Influences of IT on Management

In this article, i will discuss different viewpoints on the influence of information technology on management. Therefore, I read three articles from 1958, 1985 and 1988.

Article Summaries

Leavitt and Whisler described 1958 how management might look like in the 1980s; they focused on organizational transformation related to Information Technology. They stress the impact on middle and top management, while opposing future management to the philosophy of “participative management”. Their prognostications include:

  1. More programmed work and focus on performance and less planning in middle management due to Information Technology. Many middle management jobs will be highly programmed and there will be rather specialists jobs than management jobs.
  2. Large industrial organizations will recentralize and top management will take over larger proportions of planning and innovation. Top management will deal more with horizon problems (innovation and change). Their work will be more abstract and search-research-oriented and they are forced to think while being freed from internal details. This is due to pressure of rapid technical and organizational changes in the industry.
  3. Radical Reorganization of middle management. Determinants of the impact of change:
    1. Ease of Measurement
    2. Economic Pressure
    3. Acceptability of programming by the present jobholder

On this basis two classes of middle management jobs should move up: the new information engineers, R&D. Middle management jobs gets depersonalized (machine-like), just like hourly workers middle managers are forced to satisfy their personal needs off the job.

  1. There will be a clearer separation among middle and top management

Zuboff takes a different view point in 1985. She claims technology was often used to automate production, reducing skill and labor requirements. But as Zuboff points out, technology can inform as well. There is a lot of data generated in the technology-driven automated execution of a process. This data can inform organizational members about the work process, improve operations and increase innovations. It can yield a competitive advantage for the organization. Therefore, Zuboff declares it to be important for long-term organizational success.

Drucker compares in 1988 new organizations rather with hospitals or a symphony than with a typical manufacturing company. He describes new organizations twenty years in the future as knowledge-based companies. In the realms of an information-centered organization he predicts organizational transformations related to

  • Decision processes:
    Opportunistic financial decisions based on numbers are transformed to business decisions based on probabilities of decision alternatives.
  • Organizational structures:
    Shrinking of middle management and increasingly specialists in operations, carrying the knowledge of the organization.
  • and the way work gets done:
    Actual work is done in task-forced teams rather than in traditional departments

According to Drucker’s findings, an information-based organization has almost no middle management. In this type of organization clear, simple, few and common objectives that can be translated into particular actions are required. In addition to clear objectives feedback mechanisms are needed to enable self-control for the specialists, as nobody is going to tell specialists how to work. Moreover, employees in an information based organization have an information responsibility to others and to themselves.

He moreover identifies the following special management problems:

  1. Developing rewards, recognition, and career opportunities for specialists
  2. Creating unified vision in an organization of specialists
  3. Devising the management structure for an organization of task forces
  4. Ensuring the supply, preparation, and testing of top management people

Conclusions

Leavitt / Whisler and Zuboff basically describe the same era related to the use of information technology. They focus on leveraging information for more centralized control mechanisms and better communication structures. Zuboff emphasizes the “informing” role of technology in parallel to the “automating” role in the production process of companies.

Most interestingly Drucker predicts partly similar contents in the 1990s like Leavitt and Whisler in the 1960s. They’ve both foreseen a shrinking middle management twenty years ahead in the future.

But Leavitt and Whisler compared the influences of Information Technology rather with the previous industrialization and its effects on the hourly worker. They predict the future changes in middle management in analogy to the changes that hourly workers and manufacturing organizations experienced before. In contrast to Drucker, they stress the highly programmed work of future middle management or specialists. Especially impressing are the prognostications related to the organizational structure of companies influenced by information technology. In my opinion, they were pretty accurate in terms of recentralization and the new role of top management. However, they did not stress the lean flat structure that Drucker emphasized in his article.

Besides the shrinking middle management, Drucker on the other hand stresses the role of specialists as the carrier of knowledge within the enterprise. The knowledge in information-based organizations is located at the bottom rather than at the top as stated by Leavitt and Whisler. He derives interesting challenges for the management of those specialists, like the need for goals and feedback mechanisms for their self-control. He went into detail and already cared about reward mechanisms for good work of specialists as a promotion to management position is not as easy as with an existing middle management. Another interesting aspect is the flat structure he propagates, through getting work done in task forces rather than in departmental structures. This fits with the idea of specialists and drives further management challenges. Drucker doesn’t forget the top management; he recognized the increased difficulty to find management staff that can deal with the new role of top management. The role of top management can be compared to the one Leavitt and Whisler identified.

Zuboff clearly expresses the need for systems we know today as Management Information Systems (MIS) and Information in the context of Business Intelligence. While expressing the danger of drowning in information, Drucker goes even one step ahead and stresses the importance of knowing one’s information need.

Summarized Comparison of Drucker versus Leavitt/Whisler:

Drucker Leavitt / Whisler
Role of middle management dissolved Greatly diminished
Location of knowledge Bottom at specialists Centered at top
IT effects on control Higher self-responsibility More control / centralized
Nature of work More knowledge, more specialists, more differentiation => jobs enriched and develop over time More control, fewer “judgement” decisions, fewer “experience” => programmed static jobs
Effects of increase of information Danger of drowning in data Better communication, misconception of goals and measurements
Effects on organizational structure Flatter, more uniform hierarchy Organizational integrity dissolves, top-mgmt. drfits apart from rest of organization

Common aspects of Drucker versus Leavitt/Whisler:

  • Fast Changing world due to technology
  • Moving up into top-management becomes more difficult
  • Decision-making more rational, less judgmental
  • Recruiting for top-management becomes more problematic

References

  • Drucker, P. F. (1988, 01-02). The coming of the new organization. Harvard Business Review, pp. 45-53.
  • Leavitt, H. J., & Whisler, T. L. (1958, 11-12). Management in the 1980’s. Harvard Business Review, pp. 41-48.
  • Zuboff, S. (1985, 14 (2)). Automate / Informate: The Two Faces of Intelligent Technology. Organizational Dynamics, pp. 5-18.

2 thoughts on “Influences of IT on Management

  1. David McCarthy

    Hi ,
    Great article.
    Do you have by any chance a copy of the Leavitt & Whistler article you could email me?

    Thanks,
    David

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