Organizing

Dr. C. M. Chang

Only to be used by instructors who adopt the text: C. M. Chang, “Engineering Management: Challenges in

the New Millennium,” Pearson Prentice Hall (2005)Copyright © 2005 by Dr. Carl Chang

2

Engineering Management Functions

Organizing

Planning

Leading

Controlling

3

Engineering Management Functions

• Planning (forecasting, setting objectives, action planning, administering policies, establishing procedures)

• Organizing (organizing workplace, selecting structure, delegating, establishing working relationship)

• Leading (deciding, communicating, motivating, selecting/developing people)

• Controlling (setting performance standards, evaluating/documenting/correcting performance)

4

Chapter 3 -Contents

• Introduction

• Activities of organizing: (1) workplace, (2) structure, (3) delegate work, and (4) establish working relationship

• Examples of organizing for performance

• Informal organizations

• Cross-functional teams

• Conclusions

5

Organizing

• Arrange and relate the work, so that it can be done efficiently by people - Specifically: Ensure that important work is done, Provide continuity Form basis for salary administration Aid delegation Promote growth and diversification Encourage teamwork, and Stimulate creativity

6

Definitions

• Organization Type - Line versus Staff

• Authority - Power to command, act or make decisions (Legal, position-based)

• Responsibility - Duty to perform work efficiently and in professional manner

• Accountability - Upwards directed obligation for securing the desired results

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Line Versus Staff

ProductionEngineering Marketing

Service

Business/Product Management

CustomersDistribution

Safety & Environment

Legal Accounting

Public Relations Human Resources

R&D

Procurement

8

Definitions (cont’d)

• Span of control - Number of people supervised by a manager (e.g., 7 to 20)

• Specialization - Increased degree of skills concentration in narrow technical domains

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The Function of Organizing

Developing Structure

Organizing Workplace

Delegating Work

Establishing Relationship

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Organizing Own Workplace

• Set priority of daily work (attend meetings, make phone calls, write emails, block out time to do creative work, discourage disruptions, keep conversations short, maintain “to-do” lists, prioritize tasks, etc.)

• Create a file system for efficient retrieval

• Develop one’s own system for names and contact information

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Question # 3.10

• David Pope • Administrative assistant

• George Wallace• Glen Sanford• Personnel director• President’s meeting• Own child has flu

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Develop Organizational Structures

• Identify and group work so that it can be done efficiently by people

• Choices: (1) functional, (2) discipline, (3) product/regional, (4) matrix, (5) team, (6) network

13

Functional Organization

Technical Director

Quality ControlElectrical DesignMechanical Design

System Engineering Production Engineering

14

Functional Organizations (Pros and Cons)

• Permits hierarchy of skills

• Facilitates specialization

• Simplifies coordination

• Permits use of current technologies and equipment

• Encourages excessive centralization

• Delays decision making

• Compounds communication line loss

• Restricts development of managerial skills

• Limits personal growth

15

Functional Organizations(When to Use)

• Organizations with high relative stability of work flow and limited product diversity - certain manufacturing operations, process industries

• Startup companies

• Organizations with narrow product ranges, simple marketing pattern and few production sites

16

Discipline-Based Organization

Engineering Dean

Industrial EngineeringElectrical EngineeringMechanical Engineering

Chemical Engineering Civil Engineering

17

Discipline Organizations

• Favored by universities, governmental laboratories and other R&D organizations

• Promote innovative pursuits in individual disciplines, allowing employees to drill down to deeper knowledge levels without requiring much coordination with others.

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Product Organization

Technical Director

Custom ProductsUniversity ProductsGovernmental Products

Consumer Products Industrial Products

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Regional Organization

President

AsiaEuropeNorth America

Latin America Africa

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Product/Regional Organization (Pros and Cons)

• Focuses on end products or geographical regions

• Facilitates coordination• Encourages management

development• Provides for

decentralization• Promotes growth

• High costs due to layers, autonomy or duplicated facilities

• Requires management talents

• Technical obsolescence of specialists

• Changes take time to effect

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Matrix Organization

Project A

Project B

Project C

Functional Control

Project-basedControl

Engineering Production Logistics Design

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Matrix Organization (Pros and Cons)

• Project manager focus on schedule and cost, functional managers on quality/expertise

• Work load balance• Excellent for

individuals (to achieve exposure and interactions)

• Dual reporting • Severe conflicts among

managers• Delicate balance of

power (people versus money/time)

• Communications problems

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Matrix Organization (Bases for Conflicts)

