ORG 726 Week 1 Technology and Organizational Structure Example

Does the Claims System Shape the Company? Technology and Structure at a Midwestern Insurer

[Student Name]

University of Phoenix

ORG/726: The Impact of Technology on Organizations

Week 1 Assignment

[Instructor Name]

[Date]

Prairie Shield Mutual, its systems, people and figures are composites written for a model paper.

Prairie Shield Mutual, a composite company, insures homes, farms and vehicles in seven Midwestern states. It employs 1,900 people and handles about 160,000 claims a year from offices in Des Moines and Omaha. Last year it replaced a 1990s mainframe claims system with a cloud platform that routes claims to adjusters by type and complexity, scores each claim for fraud risk, pays simple claims such as windshield repair automatically and tracks every adjuster's workload in real time. Leaders expected the platform to cut costs and speed settlements. They did not expect the two claims offices to end up organized differently. This paper asks how technology and structure influence each other, using the rollout as a case.

What Counts as Technology

Organizational theorists have long defined technology broadly as the tools, techniques and knowledge used to transform inputs into outputs. In claims, the inputs are reports of losses; the outputs are settlement decisions and payments. Technology includes the software platform, but also adjusters' methods for investigating damage, the rules for authority limits and the knowledge needed to judge fraud. A broad definition matters because the platform changed all of these, not only the screens adjusters use.

Technology as a Determinant

Woodward (1965) studied about 100 English manufacturing firms and found that their structures varied systematically with production technology. Firms using unit and small-batch production, mass production or continuous process production differed in spans of control, levels of hierarchy and the ratio of managers to workers, and the most successful firms in each group had structures close to the median for their technology. Perrow (1967) generalized the argument beyond manufacturing, classifying technology by the number of exceptions workers encounter and whether those exceptions can be analyzed with known procedures. Routine work, with few exceptions and analyzable problems, suits centralized, formalized structures; non-routine work suits decentralized, flexible ones.

Applied to Prairie Shield, these views predict that the platform would sort claims into routine and non-routine streams. Routine claims, now settled automatically or by junior staff following rules, would need less supervision and fewer skilled adjusters. Complex claims, such as large farm losses or suspected fraud, would concentrate with senior adjusters with more discretion. Some of this happened: auto-paid claims rose to 28 percent of volume, and the number of claims supervisors fell from 34 to 26.

The Same Technology, Two Structures

The two offices diverged. In Des Moines, the claims vice president allowed adjusters to override the platform's routing when they judged a claim more complex than its score suggested, and senior adjusters formed an informal review group for overrides. In Omaha, the regional manager locked routing to the platform's scores, believing overrides would undermine consistency, and assigned a data analyst to monitor adjuster performance against platform benchmarks. Within a year, Des Moines had fewer levels of hierarchy and more adjuster discretion; Omaha had a new analytics role, more formal performance monitoring and adjusters who described themselves as processing what the system sent them.

One platform, two offices, two structures: the software did not decide which one Prairie Shield would become.

Technology as an Occasion for Structuring

Barley (1986) studied two hospitals that adopted identical CT scanners and found that the technology altered relations between radiologists and technologists differently in each. The scanners were occasions for structuring rather than determinants: they disrupted existing roles, and the specific patterns of interaction that followed produced different structures. The Prairie Shield offices fit this account closely. The platform disrupted the old relations among adjusters, supervisors and managers; local leaders' choices and adjusters' responses produced different patterns.

The Duality of Technology

Orlikowski (1992) proposed a structurational model in which technology is both a product of human action, designed and configured by people, and a medium of human action, shaping what people can do. Technology's influence depends on how it is designed, configured and used, and institutional conditions shape all three. Her model explains why Prairie Shield's platform carries choices made by its vendor and the company's configuration team, such as the fraud scoring thresholds, and also why use in each office remade those choices. Des Moines adjusters' overrides, for example, have led the configuration team to adjust scoring rules twice, showing that use feeds back into design.

Who Gained and Lost Authority

Structural change appears most clearly in authority. In Omaha, authority moved from supervisors to the platform and the analyst who monitors it; adjusters lost discretion. In Des Moines, authority moved from supervisors to senior adjusters in the review group. In both offices supervisors lost authority, but to different people. These shifts matter for later weeks on resistance, data and ethics.

The Role of Institutions

Orlikowski's model also points to institutional conditions, and they shaped the rollout. State insurance regulators require insurers to handle claims promptly and fairly and to document decisions; the platform's audit trail was chosen partly to satisfy market conduct examinations. Reinsurers and rating agencies watch loss adjustment expenses closely, which pushed leaders toward automation targets. Professional norms among adjusters, many of whom hold state licenses and see themselves as skilled investigators, explain why Des Moines adjusters pressed for override rights and why Omaha adjusters experienced locked routing as a loss of professional standing. These conditions did not determine either office's structure, but they set the terms on which local choices were made.

Early Results

Both offices cut average settlement time for simple claims from 11 days to 4. For complex claims, Des Moines has a lower rate of reopened claims, 6 percent against 9 percent in Omaha, and higher adjuster engagement scores. Omaha has more consistent outcomes on mid-sized claims and lower costs per claim. Neither office is clearly better on every measure, which suggests that the structural choice involves trade-offs rather than a correct answer.

A Position

The evidence supports a position between determinism and pure social choice. Technology constrains and enables: the platform made automated payment and real-time monitoring possible and made the old supervisor role less necessary. But it did not determine whether discretion would rise or fall or who would gain authority. Those outcomes depended on local leaders' choices and on how adjusters used the system. For leaders, the implication is that technology projects are also structural projects and should be designed as such. Prairie Shield's leaders approved the platform as an IT investment, with targets for speed and cost, and left the structural questions to whoever happened to run each office. A structural view would have asked from the start who should decide routing and how adjusters' judgment would be used.

Conclusion

Prairie Shield's claims platform shows both sides of the relationship between technology and structure. Woodward and Perrow explain the pressures the platform created toward separating routine and non-routine work. Barley and Orlikowski explain why two offices with the same technology arrived at different structures. Technology shapes the range of possible structures; people's choices and practices determine which one emerges.

References

Barley, S. R. (1986). Technology as an occasion for structuring: Evidence from observations of CT scanners and the social order of radiology departments. Administrative Science Quarterly, 31(1), 78-108. https://doi.org/10.2307/2392767

Orlikowski, W. J. (1992). The duality of technology: Rethinking the concept of technology in organizations. Organization Science, 3(3), 398-427. https://doi.org/10.1287/orsc.3.3.398

Perrow, C. (1967). A framework for the comparative analysis of organizations. American Sociological Review, 32(2), 194-208. https://doi.org/10.2307/2091811

Woodward, J. (1965). Industrial organization: Theory and practice. Oxford University Press.