Automation usually refers to the replacement of human work by machines. The word was first used by the Ford Motor Company in the 1940s to describe automatic handling and machine-feeding devices in their manufacturing processes. Advanced manufacturing technology (AMT) is a special instance of automation and usually refers to computer-based manufacturing technologies and support systems. Examples include computerized numerically controlled machine tools, computer-aided design, and computer-supported production control systems. There will be few, if any, manufacturing companies in the developed world that have not undertaken some investment in AMT.
Computer-based integrated technology (CIT) refers to higher levels of integration and comprises systems that cut across organizational functions. For example, enterprise resource planning (ERP) systems include a centralized database and sets of integrated software modules designed to manage all aspects of an organization’s work processes, including production control, customer billing, and human resources. Estimating the uptake of CIT is difficult. However, a survey in Australia, Japan, and the United Kingdom, published in 2002, found that approximately 33% to 40% of larger manufacturing companies (employing more than 250 people) were significant users of CIT. The same survey in Switzerland reported substantial use in around 60% of companies. The findings are similar for ERP systems. By the late 1990s, it was estimated that around 40% of large U.S. companies and 60% of small ones had deployed ERP systems. By 2004, the worldwide market for ERP systems was estimated to be around $79 billion per annum.
Over the last decade, there has also been growing investment in systems to integrate activities between organizations, a good example being e-business systems that allow electronic ordering and billing through a supply chain and on the part of customers. By the year 2000 it was estimated that around 20% to 25% of companies in the United States, Canada, Europe, and Australia were trading online, although the proportional value of goods traded online was much lower (less than 10%). It is almost certainly the case that these amounts have grown and will continue to grow.
Motives and Impacts
Such investments are usually undertaken for a mix of motives. Machines may do the work more cheaply, more quickly, to a higher quality, with more repeatability, with reduced errors, and with reduced lead times. For these reasons, many companies have become enthusiastic adopters of such new technologies. They are also mindful that if they don’t innovate, their competitors might, thereby gaining a significant advantage in the marketplace. This can feed so-called fads and fashions, often vigorously supported by an active community of suppliers of equipment and expertise, including consultants.
Unsurprisingly, such changes are also often accompanied by fears on the part of employees. Will the adoption of new technology lead to reduced head-count and thereby redundancy? Will the remaining jobs become deskilled, with previously skilled employees being reduced to unskilled labor?
It is certainly the case that the trend to automation can reduce headcount. To give a specific example, the city of Sheffield in the United Kingdom, famous for its high-quality steel, produces the same amount as it ever did in its postwar prime, but now with 10% of the earlier workforce.
But at the same time, the development of computers and their increasing application to different domains has spawned whole new industries, thereby creating many new jobs. New organizations have grown up around the development, provision, marketing, and support of computer hardware and software, project management, knowledge management, computer simulations, software games and entertainment, and communications, to name just some-all enabled by the onset of sophisticated computerization.
Concerns over deskilling are equally complicated to assess in practice. Whereas some organizations have used computer-based operations to deskill their operators – for example, by turning them into machine minders—many others have upskilled their operations by asking their machine operators to write and edit computer programs and to solve complex machine problems. Also, as previously implied, at a more macro level, the onset of computerization has led to the creation of many new highly skilled professions.
The process is further complicated by the onset of globalization. Computer-based information and communications technologies now make it possible to move work around the world. A topical example is provided by the widespread use of customer call centers based in India. This may be to the benefit of the Indian economy, but it may not be perceived that way by employees in the developed world who see their jobs as being exported to regions where labor costs are significantly lower.
Three generalizations seem appropriate. First, such periods of change may be genuinely uncomfortable and threatening for the individuals concerned. It may be no real consolation in losing one’s job to be told it is an inevitable long-term structural shift in the nature of the global economy. Second, such changes are likely to be easier to manage and endure during periods of economic growth rather than decline. A buoyant labor market certainly helps. And third, this is one of the reasons why most leading commentators in developed economies see their economic future in the development of highly skilled, high value-added, and highly innovative work, areas where education and skills are at a premium and where competition in a global economy is not solely dependent on the cost of labor.
