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Organizations collect and distribute information. In the
process, they also distort it. Some distortions are intentional. Sometimes employees are asked to
summarize data and report it to their supervisors. By definition,
summarizing data means leaving some parts of it out. This is one type of
distortion that is intentional. Other times, organizations
distort data so much as to changes its meaning and value. This section describes the
importance of information within organization and how information is acquired
and changed within organizations.
- Describe the difference between data and information.
- Define what is information search
- Describe the investment of US industry in information processing
- Describe the changes in cost structure of information technology
- Describe the ways in which employees distort information
- Describe barriers to information search within organizations
- Describe the role of organization structures in information processing
In everyday language data and information are used interchangeably. For
example, the Oxford American Dictionary defines data as: "facts or
information to be used as a basis of discussing or deciding something."
At the same time information is defined as "facts told or discovered or
facts to be fed to a computer". In both definition, data and
information are assumed to be one and same concept.
But these terms have radically different meanings in the information
processing or management literature. Data are collection of observations,
which may or may not be true. Thus data may not be facts. Data
become information when they are processed. To process data one needs to
(1) clean the data from errors and reduce sources of unreliability, (2) analyze
data to make it relevant to decision at hand, and (3) organize data in ways that
help understanding.
In this definition, information is "meaningful data." Data
are the building blocks (the bricks and mortar) and information is the finished
house. The raw materials are useless as a pile but once organized into a
structure they become someone's home. Likewise data are useless for
managers unless organized into information.
Data goes through many distinct steps before it becomes information,
including:
- acquisition of data;
- classification of data;
- storage of data;
- retrieval of data,
- editing of data;
- verification and quality control of process that produced the data;
- aggregation of data;
- hypothesis generation;
- description of data;
- test of analysis assumptions;
- analysis;
- extrapolation of implications of findings;
- choice of format for presentation of data;
- distribution of reports;
- evaluation of effectiveness of reports.
A datum has to go through considerable amount of manipulations before it
becomes meaningful information. To help derive the distinction between
data and information home,
here is a simple
exercise.
So far we have argued in the negative. We have said that information is
not data. But what is information and how can we define it? One of
the earliest definition of information was produced by Shannon and Weaver
(Shannon CE, Weaver W, 1949. A mathematical theory of communication.
Chicago University of Illinois Press.). They defined information as what
is known beyond random chance predictions. In this sense, information must
surprise the recipient. It must reduce the uncertainty recipient has about
the state of the world. Random chance events represent the state of
complete uncertainty. To the extent that recipient can reduce his/her
uncertainty, he/she is informed. If the conclusion of a report is known a
priori, then it has no surprise value, and therefore it is not, according to
this definition, informative.
Shannon and Weavers definition is probably too mechanistic and narrow for
today's business operations, where information systems play multiple roles.
Some information systems gather data on operations already known to managers.
These systems are not designed to have a surprise value but one of
documentation.
Another definition of information is one that relates it to decision making.
According to this definition, information are data that reduce the alternatives
available to the manager. An uninformed manager can do anything, an
informed manager is likely to have fewer rational options. This definition
relies on the role of information in changing manager's decisions.
Still another definition of information is processed or meaningful data about
the world we work within. In this sense, any observation may be considered
data and once processed and made meaningful to a recipient it is then defined to
be information.
A concept closely related to the definition of information is the behavior of
"seeking information." Information search is any purposeful
activity leading to collecting data and processing it to become information.
Thus asking direct questions is information seeking. So is asking indirect
questions. Gathering information by testing limits of work rules or
behaviors is also information seeking.
These days computers and information processing are everywhere.
Computers influence what decisions are made, when decisions are made, what
information is available at the point of decision and who is asked to decide.
Computers and information processing affects how work is organized and how
employees feel about work. Computers even influence what patients want
from health care systems and how patients approach health care organizations.
Information processing and computing is pervasive.
From our perspective, the essential element of management is information
processing and thus computers are expected to heavily influence management.
