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
7
Line Versus Staff
Production Engineering Marketing
Service
Business/Product
Management
Customers Distribution
Safety &
Environment
Legal Accounting
Public Relations Human Resources
R&D
Procurement
8
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
9
The Function of Organizing
10
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
11
Question # 3.10
David Pope Administrative
assistant
George Wallace
Glen Sanford
Personnel director
Presidents meeting
Own child has flu

12
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 Control Electrical Design Mechanical 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 Engineering Electrical Engineering Mechanical 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.
18
Product Organization
Technical Director
Custom Products University Products Governmental Products
Consumer Products Industrial Products
19
Regional Organization
President
Asia Europe North America
Latin America Africa
20
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

21
Matrix Organization
Project A
Project B
Project C
Functional Control
Project-based
Control
Engineering Production Logistics Design
22
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
23
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
24
Team Organization
Member A
Member B
Member C
Functional Control
Engineering Production Logistics Design
Team Leader
Member D
25
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


26
Network Organization
27
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.)

28
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?

29
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?


30
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

31
(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
32
(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.
33
(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).


34
(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).
35
(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
36
(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
37
(4) AES Corporation
AES Corporation Total Revenue
0
500
1000
1500
2000
2500
3000
1990 1991 1992 1993 1994 1995 1996 1997 1998
Year
M
i
l
l
i
o
n
s
38
(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
39
(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

40
Cross-Functional Teams
41
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


42
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.

43
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
44
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%

45
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.
46
Cross-Functional Teams (Contd)
47
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
48
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
49
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.)
50
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
51
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 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

52
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?



53
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?
54
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
55
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?


56
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?

57
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

58
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
59
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
60
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
61
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
62
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)
63
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
64
Barriers to Delegation
Own technological obsolescence -
Employee may learn and grow technically
Organizational barriers - unclear roles and
responsibilities, line and staff positions

65
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
66
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 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?

67
Establishing Working
Relationships
Purpose - To create an environment in
which people can work together efficiently
Steps: (1) clarify roles and (2) resolve
conflicts
68
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)
69
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
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
70
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?)
71
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
72
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)

73
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).

74
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)


75
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?

76
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?

77
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?

78
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 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?


79
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?

80
Answer # 3.11
Director Fellow
Manager Manager Associate
Supervisor Project Manager Consultant
Section Engineer Project Engineer Senior Engineer
Staff Engineer
Engineer
Director
Vice President
81
Question # 3.12
Jim Foley
Program Manager
Roy Blair
Engineering Manager
Paul Warner
General Manager
82
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?
83
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.
84
Question # 3.14
1. Upper-level managers
2. Project managers
3. Functional managers
4. Project team members


a. A threat to established authority
b. A source of future general managers
c. A cause of unwanted changes in ongoing
procedures
d. A means to an end
e. A significant market for their services
f. A place to build an empire
g. A necessary evil to traditional management
h. An opportunity for growth and advancement
i. A better way to motivate people toward an
objective
j. A source of frustration in authority
k. A way of introducing controlled changes
l. A means of coordinating functional units
m. A means of deep satisfaction
n. 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?
Department
Number of
Employees
A 3
B 7
C 4
D 6
E 9
86
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?