MANAGEMENT SCIENCE
Voi, 29, No, 9. ScpUmbcr 1983
fnnled in U.S.A.
THE CUSTOMER CONTACT MODEL FOR
ORGANIZATION DESIGN*
RICHARD B. CHASEt AND DAVID A. TANSIKf
The literature on organization design has been dominated by descriptive models in its
dealing with structure and operations. This paper takes an altemative view advocating the use
of a normative model to be used in the design of service organizations. This model sees the
extent of customer contact with the service organization as a major variable affecting system
performance and advocates reconfiguring the structure of the service organization to reflect
this impact. The discussion describes a taxonomy used to classify firms along the contact
dimension and develops 13 propositions which convey critical distinctions between high and
low contact services. Application of the model for managerial decision making involve the use
of decoupling and the paper identifies factors which favor/disfavor decoupling in light of
existing and desired service delivery objectives,
(ORGANIZATIONAL DESIGN; DECOUPLING; CUSTOMER CONTACT; SERVICE
SYSTEMS)
1. Introduction
In recent years closed system models of organization design have largely given way
to open system mcxiels that emphasize uncertainty brought on by constraints and
contingencies that lie outside the organization's boundaries. Yet, as Thompson [30] has
noted, our quest for reducing uncertainty can lead to overlooking useful knowledge
developed by closed system theorists. We ought not ignore reality and uncertainty by
wholly embracing closed system rational models; nor should we ignore rational design
approaches in order to increase spontaneity in the face of an uncertain environment.
Rather, we must " . . . conceive of complex organizations as open systems, hence
indeterminate and fac:ed with uncertainty, but at the same time as subject to criteria of
rationality and hence needing determinateness and certainty" [30, p. 10]. This observation of Thompson's provides the theoretical springboard for the model presented here.
This model, which we term the customer contact model, is a stmctural one which seeks
to specify how to decouple and recoup organizational subunits in servic^es in light of
the unique influence that the physical presence of the customer has on the operation of
the organization. Briefly, the model holds that service systems should be viewed as
falling along a continuum from high ctistomer contact to low customer contact with
the system during the creation of the service prcxluct. This perspective is valuable
because as we will attempt to show, the presence of the customer is the dominant
constraint on the efficiency of Uie system. In this paper the model is related only to
servic:e organizations; however, we believe that it can be extended to certain phases of
manufacturing firms' operations as well.
We will proceed as follows: First, we will quickly comment on the cnurent literature
on organization stmcture and design relative to environment, technology, and size.
Then we will discuss the technologic^ core, organizational disaggregation, and coupling since our mcxlel, in essence, proposes a new basis for utiliang these concepts.
Next, we mil describe the model itselif and the classification scheme which derives
from it. Following this, we will pr^ent implications for organizational design and
• Acoq>ted by Arie Y. Lewin; received July 10,1981. This pqjer has bera with the authors 4 months for 2
revisions.
of Arizona.
1037
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Copyri^t O IM3, TTK lutitBK or Mu<WBB>ait Sdeaca
1038
RICHARD B. CHASE AND DAVID A. TANSIK
operation and offer some research-oriented propositions relating to what are termed
high and low contact systems. Finally, we will provide prescriptions and design actions
for dealing with organization design problems from the customer contact perspective
and suggest how the model might be tested.
2. OvcaTiew erf die CiOTent Utaratwe
The current literature on organization structure and design is largely descriptive and
represents a process rather than a structural taxonomy. (Some notable exceptions are,
however, found in Nystrom and Starbuck [24].) This literature generally espouses a
contingency theory of organization design which is based upon identifying the relevant
(or contingent) factor(s) which determine the most effective organization design
approach in particular situations. Contingency theory grew out of a number of studies
that were published in the early 196O's by Udy [31], [32], Bums and Stalker [4], Hall
[13], and Woodward [36].
The major sets of contingency variables that have been researched concem an
organization's environment, its technology, and its size. Several good reviews of the
literature conceming the effects of these variables on organizational structure exist (see
[8], [11], [15], [22]).
An analysis of this literature, however, reveals numerous studies with often conflicting results. For example, two of the above cited studies [8], [11] sought to compare the
effects of technology and size on stmcture and found that technological variables
rather than size were better stmctural predictors. However, Blau, Falbe, McKinley and
Tracy [3] also sought to compare size-technology effects and were unable to wholly
support either approach.
