functional elements. 1

The purpose of this article is to investigate these predictions with a view toward forming conclusions regarding the hypothesis that the new information technology (specifically computers and electronic data processing systems) will have considerable impact on computer-oriented organizations.

structure change

In 1958 a now famous article predicted that in place of the classic organizational pyramid the future structures of computer-oriented organizations would resemble a football balanced atop a church bell?2 The football was to represent complete centralization of the many management functions that were formerly spread in small pieces throughout the organization.

Now, more than 15 years later, many authorities feel that these implications have yet to be realized. Nevertheless, they do recognize that in some cases the classic hierarchical pyramid structure has taken on a bulge around its middle, the bulge reflecting obsolete management.3 Authorities also feel that the growing alliance between top management and computer technology is still very likely to have considerable additional impact on organizational structures. This point of view is based on the tendency for an increasing number of computer personnel to report directly to top management, which shows an increasing high-level involvement in this function and supports the idea that a "new management" is evolving.4 This tendency is illustrated by a sampling of 330 business firms covering the spectrum of industry types and sizes. In over half of the sampled firms, the Data Processing Manager reported to a Vice President (107 cases) or Chief Executive Officer.5

The reasons for the growth in interest in computer systems by top management are readily evident. By the mid- 1970s it is felt that computer systems will no longer be mere tools for accomplishing business functions; they will be thoroughly immersed in tactical planning. By the mid-1980s John Diebold sees computers as "the heart of the structure" and expects all levels of management to be involved in one or another information processing activity.6 The advent of integrated computer systems that are not limited to specific projects, problems, or functions is forecast to provide a positive basis for the whole decision-making spectrum. Thus, data for the entire management process will soon be possible from computerized information systems. 7

Harold Wolff, a management consultant who led a panel session on "the new management" at an annual meeting of the Institute of Management Science (TIMS), says one characteristic of this group is their point of view that "change is one constant fact of life." As a result, the group insists that organizational flexibility is the prime requisite for good management, rather than rigid structures with clearly defined job descriptions and lines of authority.8

While a great deal has been written concerning the impact of computers on organizational structures, there was little empirical evidence supporting the various conclusions. As a result, a plant facility of a large, nationally known company employing several thousand employees was studied to determine the influence on installed computer systems. The conclusions:

1. Computers provided many benefits to the company through reduction in manual effort, improved performance, cost savings, and more timely information for decision making and control purposes.

2. Computers resulted in organizational change and, in many cases, upheaval. Departments became combined, functions became obsolete, and positions were eliminated; all resulting in a change in managerial philosophy toward organizational relationships.

3. Failure to recognize the importance arid the extent of such changes will jeopardize the best technically designed systems. The result may be the loss of key personnel and sabotage of the system to the extent that technical information gains are negated.9

Further validation of the structural impact of computers is provided in reports that such companies as Ling-Temco-Vought, flow Chemical, Pillsbury, General Electric, General Mills, and many others have had or are now experiencing many organizational changes resulting from computer installation. In addition, special organizational development departments to provide expertise in organizational planning have been established at companies such as the Hotel Corporation of America and Federated Department Stores.10

Another article states:

Most current theories of structuring organizations stress the concern for humanizing the organization. . . . What needs to be recognized is that technology may also exert an important effect upon the structures of the organization and may help determine the tasks toward which the other . . . components of the organization structure strive.11

On the other hand, for those who think change is necessary for the sake of change or to keep up with the times, James D. Webb, NASA's former administrator, warns and insists that the dimensions of any new computer-organization system are impossible to determine in advance. His rationale:

"The critical factors arise out of the environment in which the systems are being devised, and that environment is constantly changing."12

middle management

Concomitant with a change in organizational structure, many theorists and practitioners foresaw a radical change in the status and functions of middle management. It was felt that the middle management functions of planning, computer programming, and research and development would take on increased importance because innovation and creativity would become increasingly vital to top process many ordinary repetitive decisions.13