• Project Managers: Money under control, mandate to authorize work with top management support

• Rights to buy services elsewhere

• Functional Manager: Manpower, skills knowledge, facilities

• Own funds to support people

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Team Organization

Member A

Member B

Member C

Functional Control

Engineering Production Logistics Design

Team Leader

Member D

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Team Organization

• Team members “on loan” from functional organizations to eliminate organizational conflicts

• Team Leader in full control

• Short term high-priority tasks/projects

• Examples: Product team, special task force

• Purposes: (1) create recommendation, (2) make or do things, and (3) run things

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Network Organization

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Network Organization

• Global business alliances/partnerships to manufacture, market, deliver and service products (supply chains)

• Change alliance members from time to time

• Diversified alliance members (e.g., company allegiance, culture, value system, business practices, geography, attitude, motivation, information sharing and collaboration, etc.)

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Question # 3.1

• Which type of organizational structure is best suited for developing a new product which requires a high level of specialization in several functions and the time to market represents a critical factor?

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Question # 3.2

• A materials manager suspects that the quality of work being done within his department was steadily deteriorating. He wanted to introduce a program of change to improve quality. What steps should he take?

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Examples of Performance Enhancement by Organizing

• (1) Keep Structure flexible

• (2) Promoting Innovation

• (3) Design-Manufacturing Interface

• (4) Heightened Employee Motivation

• (5) High-tech Marketing Interface

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(1) High Performance Enhanced by Flexible Structure

• Starbucks - Encourages new ideas from all, fast corporate decision making, special marketing teams, reward systems - Coffee ice cream, Frappuccino, “Store of Future,” “Lunch Service Concept,”

• First USA - Quick formation of teams to pursue new opportunities, new credit card products many times more than competitors

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(1) High Performance Enhanced by Flexible Structure

• Dell Computer - Give P&L responsibilities to more people running smaller business units.

• 3M - 15% of time for creative work of own choice, supported by extra grant money, Group is to derive 30% of income from inventions made in the last 4 years.

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(1) High Performance Enhanced by Flexible Structure

• COMPOUND ANNUAL GROWTH RATE (CAGR) - 1994 to 1998

• Name CAGR (%) Average Growth Rate of Next Three Largest Competitors in Industry (%)

• Trilogy 75 49• First USA 60 21• Dell Computer 51 39• Starbucks 46 23• Home Depot 25 17•

• Source: Nora A. Aufreiter, Teril Lawyer and Candance D. Lun, "A New Way to Market," The McKinsey Quarterly, New York (2000).

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(2) Organizing For Innovation

• Key Trade-off: Talents versus control

• Vertically Integrated Structures: Systemic Innovations (requiring close coordination and information sharing)

• Virtual Flexible Structures: Autonomous innovations (independent inventors with breakthrough ideas without coordination).

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(3) Design-Manufacturing Interface

• Difficulty created by a lack of coordination

• Design is “thrown over the wall” and check on produciability may require undoing design

• Methods to eliminate “silo” effect: (1) manufacturing sign-off, (2) integrator, (3) cross-functional team, (4) combine both functions into one department

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(4) Heightened Employee Motivation

• AES Corporation - Runs 90 plants in 14 countries as contract generator using regional and local teams (5- 20 people each)

• Local teams for power plant operation and maintenance. Members “own” the work they do and are extraordinarily motivated

• Employee mobility is encouraged after skills are verified by company exams

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(4) AES Corporation

AES Corporation Total Revenue

0

500

1000

1500

2000

2500

3000

1990 1991 1992 1993 1994 1995 1996 1997 1998

Year

Mil

lio

ns

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(5) High-Tech Marketing Interface

• High-Tech: (1) products/services with scientific-technical bases, (2) products become obsolete quickly by new technology (3) products create new markets, if built on emerging technologies. Examples: semiconductors, microcomputers, robotics.

• Strategy of marketing: market-driven versus innovation-driven

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(5) High-Tech Marketing Interface (Cont’d)

• Market-Driven: Products fit to customers’ needs, but may cause potential delay of innovations, giving preemptive advantages to competitors

• Technology-Driven: New innovations may not be needed by customers, producing no value to company

• Teams with members from both camps

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Cross-Functional Teams

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Traditional Product Development Sequence

Marketing - conducts research to identify customers’ needs and defines product features (functionality, reliability, ease of repair, resale value, warranty, price, etc.)