Given the descriptive nature of the current literature, such contradictory findings are
perhaps understandable. As researchers, we develop hypotheses and test them in real
organizations; that is, we seek to relate actual structural measures to our relevant
contingency variables. Organization structure is, of course, the result of managerial
decision making and hence human judgments. Thus we must not assume that the
structures observed in the various studies are optimal since the organizations' management may well have devised an inappropriate design. Furthermore, we do not know
what theory, if any, the organization designers in the various studies actually used.
Certainly, we must not leap to conclude that various correlation results mean that a
size or technology relationship to stmcture is or is not appropriate. It simply means that
the relationship was or was not observed. The customer contact model proposed in this
paper is also c^ontingency based. The contingency variable is extent of customer
contact. The development of this model is normative and is not based on a post hoc
descriptive analysis. We strongly believe that there is a need for such normative
approaches and even a greater need for those of clear practical value for organizational design. Naturally, we hope that subsequent descriptive studies will validate our
claims of utility for the model proposed here.
3. Theoredad Bw»
The cx>ntac:t model was formulate partly in respond to insi^te by several writers
on three general concepts of organization design—^protection of the technical core,
organizational disaggregaticm, and selective decoupling of organizational units.
Technical Core. Thompson (30] propcsed that oi^anizaticmal rationality logically
leads designers to seal off the technical ixtte (the production proc^ses) of the
organization from environmental influences. In Thompson's words, " . . . organizations sedc to buff(»r environmental influences by surrounding titeir technical core
with input and oi^rat compcmnits" ip. ^ ) . lite objective of Urn is to enable the core
CUSTOMER CONTACTT MODEL FOR ORGANIZATION DESIGN
1039
to produce " . . . at a steady rate and with specified quality" (p. 20). Our perception of
high and low contact systems relates fairiy direcUy to Thompson's notions of input/output components. At organization boundaries, we get input/output transactions as the organization acquires resources and delivers services. Our mcxlei holds that
organizational rationality wOl be improved if the technical core is placed in a low
contact position and stmctured according to operating efficiency norms. The input/output componente which buffer this core can be structured according to high
contact (e.g., mariceting) considerations and directed toward effectiveness norms
(customer service).
Disaggregation. Miller and Rice [23] have influenced our perception of the importance of disaggregating the organization into its constituent parts through their novel
organization charting of operations, regulating, and maintenance systems. Interestingly
e n o u ^ , while they implicitiy recognized the exisence of divergent goals and tasks
confronting what we have termed high contact and low contact units, their concem
was more with attitudes of boundary spanning representatives rather than the operational constraints on the units themselves. Other writers such as Simon [27] and Herbst
[14] have also noted the usefulness of studying organizational design and operations
using a disaggregation perspective.
Decoupling. As envisioned in our model, decoupling refers to physically or organizationally separating activities of an organization and impli» placing them under
separate supervisions. Some of the potential benefits of decoupling (and the resultant
rep^oupings which arise from it) are: matching each organizational unit to the task at
hand, ease in objective setting, enhanced adaptiveness to Icx^alized changes, more
effective use of productive facilities, and limiting the effects of disruptions or breakdowns to the unit of the organization where they occur. Our view of service, at this
time, makes no distinction between \oose\y coupled systems as defined by Weick [34]
and what might be simply term^i coupled or linked systems. That is, the view put
forth by Weick of lcx>sely coupled systems carrying " . . . connotations of impermanence, dissolvability, and tacitness . . . " (p. 3) has yet to be incx)rporated into our
model. However, ac:cx>unting for the two cx>nstructs in our model appears to present
some intriguing research questions.
Finally, our thinking on all three of the above elements has been influenced by
Skinner's work [28] in manufacturing strategy. His "plant-within-a-plant" c o n c ^ t
("PWP") makes operational the technical core idea, disaggregaticm, and decoupling by
advocating segmentation of a mantifacturing facility "both organizationally and physically" into homo^neous units. "Each PWP has its own facilities in which it can
conc^entrate on its particular manufacturing task using its own workforc^e management
approach^, production control, organization structure, and so forth" (p. 121).