. . . we think that the horizontal slice of the current organization chart that we call middle management will break in two, with the larger portion shrinking [and sinking] into a more highly programmed state and the smaller portion proliferating and rising to a level where more creative thinking is needed. 14

The rationale behind this prediction is that the typical decision situation at the middle management level is highly structured and is accomplished through specific programs that are entirely amenable to computer logic. These decisions are composed of identifiable quantified elements capable of being rigorously manipulated.15 Therefore:

A changeover to Electronic Data Processing appears to accelerate the level of formalization within the organization. The organization of work is further rationalized; rules and regulations are substituted for individual decision making. As a result of programming, decisions (those with known criteria) formerly left to individual employees are now made by the computer. With the programming of this area of decision making, important functions and even certain positions within the organization are eliminated. 16

On the other hand, there are many viewpoints contrary to this pessimism. One such point of view is that of "the greater challenge"17 in which it is believed that as middle managers are freed from programmable decisions they will be able to devote themselves to true managerial functions. Herbert A. Simon concludes that, while programmed decisions lend themselves to computerization and unprogrammed decisions do riot, the gulf between them and the effect on middle management is not as great as seems to have been imagined.18 Thus, he feels that, however great the progress in computer decision-making, the major part of middle management decision-making has not been, and probably never will be, amenable to computer manipulation.

A research study of eight companies, all with at least two years' experience with computers, lends credence to this conclusion.19 Fifty-three middle managers and fourteen top managers reported that, be-cause the computer had relieved middle management of many petty administrative details, these jobs had grown in complexity and importance. There was no evidence from the study that middle management would be eliminated, that their positions would become highly structured, that they would become mere specialists in computer techniques, or that their jobs are taking on the characteristics of pure leadership or supervision. In some cases, instead of reducing the role of the middle manager, the computer has made possible the expansion of existing operations and has resulted in the addition of middle management positions.

Another study gives further support to this viewpoint by showing that the effect of the computer can be a decrease in the decisions reaching top management for resolution.20 This study of one hundred top managers over a fourteen-month period revealed that top management rarely made direct use of the computer as a decision tool. When it did, the computer was used to provide support for middle management decisions. Therefore, it would appear, many believe that:

The automation of decision making, irrespective of how far it goes, and in what directions it proceeds, is unlikely to obliterate the basically hierarchical structure of organizations. The decision process will still call for departmentalization and sub-departmentalization of responsibilities.21

A third, intermediate viewpoint is that while middle management jobs will become more challenging and rewarding, the number of jobs will be significantly reduced.22

The conclusion to be derived from this discussion appears to be that the middle manager, regardless of the final realized impact of the computer on his level, must improve his abilities and acquire an understanding of computers if he desires to compete effectively in the future. The middle manager who complains that the computer has turned him into a conforming, insecure clerk was probably a con-forming, insecure clerk to begin with. "Where the middle manager stands with respect to the computer will depend not so much on the computer, but on the manager himself."23

centralization

During the past several decades there has been a trend toward the decentralization of large organizations because size, complexity, and diversity have made it increasingly difficult for a central authority to exercise direct control. With the advent of more complex and sophisticated computers, there are many proponents of the theory that this trend will be reversed. They base their thinking on the proposition that a computerized data system can provide one person in a central position with the total information needed for decision-making and control. Thus, the need for decentralization will be alleviated.24 This is because  

. . . if the total information . . . is all together at one place, it seems illogical to communicate it, in segments, to several persons for purposes of making only limited decisions. The organizational implications . . . point to a broadening of the span of control assigned to any one position and fewer echelons overall.25

Also, as computer technology has improved, computers have become much more accessible, understandable, and, easier to use. Because of teleprocessing, time sharing, and user-oriented computer languages, top managers are now able to use computers directly. As a result, many managers find that it is no longer necessary to work through intermediaries, thus facilitating a move toward greater centralization.26