Design Engineering - develops specifications, performs functional design, selects material, obtains vendor/supplier inputs, and conducts engineering analysis to create product features

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Traditional Product Development Sequence (Cont’d) Production Engineering - reviews and

simplifies the product design for manufactureability and reliability considerations.

Service organization - changes the design some more for serviceability.

Production - finally develops manufacturing techniques and makes the product.

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Cross-Functional Product Development Team

• Representatives of all functional groups are participating, in addition to procurement, financial, vendors/suppliers and customers

• Issues related to product design/development are considered early on and concurrently

• Create an optimum product in shortest time, at lowest cost, while satisfying constraints and meeting customers’ needs

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Benefits of Cross-Functional Teams

• Reduction of product development time: 30% to 70%

• Reduction of number of engineering changes: 65% to 90%

• Reduction of time to market: 20% to 90%

• Improvement in product quality: 200% to 600%

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Successful Examples of Concurrent Teams

• Mercury Computers, Lowell, MASS - Reduced time to market from 125 days to 90 days for its add-on boards of VNE bus

• Hewlett Packard, Palo Alto, CA - Reduced the time to market by 2/3 for its 54600 Oscilloscope

• Toyota Motors, Tokyo, Japan - Reduced product cost by 61%

• Medical Electronic Instruments – Reduced the time to market from eight months to one.

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Cross-Functional Teams (Cont’d)

Team Learning

Team Discipline

Team Effectiveness

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Team Discipline

• For achieving “blow-the-roof-off” performance, teams must have discipline: (1) common purpose, (2) specific goals of performance, (3) complementary skills, (4) commitment to how the work gets done (each pulling the same weight), (5) mutual accountability - commitment and mutual trust, being accountable to each other - “being in the boat together”

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Team Learning

• Team must learn quickly all needed skills (process of working together, use of design tools, communications)

• Factors affecting team learning speed: (1) composition (a mix of expertise) (2) culture of risk taking allowing experimentation (3) people-oriented leadership Style

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Team Effectiveness

• Team Goals are clear, of high impact, measurable and with top management support

• Members are results-oriented, efficient, having complementary skills and experience, high energy level, positive attitude to collaborate, each supported by staff with specific expertise

• Work Environment is excellent (easy to use communications tools, opportunity for self-expression, pleasant work atmosphere, etc.)

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Roles of Team Members

• Team Leader - Keeps team moving forward• Conceptual Thinker - Sources of original ideas, with

imagination and vision• Harmonizers - Assuring team harmony, foster

collaboration, resolving conflicts• Technicians - Specialists with expertise• Planners/implementers - Bring methods to tasks of

team, autocrats with inflexibility• Facilitators - Offering help and support, being adaptable

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Role of Team Members (cont’d)

• Critical Observers - Making sure the team is on target

• Radicals - Not accepting conventional thinking and solutions, offering new approaches to problem-solving

• Power Seekers - Wanting to be right all the time, shaping the teams’ view

• Diplomats - Coordinating inter-team relationship, getting information for the team

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Check Team Player Mentality

• Do you compliment your co-workers when you observe them doing a good job?

• Are you enthusiastic about helping your teammates in any way you can?

• Do you always to do your job thoroughly and completely?• Do you take advantage of every opportunity to support the team

effort?• Do you have a professional respect for everyone on your team?• Can you follow through and support policies and rules with which

you personally disagree?• Do you attempt to avoid undermining those around you for personal

gains?

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Check Team Player Mentality

• Are you enthusiastic about your company and the direction in which it is headed?

• Do you show appreciation for the efforts of others and acknowledge their contributions to the big picture?

• Do you seek new relationships and acquaintances through the company?

• Do you take responsibility for your mistakes and easily admit when you are wrong?

• Does your attitude have a positive effect on those around you?

• Are you personally dedicated to making the company the best in the industry?

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Team Stages

• Formation Stage - Members get together to have roles and responsibilities defined

• Gelling Stage - Members of like minds will form subgroups and stay close together

• Unison Stage - All team members are getting highly organized with a common goal

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Question # 3.5

• The company has been making most of its sales to a few large customers. The company president wishes to broaden its customer base. To do so may require a change of company culture, its product line strategy, its marketing/sales program, and its service organization. How should he go about making the required changes?

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Question # 3.7

• As the company’s sales are coming down unexpectedly, the president asks you to chair a task force with the objectives of developing solutions to correct the situation. Who do you want to be on this task force? How should this problem be resolved?

