‘The engineer manager needs to acquire various skills in management, including those for organizing. technical activities. In this highly competitive environ- ‘ment, the unskilled manager will not be able to bring his unit, or his eompany, as the case may be, to success. ‘The value ofa superior organizational se-uphas been proven dramatically during the Second World War when ‘smaller American naval force confronted the formidable Japanese navy at Midway: Military historians indieated that the Americans emerged victorious because of the superior organizational skills of their leader Even today, skills in organizing contribute largely to ‘the accomplishment of the objectives of many organiza tions, whether they are private businesses of otherwise. ‘The positive effects of business success becomes more pronounced when they come as a result of international ‘operations. International businesses, however, eannot hope to make huge profits unless they are properly organized to imploment their plans.’ ‘The opportunities offered by skillful organizing are too important for the engineer manager to ignore, This chapter is intondod to provide him with some background and insights in organizing REASONS FOR ORGANIZING Organizing is undertaken to facilitate the imple- Teas and Kar Sar, nermatna Marbig (hee: The 66 mentation of plans, In effective organizing, steps are undertaken to breakdown the total job into more man- ageable man-size jobs. Doing these will make it possible to assign particular tasks to particular persons. In turn, these will help facilitate the assignment of authority, rosponsibility, and agcountability for certain functions ‘and tasks, ORGANIZING DEFINED “Organising is a management function which refers to “he ies borian alteeraeas ivitios pints caiee OU be ancl ad ee ei ‘The arrangement or relationship of positions within ‘an organization is called the structure. The result of the organizing process is the structure THE PURPOSE OF THE STRUCTURE ‘Thestructure serves some very useful purposes. They are the following 1. It defines the relationships between tasks and ‘authority for individuals and departments. 2 It defines ationships, the number of of the organi= zation, and the span 3, Te defines the | of individuals int ‘departments and departments into organizati «ee eeneaegainaeme: a When structuring an organization, the engincer ‘manager must be concerned with the following: o1. Division oflabor — determining tho scope of work. ‘and how it is eambined in a job. 2 Delegation of authority — the process of assign- ing various degrees of decision-making author- ty to subordinates 3, Pepartmentation — the grouping of related jobs, activities, or prosassos into major organizational subunits, 4, Span of contrel — the number of people who report directly to a given manager. 5. Coordination — the linking of activities in the ‘organization that serves toachieve x common goal oF objective. THE FORMAL ORGANIZATION ‘After a plan ip adapted, management will proceed to form an organization to carry out tho activities indicated in the plan, ‘The formal organization is “the structure that details. ines of responsibilites, authority, and position."* What is depicted in the organization chart is the formal organi zation. Ibis “the planned structure” and it*represonts the Geliberate attempt to establish patterned relationships ‘among components that will meet the objectives effect- ively” ‘The formal structure is described by management through: 1. organization chart 2 organizational manual and 8. policy manuals ‘Pement B Kast and Janes E,Rosonwese, Ongniction and Man agen A Syn and Conger Apprash ew Wa Mera Bosk SeTiore oo 6 ‘Tho organization chart ia diagram ofthe orgon- seations oii positions and formal lines of authority ‘The organizational manual provides written dos- criptions of authority relationships, details the Fane flons of major orgentatonal units, and describes job procedures ‘The policy manual describes personnel actviios and company policies. INFORMAL GROUPS Formal organizations require the formation of formal groups which will be assigned to perform specific tasks timed at achieving organizational objectives, The formal {group is a part of the organization structure ‘There are inatanees when members of an organiza- ‘ion apontaneooaly form a group with fendship as a ‘principal reason for belonging, This group is called an Fiformal group tis not a part of th formal organization ind it dooe not have a formal performance purpose Informal groups are oftentimes very useful in the accomplishment of major tasks, especially if these tasks ‘Conform with the expectations of the members of the informal group. ‘The informal organization, useful as iti, is “vulne- ‘rable to expediency, manipulation, and opportunism,” ‘according to Valentine’ Ttslow visibility, Valentine added, Inakes it "difficult for management to detect thos perversions, and eonsiderablo harm ean be done to the company” ‘The engineer manager is, therefore, warned that he ‘must be on the lookout for tho possible difficulties that “Fant Vln, “Dangers thor Organi? Mrs lest Marth 198,87.the informal groups may do to the organization. It will betohie best interest ifhe conld make the informal groups Work for the organization TYPES OF ORGANIZATIONAL STRUCTURES Before the commencement of activities, the deeision- makers in an organization will have to decide on what. structure to adapt. Depending on the size and type of operations, a certain struetural type may best Gt the requirements COrgunizations may be classified into three types. They are the following’? 