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Organizational structure, social network influence employee learning

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Jasmijn Bol, a professor of accountancy at Illinois, says workplace management innovations diffuse gradually through employee social networks, since their usefulness is not immediately apparent to some would-be early adopters.

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3/8/2011 | Phil Ciciora, Business & Law Editor | 217-333-2177; pciciora@illinois.edu

CHAMPAIGN, Ill. – Workplace management innovations diffuse gradually through employee social networks, since their usefulness is not immediately apparent to some would-be early adopters, according to published research by a University of Illinois expert on performance measurement and compensation systems.

Jasmijn Bol, a professor of accountancy at Illinois, says having a strong social network at work, as well as an organizational structure that doesn't frown upon co-worker interaction, allows colleagues to learn from each other.

"When it comes to the diffusion of innovations, there are very big benefits to having an organizational structure and culture where people have more contact with each other, where there is more of a democratic structure, and where people are asked for their opinion," Bol said.

The study, published in the journal Accounting, Organizations and Society, analyzes the adoption and diffusion of performance-based incentives by a large European cooperative bank, and highlights the importance of organizational design in employee learning.

"Through its organizational structure, a firm influences the degree to which managers or organizational units interact with each other," Bol said. "In our study, the cooperative nature and the continuing interactions between local banks tended to facilitate learning through more and easier access to the experience of early adopters."

According to the research, increased social interaction improved the learning process for managers, which eventually led to buy-in, adoption and speeding up the diffusion and adoption process of the management innovation by different local banks.

"By taking an active role in information sharing, and by adjusting the innovation to local banks' preferences, the organization ensured that early adopters efficiently shared their learning experiences," Bol said.

According to Bol, managers have to be willing to share information among co-workers, and not feel threatened or in competition with their peers.

"That's another key aspect of cooperative organizational structure – that local banks aren't competing with each other," she said. "If you're in a very hierarchical company, one without a lot of interactions between divisions, we wouldn't see a lot of learning going on. But if you have access to a lot of managers who have implemented the system, who know a lot about it, then it's easier to get that information and it's easier to reduce uncertainty."

Bol says that extensive learning-by-doing and strong subsequent on-the-job learning spillovers led to a relatively rapid diffusion of the management innovation. In the study, almost all local banks had adopted the system within three years.

"Three years is really quite fast for a management innovation, so in a situation where learning wasn't facilitated as much on the job, you could expect the diffusion process to take longer," she said.

Bol cautions that the research has its limitations.

"The most obvious one is that this research focuses on a single firm, which might affect how much we can generalize the results," she said. "We can't examine all the companies in the world, but there's no reason to think that the findings would not generalize to companies with similar organizational structures. The theory applies to any management innovation."

Bol's co-author is Frank Moers, of the Maastricht University School of Business and Economics, and the European Centre for Corporate Engagement.

Editor's note: To contact Jasmijn Bol, call 217-244-4608; e-mail bol@illinois.edu.
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