The customer contact model holds that a service system's potential operating
efficaenc^ is a function of the d^ree to vdiich the customer is in direct contact with the
service facility relative to a total service c:reation time for the customer:
Potential Operating = / / | _ custcwner contact time \
Efficiency
\
service ca«ation time / '
is ^ e n here as the ratio cS cwtptits to inputs for a given sernce facility; it
cioes nc}t account fc»- ctistcmia- utility fumstions CH- UX or^mizatioo-wide ptodveddon ot
nuuketing pofonnance. Sovice facilities characterized by high customer contact ( H Q
1040
RICHARD B, CHASE AND DAVID A. TANSIK
are perceived as being inherently limited in their production efficiency because of the
uncertainty that people (the customers) introduce into the service creation process.
Danet notes, relative to services in general, "Clients . . . pose problems for organizations . . . by dismpting their routines, ignoring their offers for service, failing to
comply with their proc:edures, making exaggerated demands, and so forth" [10, p. 384].
This uncertainty derives from individual differences in customers' attitudes and
behaviors. Systems characterized by low customer contact (LC) are seen as being
es^ntially free of this type of uncertainty and therefore are capable of operating at
high levels of production efficiency, analogous to that achieved in well-mn manufacturing organizations. (See [6] and [7].) This efficiency effect leads fairly directiy to a
classification scheme for services.
A Contact-Based Classification Scheme. Chjise [6] and Chase and Aquilano [7] have
proposed that common service systems could be grouped according to decreasing
contact under three broad headings: pure services, mixed services, and quasimanufacturing. Pure service include those organizations whose production is carried
on in the presence of the customers (medical care, restaurants, transportation, personal
services); mixed services commonly involve a mix of face-to-face contact and variously
coupled back office work (branch offices primarily); and quasi-manufacturing entails
virtually no face-to-face contact (home offices and distribution centers). (Admittedly,
pure services sometimes do have noncontact prcxiuction, but their main business
entails heavy customer involvement.)
Following the basic premise of the approach, quasi-manufacturing service units are
most amenable to a manufacturing rationale based on closed system design prec:epts,
mixed services are less so, and pure services hardly at all. Obviously, the classification
scheme is highly simplified and at this time c;an be supported only on the basis of
intuitive appeal and experience rather than directed research. However, for practical
application, specific cases can be incorporated readily within it and, perhaps most
importantiy, a working language and point of departure for service system study is
available. (See Lovelock and Young [19] for use of this contact conc:ept in a discussion
c^ marketing strate^; Mabert [20] for its use in operations management; and Southerland [29] for reference to it in respect to diversification and differentiation.)
A better understanding of how the classification scheme operates can be obtained
from Figure 1. At the top, the figure illustrates how the technical core in a manufacturing firm is buffered from the extemal environment by the boundary functions of
marketing, ptirchasing, finance, and personnel on the resourc^e input side, and by
distribution and billing functions on the ou^ut side. Within the technic:al core, we
have hypothesized the existence of work centers (wc's) which we have arbitrarily linked
by undirectional workflows (i.e., a flowshop). At the bottom of the figure we show a
pure service system (a branch bank, for example, where various wc's refer to tellers'
windows and officers' desks in the front office, and fumiture groupio^ of clerical
personnel in the "back office"). Here, the two-headed arrow refers to information
acrc»s the boundary between front and back offices, FinaOy, there is a quasimanufacturing (for example, a home offic^e of a bank) where boundary units again
come into play in an analogous fashion to manufacturing where the arrows denote a
flow of materials or paperwork.
forftgmiaatfwMilD e ^ «ad C^enrtkw
As has been emphasized thus far, the customer contact model has a direct bearing
OOL the way we d^gn and open.Xe orpmizations. To illustrate, we will relate the model
to a number cf organizaticHial i^ues through the me (
CUSTOMER CONTACT MODEL FOR ORGANIZATION DESIGN
SNOIlDNfiJ AUVaNOOS
1041
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RICHARD B. CHASE AND DAVID A. TANSIK
Work Design and Workforce Characteristics
PROPOSITION
1. High- and low-contact jobs call for different sets of tasks.
The customer contact view draws a distinction between work done in the front office
and work done in the back office. In the front office we have the following three-way
interaction among the primary elements of a work system:
Customer <
*'
> Technolo©'
-~~» Worker *-
^
In the back office we have a two-way interaction:
Technology <
> Worker
From a work design standpoint, task uncertainty in the front office is greater than in
the back office since in the former there is only one sentient component—the worker,
while in the latter there are two—the worker and the customer. Such task uncertainty,
in tum, suggests that skills required on the part of the worker are substantially
different in high- and low-contact work and that it makes sense therefore to consider
contact as a major contingency variable in the design of jobs.