The investment in information systems has grown. Since 1965 the investment in
information technology (office, computing, accounting, and communication
equipment) has tripled in the United States. In the same time period, the
investment in production technologies (engines, turbines, agricultural
machinery, metal worker machinery, materials handing equipment, service industry
machines, electrical transmission and distribution, and other industrial
apparatus) has increased less. In this regard Charles Jonscher writes in "Information technology and
the corporation of the 1990s, (1994, page 26)":
"The United States economy recently reached the point that expenditure
on information technology exceeds that on traditional industrial or production
technologies. The fact that business enterprises now spend as much on
the equipment that supports the manipulation of business information as on the
machinery and equipment on which it has depended for the last century and more
for all aspects of industrial production is striking evidence of the central
role now played by information processing in the economic system."
The growing investment in information technology has changed what we do at
work. Figure below shows the number of people employed in producing
information versus other goods in the United States. An employee is
classified into a production worker if the final product produced by the
employee is a physical one. Such an employee may use information in
producing the product but is not considered an information worker. A
surgeon, for example, is classified a production worker as the purpose of
his/her activities is to make a physical change. In contrast, information
workers do not produce physical products. They may produce a memo or an
analysis. A billing clerk primary function is to process information not
to produce a product, even though the clerk contributes to production of a
product. A billing clerk is classified as an information worker.
According to the data from United States Bureau of Statistics Series D232-682,
the number of information workers has been growing in the last century and
furthermore in the US more people are employed to process information than to
produce goods. The growth of information workers documents the importance of information in
today's organizations.
(Based on Jonscher C. An economic study of information
technology revolution. In Allen TJ, Morton MSS. Information
technology and the corporation of the 1990s, Oxford University Press, New
York, 1994., 5-42)
The massive investment by US firms in information technology has been
accompanied with significant changes in the technology itself. Jonscher
suggests four different ways in which information processing costs have gone
down.
- Processing costs have gone done by 30 to 40 percent per year, since 1950s.
These cost reductions led to new applications for computers including
mathematical and scientific applications.
- Storage costs have cost have dropped 25 to 30 percent per year, since
1960s. The reduce storage cost enable many users to save their data on
the computer as files. The use of computers in conducting routine
business operations started in this decade.
- Transmission costs have dropped 15 to 20 percent since 1970s. These
reduced cost led to use of networked computers. Public and
private data sources began operating.
- In the 1980s personal computing grew rapidly as the cost of input/output
devices dropped by 5 to 15 percent per year. Business use of personal
computing grew and central computing costs became lower than the cost of
terminals.
These cost reductions show how information technology has changed over time.
To the categories that Jonscher suggests we have added a fifth. In
the 1990s, the innovation in information devices did not lead to changes in cost
of equipment but to cost of marketing. In this decade, the number of home
computers grew to a level that it became viable to market products online.
The growth of online markets changed the way work was organized.
Businesses rushed to market products online.
(Based on Russo JE, Shoemaker PJH Decision Traps
Double Day publishers, 1989)
We think of ourselves as infallible. If the whole world around us
falls apart, we know that in the end we have our own intuitions to make sense of
it and to pull us through. Our intuitions tell us when to ignore reports
from information systems and go with our "gut feelings."
We, meaning you the reader and I the writer, think that our intuitions and
judgments can show us the right from wrong. We implicitly trust our
intuition. When we manage people, when we evaluate their work and assess
their effort, we may look at data but in the end it is our judgment that we rely
upon. So deep is our trust of our own experiences and judgments, that not
doing so will be tantamount to not being ourselves.
Yet there is something wrong with our judgments. It is not as good as
we claim it is. According to recent data most decision makers commit some
type of error in processing information. Russo and Shoemaker have
provided the following summary of the ten most dangerous decision traps:
- Plunging in before full examination -- Some mangers reach
conclusions without thinking through how they should decide about the issue,
on what basis should a judgment be made and whether sufficient information
is available for the decision. Information systems make this worst by
hiding the source of data, the process of the analysis and give the
impression that a comprehensive evaluation has been done. The decision
maker has little or no understanding of how the decision was made or should
be made, nor does the system describe what information should be available
which is absent. It creates confidence when none is deserved.