Another argument given by the centralization proponents is that computers cause an increasing integration of work processes resulting in less autonomy for each functional area in setting the work pace for its individuals and groups. Because the computer causes this interdependence, there is a greater need for central control. To effect the control needed, it must be moved to the highest levels in the organization so that complete cognizance of the entire operation is maintained. In consequence, final responsibility and control are placed in a very limited number of top management positions, resulting in a shift toward centralization.27

The logic that computers make centralization the most effective and efficient decision-making locus has been criticized on several points. First, many managements have not been able to use their data to full potential. Historically, data management has developed somewhat haphazardly through the years, and computer applications have not been integrated. As computer complexity and capabilities increased, there have been many new potential applications, but these have been mainly designed for specific operational use or for specialized staff functions.

Hence, management of data has continued to develop in fragmented fashion and at rather low organizational levels--at sub-departmental or sub-staff level.28

Second, it was not the lack of information that caused decentralization; it was that top management lacked the time to make all but the few most important decisions. The increase in amounts of information, made available by computers compounds the problem instead of alleviating it. Third, even when aided by the computer, top managers will still be unable to maintain enough expertise in all aspects of their business to make the best possible decisions.29 Fourth, decentralization is often thought to be the best trend because it brings the profit motive to bear on a larger number of management personnel. Since it allows profit goals and related decision-making activities to be established in decentralized units, there is a greater likelihood that the managers of these units will reinforce the goals of top management.

Finally, and related to all these points, the managerial function is frequently too complicated and thoroughly diversified to be allocated to one centralized body. Decentralization separates groups of related activities and permits simplification by allowing decisions to be made by the most relevant organizational divisions.30

Paradoxically, there is evidence that a centralized computer system might even result in an increase in decentralization. The system, in providing top management with information on all aspects of the business, will permit, a closer comprehensive check on what is happening at all decision-making levels. Therefore, it might be practical for top management to delegate certain decisions, formerly made centrally, and only raise the level of certain decisions when the information received points to the need to make an exception.31

Studies on the centralization-decentralization question show conflicting evidence. Pillsbury, which makes extensive use of the computer in daily operations as well as in top-level planning and decision-making, is illustrative of what happens when the new technology becomes an important aspect of management."‘We had this idea of decentralizing and diversifying 10 or 12 years ago,’ recalls President Terrance Harold. But instead of immediately reshuffling its organization chart, Pillsbury did a curious thing: It began its decentralization by first becoming more highly centralized. And only now, a decade later, has it moved formally to create what Harold calls 'free-standing firms' within the corporation."32

In another study, when a computer system was installed in the home office of a medium-sized insurance company the result was found to be an increase in central control and decision-making.33 On the other hand, in another company where each regional office has its own computer, there was an increase in decentralization toward these offices.

the new breed

The number of people in the United States employed as computer system analysts has grown from a mere handful in the early 1950s to nearly 200,000. This number is expected to double by 1980.34 Initially, computer equipment was located in the Accounting Department and used as an ultra high-speed tabulator.35 Gradually, however, as the computer became more sophisticated, there was a need to utilize it more fully from a profitability standpoint. Thus, use in the functional areas of personnel, production, and marketing, to mention a few, became commonplace.36 As a consequence, there was a general recognition of the need for a separate function to deal with the information services provided by the computer. This function, frequently a new function staffed by computer experts, is often not defined to other organizational members, a factor that is likely to, cause considerable unrest and/or mistrust. The frequent result is that the function's members are referred to as "the new breed," "the new theocracy," "prima donnas," "industrial carpetbaggers," and the like, whose primary function is considered by some to be the undercutting of the operations and authority of other departments.37 In addition, because it is a new management resource and often not completely understood, the computer function is frequently allocated a measure of autonomy that is seldom if ever enjoyed by other areas. It designs its own projects, makes changes it thinks expedient, and hires its own personnel. 38

The introduction of the computer is fraught with organizational difficulties because while EDP managers can say, "Top management wants this conversion," they cannot say, "Top management wants it done this particular way." Thus, while the EDP manager has little hierarchical authority to introduce specific changes in the organization, he usually resolves this hierarchical ambiguity by asserting his expert authority which is difficult for the average manager to challenge due to lack of EDP knowledge.39