PROPOSITION 2. Because they directly represent the organization, high-contact workers need interpersonal skills and knowledge of policies under which the firm operates.
Low-contact workers generally deal with customer surrogates {e.g., invoices) and must
have production skills (e.g., typing).
This means that as a job specialization strategy, we should match people-oriented
workers to people-dominated tasks, and thing-oriented workers to thing-dominated
tasks. Conversely, should we wish to enlarge ajob, the combining of high-contact work
with low-contact work would add a sharper note of diversity than would simply adding
tasks within each of the categories.
Decision Processes
PROPOSITION 3. Low-contact subsystems are more amenable to programmed decisions
than are high-contact subsystems.
The way in which decisions are made in an organization is classically viewed as a
function of uncertainty in the environment. To oversimplify, the more the uncertainty,
the more we must resort to nonprogrammed decisions. Relative to the customer
contact mcxlel, the functional relationships between imcertainty and programmability
are paralleled by our contact cxintinuum's treatment of potential efficiency; i.e., the
less contact the ^eater the potential efficiency of the system. The parallel becomes
even closer if one accepts the argument that potential efficienc:y is direc^tiy related to
environmental certainty.
Operating and Control Systems
From an cqierations management perspective, high-contact and low-contact systems
call for different strategies for capacity planning, prcxiuction planning, facility lcx:ation, and facility layout.
PROPOsmoN 4. In high-contact systems, capacity must be set to match peak demand
if hst sales is m>t penmtt&i. In low-contact systems, statable <»i^mt permits setting
capeaity at some averagie demand level.
PROPOsmoN 5. In hi^-cmtact systems probation planning is inimvrUfy inexact. In
hw-amtact systems, production plarming can exactly match pUmnai prodiKtkm to resource
CUSTOMER CONTACTT MODEL FOR ORGANIZATION DESIGN
1043
The inability of high-contact systems to predict demand and to backlog orders
makes capacity determination and prcxiuction planning within such systems highly
uncertain. As a corollary, this requires HC managers to use nonlinear stochastic
models (e.g., queueing theory) rather than the linear, deterministic models (e.g., linear
programming) available to LC managers in making operating decisions.
PROPOSITION 6. In high-contact systems, the service facility must be located near the
customer. In low-contact systems, the service facility may be located near the resources.
PROPOSITION 7. In high-contact systems, the service facility must be laid out to
accommodate the customer's physical and psychological needs and expectations. In
low-contact systems, the facility should be designed to maximize production.
Proposition 6 tacitly reflects the service marketer's credo: "The two most important
aspects of service marketing are 'location' and 'location'"; and the classical prcxiuction
economics goals of lcx;ating near the sources of labor and materials. Proposition 7
reflects, for instance, the demonstrated importance of "atmospherics" (Kotler [16]) in
HC customer service systems, and emphasizes the industrial engineering objective of
efficient material flow in LC systems.
A control system includes a standard, measurement, feedback of deviations from
standard, and corrective action where necessary. Each of these features is subject to
differential treatment when operationalized in terms of degrees of contact.
PROPOSITION 8. Control is more difficult to effectuate in high-contact systems because
of the customer being an uncertain input to the process being controlled (as noted earlier
in the paper).
