Optimal time switching from tayloristic to holistic workplace organization

Abstract The introduction of information and communication technologies in firms over recent decades has engendered a process of internal workplace reorganization in order to maximize performance. Using a two-stage optimal control technique, this paper provides analytical solutions for the conditions under which a firm adopts a new organizational regime characterized by multitasking and an horizontal hierarchical structure (holistic organization). We consider two flexibility options: (a) the possibility that only a part of the labor force is switched to the new organization and, (b) the possibility that any loss of productivity is not permanent. In all cases we conclude that the new organization is adopted if, and only if, the productivity gains in the capital-goods sector compensate both the loss of expertise suffered by workers and the drop in consumption.