- Solving wrong problems -- Some managers are so busy
addressing problems and the latest crisis that they fail to stop and ask if
they are solving the right problem. In the way they have framed their
understanding of everyday issues, they fail to see the real problems the
organization faces. Information systems make the matter worst by collecting
data on what is easily available as opposed to what is needed.
Managers then focus on problems defined by available data and ignore real
and perhaps more pressing problems not documented in the information
systems.
- Narrow view -- Some managers see the problem they are
facing in one perspective that limits their creativeness and the solutions
they look for. Information systems make the matter worst by providing
more detail in the single perspective and not providing conflicting
perspectives of the same data. Research on framing shows that multiple
perspectives of the same problem is important in avoiding biased judgments.
- Overconfidence -- Some managers ignore the underlying
uncertainties about the future and act as if their conclusions hold under
all future scenarios. They fail to plan for alternative scenarios.
This is most apparent when it comes to evaluating the manager's performance.
They tend to think that their success is because of their skills when in
reality it might just be a lucky coincidence. Information systems make
this worst by hiding the reliability of the source data and the assumptions
used in the analysis. Computer printouts project an image of accuracy
and reliability that may be false.
- Shortsighted shortcuts -- Some managers may rely on
rules of thumb to decide critical issues. They may trust the most
readily available information. They may weight more heavily what is
easier to remember. They may anchor their judgment on the most
conveniently available facts. The more complex the decision, the more
likely that managers will short cut their own thinking about the issue.
- Shooting from the hip -- Despite complex issues managers
face, many insist to arrive at their judgment on their own without any
decisions aids. Data shows that as the decision becomes more complex,
intuitions are less likely to integrate various pieces of information and
inevitably important information may be ignored. Some information
systems contribute to the problem by providing information but not decision
aids.
- Equating popularity with accuracy --Some managers assume
that because they are involved in the decision or because many smart people
are involved then necessarily the decision will be good. They fail to
see the potential that groups of decision makers may fall into traps.
Groups that are very cohesive and social, tend not to question each other's
assumptions and may ignore important information. Information systems
can help by highlighting processes used by groups in arriving at judgments.
- Fooling yourself -- Some managers fail to learn from
their own experiences because they attribute their success to themselves and
their failure to others. In the end, no matter how poorly they have
decided, they only see their own success and fail to notice their failures.
Information systems can help by keeping track of outcomes and helping
decision makers understand them.
- Not keeping track -- Many managers forget their
experiences and remember the more vivid events. Information systems
can help by keeping track of the decision makers judgments and events that
occurred afterwards.
- Not checking -- Many managers believe that decision
making is an art not a science and that they can do it without training.
Hence they do not check routinely to see if they are falling victim to any
of the above traps.
The data on human information processing limitations suggests that managers
should take several steps to avoid above traps, including:
- Frame the problem better. Be cognizant of how you choose a problem
to solve and state the problem from multiple perspectives.
- Gather information more intelligently. Gather not only the facts
needed but be aware of the data missing. Postpone as long as possible
the decisions until more information is available.
- In complex decisions, use systematic processes to come to conclusions.
- Seek and learn from feedback by keeping track of success and failures.
Information systems designers should keep in mind how managers may distort
facts and provide aids that allow them to overcome these biases.
(Based on Johnson JD. Information Seeking Quorum Books
Connecticut, 1996)
There is hardly any management activity that does not involve active or
passive information seeking. Information seeking is the first step in
bringing about individual or organizational change. It helps prepare and
lead managers to action. Even after action, information seeking continues
in order to reconfirm the validity of the action taken and give a feeling of
control over events.
Managers also need to understand the workers' information seeking behavior.
If the information that a worker is receiving is well understood, the
perspective of the worker is understood. It is then possible to encourage
the worker to be more productive. Historically, managers have been
expected to "motivate" workers. But except for a short period in
the late 1960s, when t-groups were used heavily, managers do not try to
emotionally engage workers. Instead managers take a cognitive approach.
They try to motivate workers by informing them and helping them participate.
Thus understanding the information seeking behavior of workers is one of the
first elements of how one can motivate them.