Note that this is directly analogous to Perrow's [25] concept of raw material
variability in "people-changing" systems. Specific human attributes which create this
uncertainty are unique perceptions of quality, unique processing needs and expectations, unique prior experiences (either gcxxl or bad) that the customer has had with the
service organization, and so forth. The following table summarizes some posited effects
of these traits on control system features:
Control System Features
High Contact
Low Contact
Performance Standards
Measurement of Deviations
Feedback Loop
CIk>rrective Action
Subjective
Imprecise
IU-Defined
Instantaneous
Objective
Precise
Well-Defined
Deferred
Coping with the above features in a HC system represents an agenda for future
research. However, we can at this time make some tentative suggestions in addition to
the more general ones to be made in §6. One is to simply reduce the ratio of
high-ccmtact to low-contact work by trading off cx)ntact benefits (e.g., sales opportunities from having the customer in the system) with efficiency losses from having the
customer "on the shcq) floor". This leacls to the decoupling decision prcx:ess described
in the next section. Alternatively, we can take as given the current structure and
prcx«K flow of the organization and try some efficiency tactics for improving HC
operations. Try is italicized because, as we have argued all along, HC operations
catmot be totally predictable. Still, it is useful to point out some of the cq>tions which
are available: Involve the HC customer in the prcxiuction prcx:«s (set [19]), restmcture
service channels into stanciardiz^ and custcnnized cq>erations as a function of programmable decisions made by the server; establish take-a-number systems, etc.; or as
is common^ bdng done, c^er computer techncdc^ such as electronic scanners for
grocery ch«;kout lines. It should be noted that of these, only the first cme—^involving
1044
RICHARD B. CHASE AND DAVID A. TANSIK
the customer in the prcxlucrtion prcxsess—t^es advantage of the customer as a
productive resource; hcjwever, even here system-wide efficiency will probably be lower
dian if the task is perfcHmed in a back office. On the low-contact side, we can start to
adopt more vigorously some of the mcxlem prcxiuction control systems to back office
work (e.g., computerized scheduling of large financial institutions and public agencies).
The possibilities here are endless in our opinion.
Organization Objectives and Structure
These two elements are determined jointly in the application of the model and
therefore we will discuss them together io this section.
PROPOSITION 9. Because they operate in divergent environments, high-contact and
low-contact subsystems require differing goals and operating objectives.
The specific goals and operating objectives of HC and LC subsystems should be
clearly differentiated in light of their unique environments. HC subsystems tend to
face a turbulent, ill-stmctured environment; LC subsystems tend to face a placid,
well-structured one. Thus, while the general mission of the service organization may be
stated as "servic^e to the customer", this mission can more likely be achieved if HC and
LC subsystems fcx:us on what they do b ^ t . Thus,
PROPOSITION 10. High-contact subsystems should seek to maximize effectiveness
goals; low-contact subsystems seek to maximize efficiency goals.
The differences in HC and LC environments also shape our thinking on the
prcx;esses involved in customer-organization interactions.
PROPOSITION 11. High-contact systems should emphasize analogic as opposed to
digital communication.
Watzlawick, Beavin, and Jackson [33] distinguish between two types of communic^ation—digital and analog. Distal communication iavolves a cx>mplex, logic^al syntax
that defines the content of a message. Words are simply used to name things, and the
link between words and things is, of course, arbitrary but agreed upon. Digital
communication is particularly used for " . . . sharing information about objects and for
the time-binding function of the transmission of knowledge" [33, p. 62]. Analogic
communication, on the other hand, comprises virtually all nonverbal communic:ation
and includes the context in which the communic^ative interaction cxxurs. While digital
communication imvolves objects, a i ^ o ^ c communication involves relation^ips. For
example, mail, work orders, and similar written items would be largely digital.
Face-to-face or phone interactions would be mc»% analogic.
To the extent that the client or customs is in, or is a part of, the prcxiuction system
(i.e^ is in a HC mcxie), analctgic communications would be ai^ropriate. Tlius, the
client c:an "«cplain" via g^tures, intonation, and othra- nonverbal ac^tions. Further, as
notol by Danet [10, p. 384], both scx»>cultural environmraits and situational factors
h e ^ to define the customer (client)-organization encounter, l i i ^ e f»:tcHs, Danet
notes, hel^ to define customer or client demands and expecta.tx(a& m well as organization monber intopretaticms of these. We can also note how such situational factors as
" . . . fumiture arrangements, allocations of ^>ac^ and partiticms all impinge on ^ e
nature d cdknt-office encx>unters" [10, p. 396\. Thus, a c^nmter or d ^ c vaed as
a fuiKstional barrier or the use d plants and cxnnfcHtable seating arrangements
"ccMnmuaicatK" to custc»im:s c^tain adjects oi the s»vice ^ organization intends to
(Met. Also, Ate spetxh, dtws, and c^meuior oi ihe d k n t or cmstcm^ ccHomunicates
ontain infcmnaticm about the snviix deared <H^ needed by tl
CUSTOMER CONTACT MODEL FOR ORGANIZATION DESIGN
1045
On the other hand, back officx or 1X2 work involves fewer symbolic cx}mmunicative
activities. Reliance is instead on predominantly digital means such as written work
orders, invoices, or pre-printed complaint forms. These involve far fewer nonverbal
inputs and would thus be treated by organization workers in a much more universalistic or bureaucratic manner.