1. Functional organization — this is a form of de- partmentalization in which everyone engaged in one functional activity, such as engineoring ‘or marketing, is grouped into one unit, 2, Product or market organization — this rofers to the organizction of a company by divisions that brings together all those involved with a certain type of product or customer 8. Matrix organization — an organizational struc- ture in which each employee reports to both a functional or division manager and to a project. or group manager. ‘The diiferent types of organizations, with their own distinet advantages and disadvantages, are briefly pre sented on the next. page. ™ Figure 4.1 Reasons of Factors for Joining or Forming a Group FRIENDSHIP ‘COMMON INTEREST ko: concer for Sieonment or Jove for cias- steal music PROXINITY ‘which gives people the ‘change to share ious, opinions, and tealings NEED wnuch PROPEL SATISFACTION PEOPLE wich are derived cultural societies, tater, aN on INFORM ‘GROU ‘COLLECTIVE POWER. ‘whichis derived from unions, fratomiti, oe, (GROUP GOALS which atract| Invials tk: ‘consumer society, spare ub, cic. nFigure 42 4 Typical Functional Organization Chart of a Construction Company PRESIDENT ico Prosiient] [Vice Presitent] [Vico Prosizant] [Vice Preston Marteing | | Constucton Finance | | Human Resources| Functional Organization Functional organization structures are very effect- ‘ve in smaller firms, especially “cingle-business firms where key activities revolve around well-defined skills and aroas of specialization. Punctional organizations have eertain advantages. ‘They are the following: 1, The grouping of employees who perform a com. mon task permit economies of scale and efficient 2 Since the chain of command converges at the top of tho organization, decision-making is central. ized, providing a unified direction from the top 3. Communication and coordination among om- Ployees within each department are excellent 4. The structure promotes high-quality technical problem-solving, 5, The onganization is provided with in depth skill specialization and development. ‘Arte A Thom pin, J and AS. Slam Sate Prmlation agggrlranatnsTrae anarl Mer, Pn Baio omen 2 pmplayee ao povided with carer rograe © thn foneonl eparionta ‘he disadvantage of the fictional organization are the lowing 1. Communication and corinatonbntween tho Apartments ave olen poo 2, Decisions involving more than one department pile up af the top management level and are often fala 3, Work specialization nd division of labor, which desiree in funetional organization, produce routine, nonmotivating employce tasks. 4. Ibis diffieut to identify which section or group is responsible for certain problems, 5, ‘There is limited view of organizational goals by employees 6. There is limited gonoral management training, for employees. Product or Masket Onganzstion ocr mare rgeizato, witht featare of operating by dvisim, &'approprite fora longs ctrpoaton ith may produ fen sn several ead indatee > Ths avantigns fa pedut or maiko ongenastion are ae flows 1. ‘he organization i leible and responsive to chine 2, Tho ergniztin provides high conern for pone eo chard, Daf, Management, Sosved Paitin (Chicago: The Dryden Prom,8. The organization provides excellent esordina- on across functional departments, 4 There is easy pinpointing of responsibility for produet problems, 5. Thereis emphasis on overall produet and division, goals. 6, ‘The opportunity for the development of general ‘management skills ie provided, ‘The disadvantages of the product or market organi zation are as follow: 1. There ix a high possibility of duplication of resources across divisions 2 is less technical depth and specialization ‘There is poor cvordination across divisions 4. ‘There is less top management contro, | 5. ‘Thore is competition for corporate resources, Matrix Organization A mostrix organization, according to Thompson and Strickland, “is a structure with two (or more) channels command, two lines of budget authority, and to sources, of performance and reward." Higgins declared that “the matrix structure was designed to keep employoas in a cen- tral pool and to allocate them to various projects in the firm according to the length of time they were noeded.”2 The matrix organization is afforded with the follow- ing advantages: 1, There is more efficient use of resources than the: divisional structure, ‘mos and Strela,» 28 teens» " Figure 4:3 A Typies ‘Construction Company Product/Market Organization for a PRESIDENT ‘Vow Prosi View President Industral Residential Aecounts Aecourits [marketing [| marktin {construction tI consiu Fiance {+ Finance Homan Homan [Resources Fesour ®2, There is flexibility and adaptability to changing. ‘environment. 3, ‘The development of toth general and functional ‘management skills are present 4. There is interdisciplinary cooperation and any ‘expertise is available to all divisions. ‘There are enlarged tasks for employees which ‘motivate them better, The matrix organization has some disadvantages, however. They are the following: 1. There is frustration and confusion from dual chain, of command, 2, There is high conflict between divisional and functional interests, 3. ‘There are many meetings and more discussion than action, 4. There isa need for human relations training for key employees and managers, ‘There isa tendency for power dominance by one side of the matrix, TYPES OF AUTHORITY ‘The deleyation of authority is a requisite for effect ive organizing. It eonsists of three types, They are as follows" 1. Line authority —a manager’ right to tell subor: dinates what to do and then see that they do it. 2 Staffauthority —a stafTspecialist adviee to a superior ight to give san Mn ts Mat ein Mh DE 6 Figure 4.4 A Typical