Effectiveness and the Role of Industrial/Organizational Psychology
The foregoing description gives the impression of inevitability and, although difficult perhaps for some individuals in the short term, of benign and effective progress. However, the position on the ground is a good deal more complex. Let us look now at some of the data on the effectiveness of such new technologies.
The data from economic analyses, surveys, case studies, and expert panels is consistently disappointing. Turning first to ERP systems, many are scrapped (estimates vary between 20% and 50%), and overall failure rates are high (again, estimates vary, at around 60% to 90%). Indeed, it is now commonplace for economists to bemoan the lack of impact of investments in IT (information technology) on overall productivity over time.
The best estimate is probably that up to 20% of investments are true successes, genuinely meeting their goals; around 40% are partial successes, meeting some of their goals but by no means all; and around 40% are complete failures.
So, why are such investments often so disappointing, and what can be done about it? Many industrial/organizational psychologists have worked in this domain, most notably perhaps under the general banner of sociotechnical thinking. Their central proposition is that work systems comprise both technical and social systems and that companies cannot change one without affecting the other—it is the nature of systems that they are intrinsically interconnected. It follows that technical change requires active consideration to changes in working practices and processes, job designs and work organization, employee skills and competencies, training and education, human-computer interfaces, and the management of change. These are major issues, and the evidence is that many organizations focus too much on the technology, pay too little regard to the social, and fail to adopt an integrated systems perspective.
Several attempts have been made at formulating good practice guidelines, of which the following are representative:
- Senior managers should ensure that new technology investments meet the needs of the business. Senior managers should ask, “Why are we doing this? What benefit do we gain? Does it further our strategy?”
- Any technical change will require changes in business processes, working practices, job design, and the like. Senior managers need to ensure that changes in all these areas are an intrinsic part of the project— a systems view is needed.
- Senior users in the business need to have some ownership of, and influence over, the nature of the changes they require. Changes in systems that are pulled into a business are usually much more successful than changes that are pushed into a business. Beware projects that seem just to be about IT and that are being pushed hard by the IT department.
- Any project team needs to include all the requisite skills and expertise, including the human and organizational issues.
- The users (or recipients) of any change program need to be actively involved. This should be all the way from the design of the new way of working through to evaluation of the effectiveness of the changes.
- There is a need to educate all those involved in what the changes mean, why they are being undertaken, what benefits accrue, and what actions are necessary to achieve success. At the same time, training is needed on the operational and more detailed aspects of the changes.
- Where such changes are undertaken, organizations need to learn as they go, to be pragmatic, and, where possible, to undertake changes in manageable chunks.
- Evaluation against objectives using benchmark measures is a prerequisite for learning. Internal and external benchmarking can provide excellent opportunities for improvement.
- All the above require the commitment of resources, in particular time, effort, money, and expertise. They also require a different mind-set on the nature of change, one that adopts a systems orientation and views technology as a necessary but not sufficient predictor of success.
But there continues to be evidence that such standards are ignored in practice. Perhaps the interesting question is, “Why is it that informational technology failures persist?” There is massive potential here for industrial/organizational psychologists to make a substantial contribution, but it is likely that this will best be achieved by working with other disciplines (including technical and operational specialists) and with organizations facing some very practical problems. It is certainly true that we need to bridge the divides between disciplines and between academia and practice.
- Clegg, C. W. (2001). Sociotechnical principles for system design. Applied Ergonomics, 31, 463-477.
- Clegg, C. W., Wall, T. D., Pepper, K., Stride, C., Woods, D., Morrison, D., et al. (2002). An international survey of the use and effectiveness of modern manufacturing practices. Human Factors and Ergonomics in Manufacturing, 12, 171-191.
- Holman, D., Wall, T. D., Clegg, C. W., Sparrow, P., & Howard, A. (2003). The new workplace. Chichester, UK: Wiley.
- Landauer, T. (1995). The trouble with computers. Cambridge: MIT Press.