The tendency of organizations to attempt to establish workable levels of certainty
may lead to the development of LC digital activities. Weick [35] has noted that a basic
raw material of organizations is informational inputs that are often ambiguous,
uncertain, and equivcx:al. "Whether the infonnation is embedded in tangible raw
materials, recalcitrant customers, assigned tasks, or union demands, there are many
possibilities or sets of outcomes that might occur" (p. 6). Organizations attempt to
establish workable levels of c^ertainty by transforming equivocal information into a
level of unequivoc:al inputs with which the organization can work. Absolute unequivocality is rarely required, and thus different organizations, or c^omponents of them, may
require different levels of unequivocality in order to satisfactorily perform.
PROPOSITION 12. All high-contact subsystems tend to require some minimal capability
to handle nonroutine tasks even if they are imbedded in a mechanistic organization
structure.
Perrow's [26] notion of routine and nonroutine tasks is relevant here:
Ratline tasks: " . .. there are well-established techniques which are sure to work, and these
are applied to essentially similar raw materials, Hiat is, tfiere is little uncertainty about
methods and little variety or change in the tasks that must be performed" (p. 75),
Nonroutine tasks: " , , , there are few well-established techniques; there is little certainty
about methods, or whether or not they will work. But it also means that there may be a variety
of different t a ^ to perfonn, in the sense that raw materials are not standardized, or orders for
customers ask for many different or custom-made products" (p. 75),
Perrow contends that nonroutine tasks ought to be managed via organic stmctures;
routine tasks with mechanistic stmctures. Our conceptualization of high-contact systems also adopts this view. Indeed, while there are many HC systems which are
characterized by routine tasks (ticket seller, cafeteria worker, etc.), even these tasks are
subject to nonroutine demands as postulated by our mcxlel.
Our final proposition reflects the fact that most if not all large servic:e organizations
are a mix of HC and LC imits which give rise to boundary spaiming tasks which are
mcxlified by the contact dimension.
PROPOSITION 13. Multistage mixed service orgartizations call for multiple and heterogeneous boundary spamung tasks within the organization itself.
By definition, HC systems operate at the organization's boundary, with the worker
carrying out a boundary spaiming role with the customer environment. As we initiate
support activiti^ in back office, laboratories, etc., an additional intra-organizational
boundary is crossed c:reating needs for informational or material handling tasks. In
multista^ organizations, divergent boundary spanning (as well as processing) tasks
arise. In a hospital, for example, consultation between physicians and laboratories,
schedule planning t^etween medical and administrative staffs, movement of supplies to
opiating rcx}nis, and fcxxl ^rvice delivery all embcxly boundary spanning tasks
entailing different mixes of skills and activities. Some of these interactions are
amenable to h i ^ routinization, while others are quite variable with ad hex; agendas.
Admittedly, multistage manufacturing organizaticms are faced with analogous boundary activities; however, once again the customer in tite ^stem modifies the significance, if not die uigrau^, of prcq>er articulation of organizational subunits.
1046
RICHARD B, CHASE AND DAVID A, TANSIK
6. Applying the
Although we are still in the prcxess of refining and testing the customer contact
mcxlel (see the research discussion below), we do believe that we are justified in
making some suggestions at this point as to how it can be applied. Connor [9, pp.
485-487] provides a stmcture which we can build upon. This structure is a summary
interpretation of organization design problems identified by Thompson [30] (interdependence); Lawrence and Lorsch [17] (differentiation/integration); Galbraith [12]
(uncertainty); and McKelvey and Kilmann [22] (participative norms). Table 1 presents
a brief summary of design objectives related to these design problems after Connor [9,
p. 425] and in addition identifies contact mcxiel prescriptions and design actions.
