A measurement of organizational complexity and its impact on quality economics — A grey perspective

With the development of a company, its organizational structure tends to be more complicated, including more employees, more hierarchies and more allocations. The company then needs to allocate more resources, create more rules, and deal with more information to meet multiple business goals. The complexity of a company impacts its operations in two aspects: efficiency and quality. This paper discusses the impact of organizational complexity on quality economics of a company. A grey measurement model of organizational complexity is developed, including resources, rules, and information exchange. The model is then used to analyze the relations between organizational complexity and quality costs in an automobile part company. It shows that complexity of organizational structure has a positive impact on prevention cost and appraisal cost, the number of works has a positive impact on failure cost, and the number of machines and equipment has a positive impact on product cost.