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Organizational Linkages: Understanding the Productivity Paradox
Most of the evidence in this report, however, indicates that even when productivity improvement is realized at a lower level (e.g., the individual), there are influences that might inhibit improvement from being realized at a higher level (e.g., the organization). We have examined those influences from the individual to the organization and from the organization to the individual. The concepts that aid in the understanding of these dynamics were presented by Goodman, Lerch, and Mukhopadhyay in Chapter 3. Examinations of those concepts and of how they operate in specific work domains were reported for office automation by Schneider and Klein in Chapter 4, for software engineering by Kiesler, Wholey, and Carley in Chapter 9, and for computer-aided design by Harris in Chapter 10.
Another form of the productivity paradox is provided by the practice of downsizing. Organizational downsizing has been one of the major initiatives undertaken by U.S. firms during the past decade to increase productivity. It is an initiative that is assumed to lead directly to increased productivity by increasing the ratio of output to input. However, according to the evidence summarized by Whetten and Cameron in Chapter 11, this intervention (similar to the introduction of technology) has not had the anticipated effects. They concluded that this productivity paradox is explained by the use of downsizing approaches that typically ignore the effects of organizational linkages.
The concept of organizational linkages provides a useful framework for examining the productivity paradox. It has led the panel to conclude that a major contributor to the paradox has been the common attempt to initiate change through the introduction of a single intervention (technology) at a single level in the organization (the individual). As suggested by Schneider and Klein in Chapter 4 and by Sink and Smith in Chapter 6, changing a single aspect of an organization almost never results in a substantial change in organizational performance. Organizations are too complex, their performance is too multidetermined, and their inertia is too great for a single innovation at the individual level to have a substantial impact on organizational performance. Even if an intervention does in fact augment individual productivity, there may be no resulting improvements in organizational productivity. Multiple, congruent interventions are needed to achieve the desired impact. This leads to the requirement for an organizational systems framework to clarify the multiple reciprocal linkages that determine organizational productivity.
As discussed by Sink and Smith in Chapter 6, making an improvement intervention in one entity and projecting positive performance linkages to other entities at the same or different levels require profound knowledge. Profound knowledge encompasses a theory of sys-