While our prescriptions have been disctissed or implied earlier in this paper, the
design actions warrant elaboration. For the design problem of interdependence, we
suggest decx)upling, and have identified two groups of factors which favor or operate
TABLE 1
Customer Contact Model Prescriptions and Actions for Dealing with Organization Design Problems
Design
Problems
Design Objectives
Ck>ntact Model
Prescriptions
Design Actions
Interdependence
Form subunits so as
to maximize the similarity of resources
& activities within
the subunits & minimize transactions
across subunit
boundaries
Form subunits
according to
High-Contact or
Low-Contact
task dominance
Decouple HighContact and LowContact subunits
Differentiation/
Integration
Develop subunit intemal characteristics to match task
requirements
Staff according
to technical
skills (Low-Contact) and Interpersonal skills
(High-Contact)
Develop jobs and job
descriptions which
reflect and identify
key High-Contact &
Low-Contact skill
requirements
Develop integrative
mechanism to coordinate all subunits
Utilize liaison
or boundary
spanning roles
Coordinate by plan.
standardization or
mutual adjustment
depending on form of
High-Contact or LowContact interdependence
Uncertainty
Develop procedures.
subunits, & rules to
enhance information
processing under
uncertainty
Establish linkage between HighContact & LowCk>ntact subunits
Identify timing
needs & boundary
spanning requirements
Participation
Form subunits that
maximize homogeneity
with r^ard to
values & attitudes
about decision
nuUdng nwms A that
maximize task rekited dq>endeacies
anuHig »tbttnits
Distingui^
corporate
mission from
operative otgectives; thai
relate woik
groups, tadca to
otgectiveCs)
based on contact
requirements
Promote customer
oriented values and
auitudes among HighCkmtact workers;
promote factory
pnxluction effidency nwmsamcmg
Low-Contact wmkers
CUSTOMER CONTACT MODEL FOR ORGANIZATION DESIGN
1047
against this action in practice:
Decotg}ling is favored when:
1. Face-to-face contact for all operations is not technologically required (or desired
by the customer).
2. Separate workers are required to prcxluce the service.
3. Task requirements can be easily segmented into interpersonal skills and technical
skills.
4. Information exchange between service system and customer can be done by
phone or mail.
5. Price of the service is more critical to the customer than is convenience or
customization.
Decoupling is not favored when:
1. Face-to-face contact is seen as an essential marketing element of the service.
2. Rapid exchange of information with the customer is required.
3. Hiring of additional supervisors would be impractical.
4. Jobs are tightly prescribed by collective bargaining agreements.
5. Tight ccx}rdination across task or departmental boundaries is critical.
6. Resultant job specification is c^ounter to company philosophy.
Regarding jobs and job descriptions relative to differentiation, we have observed
that job design and job descriptions which arise from it tend to intermingle highcontact and low-contact skills. The design action we propose is that interpersonal skills
and technical skills become primary bases for designing and staffing jobs (Proposition
1). This means, for example, that personnel managers should reflect very c:arefuUy on
the advisability of reqtiiring, say, a 60-word-per-minute typing speed requirement for a
job that is predominantly interpersonal HC in nature.
Regarding coordination, the c^ontact mcxlel recognizes that boundary spanning roles
must be maintained across high- and low-cx}ntact subunits so as to facilitate the
organizational workflow, and that they are heterogeneous in mixed, multistage systems
(Proposition 13). The exact form of these roles and the precise ccx)rdinative action will
depend upon the form of the HC and LC interdependence. This may take the form of
pooled interdependence (e.g., various front and back office banking activities resulting
in customer servic:es), sequential interdependence (e.g., passenger check-in and baggage handling for an airline company^ and reciprcx:al interdependence (e.g., a pharmacy taking a customer's prescription (HC), filling it (LC), and returning it (HC)).
Thompson [30] notes that each form of interdependence requires different ccxnrdination (or integrative) mechanisms. "With pooled interdejiendenc^e, ccx)rdination by
standardization is appropriate; with sequential interdq>endence, ccx>rdination by plan
is apprc^riate; and with rec:iprcx^ interdependence, ccx>rclination by mutual adjustment is called for" [30, p. 56].