Therefore, in their primary concern and effort to get more information faster, the computer personnel may be artless in their relationship with other functions.40

This is complicated by the fact that research findings have shown that a high-level location contributes to efficient and effective functioning of the information systems. Computer staffs achieving above-average results are most often located just one level below the chief executive. On the other hand, those placed two more levels below the chief executive achieved only average results.41

The conclusion is that the problems I have discussed arise most frequently through failure of top management to clarify the role of the "new breed" for the new breed people themselves and for the entire organization.

In many organizations, a critical element needed for change--the collaborative process--is missing. In order for a planned change to be effective, there must be a relationship established between the giver and receiver of help so that control and dependency are balanced. . . There must be a joint effort that involves mutual determination of goals . . . and a complete investigation of the structural, technical, and personal factors affecting the relationship between EDP personnel and the rest of the organization.42

In this regard, it is essential that planners make recommendations, management scientists make computer models, and line managers make decisions. Recognition of this point has been identified as the most important factor in the success of computer project integration into the organization. While some overlap of roles is often necessary, real organizational problems are likely to result if decision-makers delegate or leave decision-making responsibility to computer personnel, or when computer personnel attempt to take over the decision-makers' responsibility.43

In addition, top managers should recognize that the majority of problems arising in connection' with computers are people problems. Based on studies conducted in cases where small-scale computers were installed, those companies that promote existing employees to computer positions seem to be able to eliminate or reduce many people problems, especially those related to staffing.44

Conclusions

It is evident that there are many conflicting opinions as to the impact of computers on the organizations that use them. Two significant factors in this respect are semantics and the mode of employment of the computer. The problem of semantics arises simply because key words--such as middle management, centralization, programmed/nonprogrammed decisions-- are interpreted differently by different people. The influence of computers depends on the way they are employed and on the length of time they are in operation. When the computer is viewed as functional bookkeeping hardware, its use does not result in conspicuous change. When it is viewed as a management system, its installation may result in drastic and extensive change.45

And so, "despite more than a decade of rapid expansion of the use of computers and growing sophistication in their application, the patterns of change are not yet clear." 46

Nevertheless, some tentative observations are possible regarding military organizations:

Tactical Air Command

Notes

1. Ida R. Hoos, "When the Computer Takes Over the Office," Harvard Business Review, 38 (1960), p. 102.

2. Harold J. Leavitt and Thomas L. Whisler, "Management in the l980’s," Harvard Business Review, November-December 1958, pp. 41-48.

3. James C. Criss, "The Out-of-Date Employee in an Up-to-Date World," Journal of Systems Management, October 1973, p.19.

4. "The ‘New Management’ Finally Takes Over," Business Week, August 23, 1969, p. 59.

5. Robert J. Greene, "The DP Manager's Status," Datamation, June 1974, p.66.

6. Walter A. Kleinschrod, "Computers and Middle Management: Where Are We Now?" Administrative Management, May 1969, p.22.

7. Robert Anderson, an address given at the 1974 Annual Conference of the Association for Systems Management, Journal of Systems Management, June 1974, p.20.

8. "The ‘New Management’ " Finally Takes Over. " p. 59.

9. Doyle Z. Williams and Sexton Adams, "Computer Technology and Organizational Change," Management Accounting, September 1968, p.48.

10. "The 'New Management' Finally Takes Over." p. 60.

11. W. F. Blose and E. E. Goetze, "On-Line Processing," Journal of Data Management, March 1969, p.26.

12."The 'New Management' Finally Takes Over," p.62.

13. Leavitt and Whisler, p. 41.

14. Ibid.

15. Melvin Anshen, "Manager and the Black Box," Harvard Business Review, 38 (1960), pp. 85-92.

16. Lawrence K. Williams, "Observations on the Dynamics or a Change to Electronic Data Processing Equipment," Administrative Science Quarterly, 5 (1960), p. 251.

