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CHAPTER 4 Organizational Structure and the Design of Reliable Systems As I have shown in the last chapter, both NASA and the FDA in the 1980s had to contend with growing political pressure to reduce the likelihood of potential type II failures. In response to these demands, we might expect that each agency instituted some significant organizational changes. This expectation, however, raises a number of important questions. What exactly can an agency do to shift the reliability of its decision-making process? Did NASA and the FDA institute the same policies in response to the similar pressures they each felt? If not, what factors caused these agencies to pursue their objectives in a different manner? These are importantquestions, but more theoretical development is needed before they can be properly answered. As a first step in this process, I begin in this chapterby focusing on organizational design and its impacton the reliability ofagency decisions. In chapter5, I discuss the factors that influence the behavior ofindividual members ofan organization. Finally, in chapter6, I draw these two perspectives together to develop some hypotheses about the organizational choices of agencies like NASA and the FDA. Basic Concepts of Structure and Reliability General Assumptions Throughout the remainder of this book I will be contrasting component and system reliability. It is important to clarify in advance what is meant by these terms. A system is a collection of subunits, known as components, that are linked together in a particular structure. In administrative theory, identifying components is dependent on the system level in question. If one were concentrating on the behavior of an agency, then the agency as a whole would be the system and the offices within it would be the components. Alternatively, if one were looking at the executive branch as a whole, that would be the system and each agency a component within the system. In an organizational context, determining what the components are depends largely on the system with which you are concerned. Although the logic is applicable to any level of 71 72 Acceptable Risks analysis, in both the case studies of NASA and the FDA as well as this theoretical section, the system of concern is the agency and each component represents an office or individuals inside the agency. Three other assumptions must also be specified. First, I assume initially that the probability offailure for each component in the system has already been determined, either by testing or by past history. Making this assumption is not unreasonable. Measuring personnel productivity is a subject that has been discussed in industrial engineering and other areas of management science, and the research from these areas makes it possible to generate statistically sound estimates of component performance and reliability. Nonetheless, I will later relax this assumption, in part to demonstrate that the theoretical framework is valuable even when the exact probabilities ofcomponent failure are not known. Making this assumption at the onset, however, is useful for developing the theory; since the components are assumed to be known quantities, the remaining question is how to assemble these components into a reliable network. Second, I assume that organizational reliability is static, not dynamic. In the engineering literature, reliability is often treated as time-dependent so as to simulate the breakdown of mechanical components; the probability of such failure naturally increases with age. For administrative systems, however, it is not clear how component reliability would change over time. One might argue that agents become more reliable over time because they have greater experience and expertise with the issues and are thus better able to address them. On the other hand, it could be posited that agents are less reliable over time because they are more secure in their positions and lose their incentive to perform well. Additionally, interest-group capture of some public agency may affect the reliability of its performance. While these ideas raise interesting questions, for our needs here, static models of administrative reliability will provide sufficient insight. Third, I assume that the states of all components are statistically independent . In other words, the failure of one component or subsystem does not affect the probability of failure of other components. Those who study public administration may question the validity of this assumption. Later in this chapter, I will discuss some features of organizations that may call this premise into question, and I will formally relax the assumption. Using concepts from probability theory, I will show later that the possibility of component interaction does not negate the...

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