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Delegating

• Objective - To improve manager’s overall efficiency by selectively distributing work for employees to do

• Process - Managers delegate the responsibility and needed authority of doing specific work to employees and create upward accountability in them for securing the anticipated results

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Why Delegating

• Improve quality and quantity of work done

• Allow manager to do manager’s job

• Become knowledgeable of employee’s capabilities

• Distribute work load efficiently/equitably

• Develop leadership capabilities in people

• Improve operating decisions - reducing cost

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Why Delegating

• Facilitate teamwork, making job more satisfying to employees

• Create opportunities for employees to gain recognition, encouragement and incentives

• Allow employees to develop new skills and knowledge, fostering initiative and competence, and gaining self-confidence

• Encourage employee growth/development

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Delegation Matrix

Can

Cannot

Cannot Can

Engineering Manager

1

2

3

4

1: Employee

3: Employee

2: Neither; if must, then to be done by engineering manager

4: Engineering manager

Employee

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What to Delegate

• Problems/Issue requiring exploration, study and recommendation for decision making

• Activities coming within the job scope and capabilities of employee

• Tasks fitting company’s needs and promoting employee development and growth

• Activities, if done right, would save manager’s time

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What Not to Delegate

• Planning (to define the right things to do)

• Resolve morale problems, differences and conflicts in groups/units

• Coaching and developing employees

• Review, evaluate and correct performance

• Own assignments from big bosses

• Others (own “pet” projects, tasks absent of talents)

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How to Delegate

• Communicate the importance of task, set goals and performance indicators, check on understanding/confidence

• Delegate responsibility for quality of work

• Allow operational decision making (resources, method, sequence of tasks, etc.)

• Trust the employee and give recognition

• Retain own upward accountability

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Barriers to Delegation

• Own technological obsolescence - Employee may learn and grow technically

• Organizational barriers - unclear roles and responsibilities, line and staff positions

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Notes on Delegation

• Delegation is limited by control in effect - no control, no delegation

• Authority must be commensurate with responsibility (related to work delegated)

• Accountability - Achieving the expected results by discharging responsibility and using authority delegated

• Willingness and ability of employee are keys

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Question # 3.9

• Steve Lee, the Engineering Manager, delegates tasks as a good manager should. However, Mark Hayes, the Engineering Director, has the bad habit of calling up Steve unexpectedly to get detailed reports on various on-going activities in Steve’s department. Steve does not want to hold daily staff meetings in order to satisfy Mark’s information needs, because Steve is quite certain that requiring his professional staff to make daily reports will definitely upset them, as all of them are known to prefer independence. What should Steve do?

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Establishing Working Relationships

• Purpose - To create an environment in which people can work together efficiently

• Steps: (1) clarify roles and (2) resolve conflicts

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Types of Roles

• Line Roles (Profit Centers) - (1) Exclusive rights to offer product/service to customers (e.g., production, product design, business management, marketing), (2) Accountable for generating profits (pricing, cost)

• Support Roles (Cost Centers) - (1) Rights to recommend/advise (e.g., legal, R&D, accounting, etc), (2) Accountable for offering active support (cost efficiency, work method, evaluation)

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Notation: 1 - General Management responsibility, 2 -Specialized responsibility, 3 -Must be consulted, 4 -May be consulted, 5- Must be notified, 6 - Must approve

TasksPrepare Bill of Materials

Visit Vendors

Prepare Purchase Orders

Authorize Expenditures

Inspect Raw Materials

Quality Control Testing

Update Inventory Files

Withdraw Materials

Project Manager Team Member Division Manager

Project Office Department Manager

3 2 4 5

6 2 2

4

1 6 5

5 3 2

6 3 2

4 4 2

6 2

5

2

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Type of Conflicts

• Technical (e.g., design, analysis, results interpretation)

• Operational (how to do tasks, who is responsible?)

• Emotional (ego involvement, hurt feelings)

• Political (who should have a say on what? who’s turf it is?)

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How to Resolve Conflicts

• Dominance (Dictation of solution)

• Compromise (Bargain - reflect relative power)

• Collaboration (Find win/win solution by finding ways for both parties to achieve objectives)

• Key Requirements: Openness, mutual respect, common interest to see project success

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Informal Organizations

• Useful in add additional bonding between employees (smooth operation, employee satisfaction)

• Social (Shared values and beliefs -golf club, bowling clubs, credit union)

• Status (Based on skills, abilities, experience, special accomplishments, peer recognition)

• Group (Coalitions to advance specific interests)• Location (Flow of vital information - Executive

secretary)

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Conclusions

• Organizing is a key managerial function, which impacts on the manager’s capability of getting work done efficiently: (1) Get oneself organized, (2) Choose the right organizational settings, (3) Assign compatible people (personality, value, attitude) to work together, (4) Allocate the right resources (skills, money, equipment, time, technology).

