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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

Engineering Management
Functions
Organizing
Planning

Leading
Controlling
2

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)
3

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
4

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
5

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
6

Line Versus Staff


Business/Product
Management

Engineering

R&D

Production

Marketing

Safety &
Environment
Procurement

Legal

Public Relations

Service
Distribution

Customers

Accounting
Human Resources
7

Definitions (contd)
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

The Function of Organizing


Organizing Workplace

Developing Structure

Delegating Work

Establishing Relationship

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 ones own system for names and
contact information
10

Question # 3.10
David Pope

Administrative
assistant
George Wallace
Glen Sanford
Personnel director
Presidents meeting
Own child has flu
11

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

12

Functional Organization
Technical Director

Mechanical Design

Electrical Design

System Engineering

Quality Control

Production Engineering

13

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
14

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
15

Discipline-Based Organization
Engineering Dean

Mechanical Engineering

Electrical Engineering

Chemical Engineering

Industrial Engineering

Civil Engineering

16

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.

17

Product Organization
Technical Director

Governmental Products

University Products

Consumer Products

Custom Products

Industrial Products

18

Regional Organization
President

North America

Latin America

Europe

Asia

Africa

19

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
20

Matrix Organization
Functional Control

Project A

Project-based
Control

Project B

Project C

Engineering

Production

Logistics

Design

21

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
22

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

23

Team Organization
Functional Control
Team Leader

Member A

Member B

Member C

Member D
Engineering

Production

Logistics

Design

24

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
25

Network Organization

26

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.)
27

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?

28

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?

29

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
30

(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
31

(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.
32

(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,
New Way to Market," The McKinsey Quarterly, New York (2000).

"A

33

(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).
34

(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
35

(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
36

(4) AES Corporation


AES Corporation Total Revenue
3000

Millions

2500
2000
1500
1000
500
0
1990

1991

1992

1993

1994

1995

1996

1997

1998

Year

37

(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
38

(5) High-Tech Marketing


Interface (Contd)
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
39

Cross-Functional Teams

40

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
41

Traditional Product
Development Sequence (Contd)
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.
42

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
43

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%
44

Successful Examples of
Concurrent Teams
Mercury Computers, Lowell, MASS - Reduced
time to market from 125 days to 90 days for its addon 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.
45

Cross-Functional Teams (Contd)

Team Discipline

Team Learning

Team Effectiveness

46

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
47

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
48

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 selfexpression, pleasant work atmosphere, etc.)
49

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
50

Role of Team Members (contd)


Critical Observers - Making sure the team is on
target
Radicals - Not accepting conventional thinking and
solutions, offering new approaches to problemsolving
Power Seekers - Wanting to be right all the time,
shaping the teams view
Diplomats - Coordinating inter-team relationship,
getting information for the team
51

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?
52

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?
53

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
54

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?
55

Question # 3.7
As the companys 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?
56

Delegating
Objective - To improve managers 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
57

Why Delegating
Improve quality and quantity of work done
Allow manager to do managers job
Become knowledgeable of employees
capabilities
Distribute work load efficiently/equitably
Develop leadership capabilities in people
Improve operating decisions - reducing cost
58

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
59

Delegation Matrix
1: Employee
Can

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

3: Employee

Employee
Cannot

Cannot

Can

4: Engineering
manager

Engineering Manager

60

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 companys needs and promoting
employee development and growth
Activities, if done right, would save managers
time
61

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)
62

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
63

Barriers to Delegation
Own technological obsolescence Employee may learn and grow technically
Organizational barriers - unclear roles and
responsibilities, line and staff positions

64

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
65

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 ongoing activities in Steves department. Steve does not
want to hold daily staff meetings in order to satisfy
Marks 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?
66

Establishing Working
Relationships
Purpose - To create an environment in
which people can work together efficiently
Steps: (1) clarify roles and (2) resolve
conflicts

67

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)
68

Notation: 1 - General Management responsibility,


2 -Specialized responsibility, 3 -Must be consulted,
4 -May be consulted, 5- Must be notified, 6 - Must approve
Tasks
Prepare Bill of Materials
Visit Vendors

3
2
2

2
2
4

6
5
6

5
3
3

4
6

4
2

Prepare Purchase Orders


Authorize Expenditures
Inspect Raw Materials
Quality Control Testing
Update Inventory Files
Withdraw Materials
Project Manager

4
5

2
2
2

Team Member Division Manager

Project Office

Department Manager

69

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?
whos turf it is?)
70

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
71

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)
72

Conclusions
Organizing is a key managerial function, which
impacts on the managers 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).
73

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 (NovemberDecember 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, Managements New Gurus, Business Week, pp. 44-51 (August 31,
1992)

74

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 companys competitor. the
training manager suggests. What should the company do?
75

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?
76

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?
77

Question # 3.8
A loyal and high volume customer has warned the
companys 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 inhouse 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?
78

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?

79

Answer # 3.11
Vice President
Director

Director

Fellow

Manager

Manager

Associate

Supervisor

Project Manager

Consultant

Section Engineer

Project Engineer

Senior Engineer

Staff Engineer
Engineer
80

Question # 3.12
P a u l W a rn e r
G e n e ra l M a n a g e r
J im F o le y
P ro g ra m M a n a g e r

R o y B la ir
E n g in e e r in g M a n a g e r

81

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?

82

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.

83

Question # 3.14
1. Upper-level managers

2. Project managers
3. Functional managers
4. Project team members

a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.

A threat to established authority


A source of future general managers
A cause of unwanted changes in ongoing
procedures
A means to an end
A significant market for their services
A place to build an empire
A necessary evil to traditional management
An opportunity for growth and advancement
A better way to motivate people toward an
objective
A source of frustration in authority
A way of introducing controlled changes
A means of coordinating functional units
A means of deep satisfaction
A way of life
84

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?

Department

Number of
Employees

85

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?
86