Designing Stress Resistant Organizations

Organizational performance has long been the center of organizational studies, in particular in technology related organizations. A look at a variety of technology related incidents such as the Vincennes incident, the Hinsdale incident, and others has raised some very important questions: Why do some organizations perform better than others? Why do some organizations sustain technologically based stress while others do not? And, what are the factors affecting organizational performance under stress? These questions have puzzled generations of organizational researchers, who, from different perspectives, have provided numerous, yet often contradictory explanations. In an attempt to address these questions and further resolve existing contradictions, this book intends to provide a formal theory that can yield consistent and systematic explanations of organizational performance. We take an organizational design approach with a focus on information processing aspects of the organization from an open system’s perspective with a microand macro-linkage.

Factors affecting organizational performance include stress, organizational design, and task environment. Each factor also varies along multiple dimensions. We now describe those dimensions of stress, organizational design, and task environment as often discussed in the literature and their connections to performance. We start by looking into the literature on organizational performance.

As discussed in Chapters 1 and 2, organizational performance is affected by multiple factors including stress, organizational design, and task environment. These factors are conceptually independent, but the effect of such factors and their interactions cannot be known unless we can examine them in an organizational setting. In this chapter, we will describe a simulated environment in which organizations are making decisions under these factors (Figure 3.1).

In the previous chapter we have described the DYCORP framework for studying organizational performance under dynamic and interactive environment. This formal framework is powerful and enables us to systematically examine, from a theoretical perspective, the effect of multiple important factors including stress, organizational design, and task environment on the performance of organizations as discussed in the organizational literature. The formal framework can also generate a series of internally consistent propositions that can be later tested in the real world.

In order to relate the theory and the real world organizational data, we conduct two detailed case studies. Though we only present two organizational cases in an attempt to show how this computational framework can help, the merit of the computational framework should not be limited to addressing only this type of problems. One case is the Vincennes incident (U.S. Congress, 1988; Rochlin, 1991), the other one is the Hinsdale incident (Pauchant et al., 1990). We choose these two cases because for them we have very rich data on the factors that we am interested in, and because they have been analyzed from an organizational perspective by other people. Further, they are both cases involving radar detection and so closely match the theoretical task in the book. From the detailed analysis of those two cases, we will be able to look deep into the real world organizations and see how these organizations actually made decisions under stress. This will enable us to test how well such decision making performance can be predicted by the computational framework, given these specific conditions.

In this book, we have systematically examined organizational performance (in terms of decision choices) under various factors discussed in the organizational literature with focus on the information processing aspect of the organization from an open system’s perspective. The results from analyses of a comprehensive formal framework and multiple organizational cases show that (1) time pressure affects organizational performance, and it severely degrades organization’s ability to proceed normal decisions as the level of time pressure increases. Further, experientially trained organizations are more sensitive to time pressure than operationally trained organizations. (2) Organizations are often under stress, but they can usually survive with a right design if only under external stress. However, when faced with internal stress, organizational performance is degraded, and the more the number of internal murphies the worse the performance. Further, operationally trained organizations on average are more susceptible to internal stress than experientially trained organizations .(3) Quality of information is most vital to organizational performance. Thus organizations whose decision making is based on information processing, should eliminate such murphies first. For organizations that base their decisions mainly on historical information, it is also very important to retain experienced and well-trained agents to maintain high performance.