Workers lack of knowledge of problems faced by organizations is one of the
central problems of today's organization. The opportunities and trials of
the organizations are understood in vague general economic terms. If a
merger is contemplated, the reasons for it are not known by most workers until
it is reported in mass media. If employees are laid off, little is known
for the conditions leading to this situation until layoffs are announced.
Even the overall profitability of the organization and the nature of competition
in the market is not well understood. Workers are not only unaware of
problems faced by the organization they are also unaware of what others do in
the organization. One of the most surprising benefits of cross functional
team work in organizations has been that many workers have become aware of what
each team member does in the organization.
In 1975, Walton (Walton E. Self interest, credibility, and message
selection in organizational communication; a research note. Human
Communication Research 1975, 20: 473-501.) studied the effectiveness of downward
communication about affirmative action. Despite intensive effort, only 27%
of employees were able to correctly identify key aspects of the program.
Other studies have shown that the level of awareness of employees declines as
one proceeds through the hierarchy of the organization. Policies are best
known at the top and least known at the bottom of the hierarchy (Smith RL,
Richetto GM, Zima JP. Organizational behavior: an approach to human
communication. In Budd R, Ruben B. (editors) Approaches to human
communication, New York, Spartan Books, 269-289).
Why is there so much ignorance in organized work? How could we remain
organized while ignorant of so many aspects of our organizations? At some
level, many argue that ignorance is bliss. To know more, would require
workers to spend so much time at information seeking that they may not get to do
their job. At another level, managers may wish to control information
available. They may wish to time the release of information to coincide
with actions they are recommending. They may see information seeking of
workers as destabilizing the organization. They may perceive insider
information as important in maintaining their position.
To become more productive and be able to meet the customer's demand more
efficiently, organizations create specialized units, managers differentiate work
and assign it to specific units of the organizations. The more
organizations are differentiated, the more the need for coordination. The
more controls managers put on information seeking, the less self-coordination
can occur among work units and the more central the manager's role. When
information is shared, the burden of coordination is shared. When
information is hoarded away, the burden falls on the manager. If he fails,
if he is sick some day, the entire organization will fail to act in coordinated
fashion.
Professionals such as physicians and computer programmers often resist being
told what to do. Professionals are managed easier through
self-coordination. In managing professionals, information systems play a
significant role in enabling them to coordinate their work with other
professionals and with organizational priorities.
Managers use organizational structures to coordinate activities among various
workers. There are at least two types of structures within an
organization: formal organizational structures as well as informal
structures. An example of a formal organization structure is the
organization hierarchy. Formal organization structures may have downward
or upward communications. An example of downward communication is the
organizational policies regarding safe work place. An example of upward
communication is employee appraisals. But not all information flows
through formal organizational structure. In fact, sometimes the best and
most accurate information is not available through formal organizational
channels.
Informal organization networks are groupings of employees who are actively
and regularly communicating with each other. It includes both social as
well as work related communications. It includes both supportive and
negative communications.
Both formal and informal organization structures provide stability.
Information structures remain the same while individuals or employees may
change. This enables workers to take some services and activities for
granted and focus their activities on their tasks.
Both formal and informal structures play a prominent role in coordination and
information processing. These networks can be used to reduce information
load on employees, to provide key information to select employees and to
coordinate activities across organizational units. Without formal and
informal organizations structures the coordination of work would be much harder.
Policies, rituals and procedures would need to be recreated every time.
Many organizational units may unnecessarily duplicate each others' work.
Every time a decision needs to be made, considerable effort needs to be put into
who decides and who should be included.
Data show that search for information may be restricted because of several
reasons, including:
- Time. Managers may not have the time to search comprehensively for
the needed information. The more decisions managers have to make, the
less time they have to investigate each decision.
- Decision making characteristics. Employees often use less than
optimal decision making procedures. Instead of having a comprehensive
list of alternatives they rely on a short list. Instead of postponing
decisions until all information is collected, they decide as they go; often
breaking the search process before necessary information is collected.
- Structural barriers. Organizations restrict access to some
information. Only specific groups within the organization have access
to these information. This is often done for security purposes.
