Chapter 3 - 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
Service

Engineering Production Marketing Distribution Customers

Safety &
R&D Legal Accounting
Environment

Procurement Public Relations Human Resources

7
 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

8
The Function of Organizing

9
 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
10
 Question # 3.10
• David Pope • Administrative
assistant
• George Wallace
• Glen Sanford
• Personnel director
• President’s 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 Quality Control

System Engineering Production Engineering

13
 Functional Organizations
(Pros and Cons)
• Permits hierarchy of • Encourages excessive
skills centralization
• Facilitates • Delays decision making
specialization • Compounds
• Simplifies coordination communication line loss
• Permits use of current • Restricts development
technologies and of managerial skills
equipment • 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 Industrial Engineering

Chemical 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 Custom Products

Consumer Products Industrial Products

18
 Regional Organization

President

North America Europe Asia

Latin America Africa

19
 Product/Regional Organization
(Pros and Cons)
• Focuses on end products • High costs due to layers,
or geographical regions autonomy or duplicated
• Facilitates coordination facilities
• Encourages management • Requires management
development talents
• Provides for • Technical obsolescence
decentralization of specialists
• Promotes growth • 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 • Dual reporting
on schedule and cost, • Severe conflicts among
functional managers on managers
quality/expertise • Delicate balance of
• Work load balance power (people versus
• Excellent for individuals money/time)
(to achieve exposure • Communications
and interactions) problems

22
 Matrix Organization
(Bases for Conflicts)
• Project Managers: • Functional Manager:
Money under control, Manpower, skills
mandate to authorize knowledge, facilities
work with top • Own funds to support
management support people
• Rights to buy services
elsewhere

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

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

2500

2000
Millions

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 (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
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 (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.
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
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.
45
Cross-Functional Teams (Cont’d)

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 self-
expression, 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 (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 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 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?

56
 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
57
 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
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 1 3 2: Neither; if must,

then to be done
Employee by engineering
manager

Cannot 2 4 3: Employee

4: Engineering
manager
Cannot Can
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 company’s needs and promoting
employee development and growth
• Activities, if done right, would save
manager’s 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
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? 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 3 2 4 5
Visit Vendors 6 2 2 5
Prepare Purchase Orders 2 4
Authorize Expenditures 1 6 5
Inspect Raw Materials 5 3 2
Quality Control Testing 6 3 2
Update Inventory Files 4 4 2
Withdraw Materials 6 2
Project Manager 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?
who’s 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 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). 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 (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)

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 company’s 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
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?
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

Paul Warner
General Manager

Jim Foley Roy Blair

Program Manager Engineering Manager

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 a. A threat to established authority
b. A source of future general managers
2. Project managers c. A cause of unwanted changes in ongoing
3. Functional managers procedures
d. A means to an end
4. Project team members 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
84
 Question # 3.15
Number of
• The organization chart Department Employees
of Company X reveals
A 3
that different number
of employees reports B 7

to its five departments C 4

shown. How would
you explain the D 6

difference? E 9

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