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References

• 2-1 C. A. Bartlett and S. Ghoshal, “Matrix Management: Not a Structure, a Frame of Mind,” Harvard Business Review, pp. 138-45 (July-August 1990).

• 2-2 D. J. Duck, “Managing Change: The Art of Balancing,” Harvard Business Review, pp. 109-118 (November–December 1993).

• 2-3 J. J. Gabarro and J. P. Kotter, “Managing Your Boss,” Harvard Business Review, pp. 150-157 (May-June 1993)

• 2-4 R. H. Schaffer and H. A. Thomson, “Successful Change Programs Begin with Results,” Harvard Business Review, pp. 80 – 89 (January-February 1992)

• 2-5 A. van de Lliet, “To Beat the Best,” Management Today, pp. 56-60 (January 1996)

• 2-6 R. M. Kanter, “Collaborative Advantages: The Art of Alliance,” Harvard Business Review, pp.96-108 (July-August 1994)

• 2-7 John A. Byrne, “Management’s New Gurus,” Business Week, pp. 44-51 (August 31, 1992)

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Question # 3.3

• The company has recently concluded a multimillion dollar contract to supply products to a third-world country. The first elite group of engineers from that country has just completed a two-month training course on maintenance and operations. The training manager reported that the level of skill and knowledge of that country was so low that no amount of training would ever enable them to properly operate and maintain the products in questions. “It might be better for that country to buy a less sophisticated product from the company’s competitor.” the training manager suggests. What should the company do?

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Question # 3.4

• Six months ago, the company hired an engineer for his expertise in hydraulic drives, based on a product development plan with a forecast for needing this expertise. Market conditions have suddenly changed in favor of sophisticated electric drives. The engineer involved turns out to be very good in his area of specialization. But it is difficult to retrain him for other assignments in the company. Should the company discharge this engineer?

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Question # 3.6

• The company is considering a plan to upgrade its current product line. The cost of product upgrade is high. There is a small company which has developed the technology required for this product upgrade. What strategy should the company follow, if it wants to continue selling into its current market with the new upgraded product?

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Question # 3.8

• A loyal and high volume customer has warned the company’s Marketing department that Project X is extremely critical to their need and that if this project is late, they may be forced to buy elsewhere. The project manager knows that the best estimates available to date from various in-house groups indicate that at the current rate of progress the Project X will be late by about 6 months. What should the project manager do?

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Question # 3.11

• In an organization offering dual-ladder career progression system, technically trained people may opt to progress along a technical ladder, instead of the traditional managerial ladder. How does it work?

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Answer # 3.11

Director Fellow

Manager Manager Associate

Supervisor Project Manager Consultant

Section Engineer Project Engineer Senior Engineer

Staff Engineer

Engineer

Director

Vice President

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Question # 3.12

Jim FoleyP rog ram M an ag er

Roy BlairE n g in eerin g M an ag er

Paul W arnerG en era l M an ag er

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Question #3.13

• Once the functional manager and project manager agree on a project schedule, who is responsible for getting the work performed? Who is accountable for getting the work performed? Why the difference, if any?

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Question #3.14

• Because of the individuality of people, there always exits differing views of what project management is all about. Below are lists of possible perspectives and a selected group of people. Match the people with their views of project management.

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Question # 3.14

1. Upper-level managers2. Project managers3. Functional managers 4. Project team members

a. A threat to established authorityb. A source of future general managersc. A cause of unwanted changes in ongoing

proceduresd. A means to an ende. A significant market for their servicesf. A place to build an empireg. A necessary evil to traditional managementh. An opportunity for growth and advancementi. A better way to motivate people toward an

objectivej. A source of frustration in authorityk. A way of introducing controlled changesl. A means of coordinating functional unitsm. A means of deep satisfactionn. A way of life

85

Question # 3.15

• The organization chart of Company X reveals that different number of employees reports to its five departments shown. How would you explain the difference?

DepartmentNumber of Employees

A 3

B 7

C 4

D 6

E 9

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Question # 3.16

• Some people feel that working as a team, instead of allowing experts to produce more creative outcomes, actually resulted in watered-down compromises and bland solutions. They view teamwork as a series of exercises in “sharing ignorance.” Do you agree or disagree and why? What can be done to improve the technical qualities of the team outcomes?