17. D. H. Sanders, "Computers, Organization and Administration," Advanced Management Journal, 34 (1969), p. 76.

18. Herbert A. Simon, The New Science of Management Decision (New York: Harper and Row, 1960), pp. 14-20.

19. Donald R. Shaud, "What's Really Ahead for Middle Management?" Personnel, November-December 1964, pp. 8-16.

20. Rodney H. Brady. "The Computer Impact on Top level Decision Making--Today and Tomorrow," Management Review, 56 (1967), p. 3l.

21. Simon, p. 42.

22. Sanders, p. 76.

23. Kleinschrod, p.23.

24. Gilbert Burck, "Management Will Never Be the Same Again, Part V," Fortune, August 1964, pp.125-26.

25. Gordon L. Murray, "Information Technology and the Professional Accountant," Management Services, November-December 1967, p-19.

26. Robert H. Hayes and Richard L. Noland, "What Kind of Corporate Modeling Functions Best?" Harvard Business Review, May-June 1974, p. 108.

27. James D. Thompson and Frederick L. Bates, "Technology, Organization, and Administration." Administrative Science Quarterly, December 1957, pp. 325-43.

28. Richard L. Noland, "Computer Data Bases: The Future Is Now," Harvard Business Review, September-October 1973, pp. 101-2.

29. J. Dearden, "Computers: No Impact on Divisional Control," Harvard Business Review, January-February 1967, pp. 99-104.

30. Simon, p.44.

31. Dearden, pp. 100-101.

32. "The 'New Management' Finally Takes Over," p. 62.

33. Jack Stieber, "Automation and the White Collar Worker," Personnel, November-December 1957, pp. 8-17.

34. Richard Booker, "Recruiting the Right People," Computer Decisions, September 1978, p. 60.

35. Sexton Adams and Doyle Z. Williams, "Information Technology and the Accounting Organization," Management Services, September-October 1966, pp. l5-23.

36. W. H. Guin, "EDP Systems in Organizational Structure," Management Accounting, 48 (1966), pp. 45-66.

37. Avner M. Porat and James A. Vaughn, "Computer Personnel: The New Theocracy--Industrial Carpetbaggers?" Personnel Journal, July 1969, p. 540.

38. Hoos, p.109.

39. Porat and Vaughn, p. 541.

40. Hoos, p. 109.

41. Dr. William F. Reif and Dr. Robert M. Monczka, "Locating the Systems Department," Journal of Systems Management, December 1973, p. 30.

42. Porat and Vaughn, p. 543.

43. John S. Hammond III, "Do's and Don’ts of Computer Models for Planning, "Harvard Business Review, March-April 1974, p. 118.

44. Michael W. Cashman, "Studies in Small-Scale Computing," 1974, p. 47.

45. Hak Chong Lee, "The Organizational Impact of Computers," Management Services, May-June 1967, pp. 39-41.

46. Ibid., p.41.

47. Blose and Goetze, p. 18.

48. Simon, pp. 49-50.

49. Anshen, pp. 85-92.

50. Sanders, p. 72.

51. Dr. Joan G. Schroeder, "Helping the Manager User," Journal of Systems Management, November 1973, p. 17.


Contributor

Major Glenn F. Pribus (M.B.A., Ohio State University) is Chief, Materiel Management Branch, DCS/Logistics, Hq Tactical Air Command. He has had tours as a communications officer at Kelly FB, Texas, and Kadena AB, Okinawa, as aidede-camp at Hickam AFB, Hawaii, and as a logistics staff officer at U-Tapao Airfield, Thailand, and Hq TAC, Langley AFB, Virginia. Major Pribus is a distinguished graduate of Air Command and Staff College and an honor graduate of the Industrial College of the Armed Forces.

Disclaimer

The conclusions and opinions expressed in this document are those of the author cultivated in the freedom of expression, academic environment of Air University. They do not reflect the official position of the U.S. Government, Department of Defense, the United States Air Force or the Air University.


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