Sometimes it is done to enable work units to focus their attention on single
tasks and allow other units to address other tasks. Sometimes this is
done in order to make some decisions more consistent with organization
priorities. When organization decentralize decision making and remove
structural barriers to information, workers have more latitude in decision
making and may follow various decision making procedures. One purpose
of restricting access to information is to make sure that the organization
applies consistent criteria to similar decisions.
- Cultural factors. Cultural factors draw the line between curiosity
and intrusiveness. These factors restrict information seeking by
making some topics taboo or requiring the person to follow particular
rituals for getting certain information. Both the society and the
organization affect the culture and milieu in which employees seek
information. Organization cultures that value formal communications,
that encourage group consensus, and that enforce hierarchical ranks are more
likely to restrict information search and innovation on the part of their
employees.
- Organization policies and rules. Certain organization policies and
rules may restrict information seeking behavior. For example, policies
on privacy of employees restrict access to information on use of employee
assistance programs.
- Individual impediments. Employees may prefer to remain ignorant
about some issues in order to not to have to choose sides on some issues.
Employees may not have the cognitive ability to process large amount of
information.
- Technical issues in search procedures. Employees may not be aware of
sources of information or procedures for access to these sources.
- Cost of search. Both the dollar cost of search as well as the cost
of thinking (tolerance of uncertainty until some future time) may restrict
search for information.
- "Not part of my job". Employees may not be motivated to
seek information because it is not in their job description.
- Fear of the unknown. Employees may not seek information, especially
feedback about their work, because the information may be negative.
Advanced learners like you,
often need different ways of understanding a topic. Reading is just one way of
understanding. Another way is through writing about what you have read.
The enclosed assessment is designed to get you to think more about the concepts
taught in this session.
- Describe the difference between data and information.
- Define what is information search
- Describe the investment of US industry in information processing
- Describe the changes in cost structure of information technology
- Describe how employees may distort information
- Describe barriers to information search within organizations
- Describe the role of organization structures in information processing
For additional information
(not part of the required reading) on role of information in organization, please see some of the following
links:
- Richman, Wendy L. 1,4; Kiesler, Sara 2; Weisb, Suzanne 3; Drasgow,
Fritz 1
A Meta-Analytic Study of Social Desirability Distortion in
Computer-Administered Questionnaires, Traditional Questionnaires, and
Interviews. Journal of Applied Psychology. 84(5):754-775, October
1999. Accession Number: 00004565-199910000-00009
- Peruzzi, William MD
Translating outcomes research into fiscal responsibility and knowledge
management in health care. Critical Care Medicine. 29(3):679-680,
March 2001. Accession Number: 00003246-200103000-00045
Keith's
presentation
- Gardner, Martin
Computerized anaesthesia information management systems: are we on the
threshold of widespread use? Current Opinion in Anaesthesiology.
14(6):643-647, December 2001. Accession Number:
00001503-200112000-00008
Bruce's presentation.
- Murray, Peter J.
Information management in the British national health service.
Computers in Nursing. 14(1):21-22, January/February 1996. Accession
Number: 00002771-199601000-00038
- Schulz-Hardt, Stefan 1,3; Frey, Dieter 1; Luthgens, Carsten 1;
Moscovici, Serge 2
Biased Information Search in Group Decision Making. Journal of
Personality & Social Psychology. 78(4):655-669, April 2000.
Accession Number: 00005205-200004000-00004
Sweet's presentation.
- Dienemann, Jacqueline PhD, RN, CNAA, FAAN; Van de Castle, Barbara
MSN, RNC, CS
The Impact of Healthcare Informatics on the Organization.
Journal of
Nursing Administration. 33(11):557-562, November 2003. Accession
Number: 00005110-200311000-00001
Arya's presentation.
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Read more about impact of information on
organization's structure.
-
For year 2000 United States Annual Survey of Communication Media
click here. For additional years,
click here.
- It is easy to change patients' behavior through online services but difficult
to reach them online.
Click here
to read Boston Consulting Report.
- Boston Consulting Group report on
Patients, Physicians and the Internet.
- Information systems are changing organization structures. Read more on
organization structures.
Ask your question and we will post your answer here. Alternatively read
answers to questions asked by others.
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