The design action for uncertainty involves determining not only what type of
information is to l » conveyed between HC and LC subunits but their timing and
mcxie as well. In addition to identifying individuals who must act as boundary
spanners, we must also lcx>k at documents such as computer output and memos, and
voice-only linka^s such as phone calls or recordings. In the broad context of coping
with uncertainty, we may view the role of the LC subunit as a support system for the
HC subunit, or the HC subunit as a buffer of the LC subunit. Each service organization would, of cour%, have to make this determination itself.
Regarduig participative ncmns, it can be aigued that they ought to be consistent
with the hi^-contact or low-contact orientation of an organizational subunit (Proposition 9). Hi^-contact workers must be trained to understand the inherent uncertainty
brought on by custc»aers as implied by Prcqx}sition 12. Such workers must be flexible
in their behavior and tolerant of the customer imposed ambiguity. High-contact units
1048
RICHARD B, CHASE AND DAVID A, TANSIK
should not tolerate employee norms that imply that customers should adapt to
organization imposed uniformity requirements or scheduling demands. Also, lowcontact subunits must display norms that recognize the need for variable inputs from
high-contact units, yet also fcx;us on maintaining technical efficiency (Proposition 10).
7. Tesdng die Model
Two approaches readily present themselves in testing the customer contact mcxlel.
One is to examine a large organization which is characterized by a different degree of
contact among its major subunits. The objective would be to see if those units which
exhibit de facto organization by cx>ntact are more effective and efficient than those
which do not. (Even though we are proposing our mcxiel as enhancing efficiency, an
argument could be made that organization by contact would provide not only less
costly service but better service as well.) An alternative approach would be to simply
reorganize a major subunit according to the customer contact model (employing
decoupling strategies, goal redefinition, and unit and task redesign) and compare its
perfonnance to unchanged subunits which have the same mission and resources.
Appealing sites for either of these approaches would be large public agencies such as
the Social Security Administration or the Intemal Revenue Service. These agencies are
relatively unconstrained by technolo©f and, political questions aside, could have
multiple organizational arrangements of offices and people.
Moving to the private sector, it would be worthwhile to examine organizations which
have apparently mastered the c^ontact dimension as evidenced by the attitudes of their
customers and the cost-effectiveness of their back office operations. (We are in the
prcx»ss of identifying financial institutions which meet these criteria.)
The key question in any application is measuring the effect on total factor productivity as a result of employing the mcxiel. In this regard. Data Envelopment Analysis as
presented in Lewin and Morey [18] seems quite promising for measuring the relative
efficiency of public sector organizations. The approach uses linear programming and,
among other things, can be used to assess the outcome of administrative experimentation such as implied by the customer contact model.
Another salient issue is the prcx;edures and analytical tcx)ls by which the mcxiel is
applied. Systematic mapping of the organization's workflows, information flows, and
authority structure is c^alled for, as well as is a thorough understanding of its mission
and objectives. Here, the organizational audit approach developed by Mackenzie [21]
provides a useful starting point. Likewise, tcx)ls to evaluate the impact of contact task
relcx;ation both lcx:aUy (within a department) and globally (system-wide) need to be
developed. Some of Aese already exist in a useful form (see Chase [5]), but others will
have to be devised in light of the contact dimension. (For example, tradeoff tables
showing the effect on operations from shifting a task from a HC unit to a LC unit.)
8. Condoijoo
The customer contact mcxlel provides what we believe to be a practical normative
to organizational design. We have no doubt that many organizations have
it in^Ucidy in their cq>erations, althou^ organization theorists might see
resultant structures as arising from a different and perhaps more complicated theoretical base. As not^ eadior in the paper, current desc^ptive studies of oi^nization
design do not allow us to cietermine why organizaticnt designers did what they did.
And in this regard, we are struck by an oiraervation made by Ar^ris [2]: " . . . what
theory did (the company) des^ers have in mind that 1 ^ to these acticms? Could it
RICHARD B, CHASE AND DAVID A, TANSIK
1049
have been a simpler and equally useful theory?" Obviously, we are of the opinion that
this "simpler theory" phenomenon may exist relative to our mcxlel. We welcome others
who might wish to explore the question with us.'
' We are indebted to Arie Y, Lewin and the referees for their help on this paper.
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