Matrix Organization of a Construction | (aee| BES = a“ ‘Manager ic fe — CEnsincer, ‘Specialist ‘Negotiator Rsv} --Gom- - eae feeFunctional authority ~ a specialist's right to Figure 45 A Line and Staff Organization oversee lower level personnel involved in that specialty, regardless of where the personnel are in the organization. Line departments perform tasks that reflect the cnganization’s primary goal and mission, In construction firm, the department that negotiates and secures eon tract for the firm isa ine department, ‘The construction division is also a line function, a cx Staff departments include all those that provide 9 corel specialized skills in support of line departments. Exam- ples of staff departments include those which perform Eratogie planning, labor relations, research, accountng, fad parsonnel, PRESIDENT a recor = ‘Staff officers may be classified into the following: Ric. | oa epieee Desc re Directo 1. Personal staff — those individuals assigned mont | [Marketing | | Manuiacturing | | Finance | | Personn to a specific manager to provide needed etait Specialized staff — those individuals providing needed staff services for the whole organization. Toaustnat Factory ‘Gualiy Functional authority is one given to a person oF @ Enginaering Manager Contr work group to make decisions related to their expertise pons! Manager even if these decisions concern other departments. This authority is given to most budget officers of organiza~ tions, as well as other officers i 3 THE PURPOSE OF COMMITTEES oh Sa oat ‘When certain formal groups are deemed inap- renee Supervisor ‘Supervisor propriate to mest expostations, eammittess are often- Fines harnessed to achive eanieational goals. Many rghsizations, lange er small, make to of commitiecs ‘A committee isa formal group of parsons formed for f specific purpose. For instance, the product planning: committee, as described by Millevo, is “often staffed by 7% nmtop executives from marketing, production, research, engineering, and finance, who work part-time to evaluate ‘and approve product ideas." Committovs are very useful most especially to engi- neering and manufacturing firms. When a certain con ‘cern, like product development, is under consideration, ‘8 committee is usually formed to provide the necessary line-up of expertise needed to achieve certain objectives. Committees may be classified as follows: 1, Adhoc committee — one created fora short-term purpose and have a limited life. An example is the committee created to manage the anniver- sary festivities of a certain firm, 2, Standing committoo — it is a relatively per- ‘manent commitioe that doule with iesuos on an ongoing basis. An example is the grievance committee set up to handle initially complaints from employees of the organization, Committees may not work properly, however, if they arenot correctly managed. Delaney suggests that “it might bbe usaf to set up some procedures to make the committee fa more effective tool to accomplish our goals." SUMMARY. ‘The proper management of engineering activities, ‘wehether at the unit, department, or firm level, requires ‘effective organizing. The organizing function is undertaken to facilitate the implementation of plans. Organizing refers to the structuring of resources and activities to accomplish objectives. The structure serves ‘as a way to reach the organization's goals. (ata: Nato! Bonk Str 190) p76 Deni "Dela 9 2 co ‘The formal organization is the structure that will camry out the plan. [tis daseribod through the ongani2a- tion chart, the organization manual, and the poliey manual. Informal groups oftentimes find their way to exist. side by side with formal organizations. These groups ‘may make it easy or make it hard for the organization to achiove its objectives. Organizations may be classified into: (1) funetional, (©) product or market, or (3) matrix. Authority delegated to the members of the orga nization may be classified into: (1) line authority, (2) stall authority, and (8) funetional authority. Committees are used as « supplement tothe existing formal organization. Committees are formed to perform specific tasks, Committees are classified into: (1) ad hoe, and (2) standing. at1 QUESTIONS FOR REVIEW AND DISCUSSION ‘Why is it important for the engineer manager to acquire skills in organizing? How may organizing be defined? 3. What purpose do organizational structures serve? What must be the cones of the engineer manager ‘when structuring the organization? What is the purpose of the formal organization? ‘What are informal groups? Why are they formed? What are the types of organizational structures? How may they be distinguished? What is meant by “line authority”? by “stall autho: rity”? Distinguish “personal staff from “specialized staf?” What are committees? How may they be classified? SUGGESTED ITEM FOR RESEARCH Prepare an organization chart ofa large engineering, firm showing line and staff relationships. 4. BITS AND PIECES INTERNATIONAL CORPORATION: Little Things Mean a Lot ‘The Bitsand Pieces International Corporation (BPIC) is one company that appears to be succeeding and growth, hhas become a part of its agendu for the next few years, ‘Thia is quite unusual for a company whose eurtifieate of ineorporation has only been approved by the Securities ‘and Exchange Commission four years ago. BPIC is maintaining an office at Makati Avenue in ‘Makati and a plant at Sta, Rosa, Laguna, The company is producing various injection molded plastie products classified as consumer and industrial ‘Tho key officers of the company are as follows: President dnd Chairman of the Board: Engineer Rodrigo Reyes Vico President and General Manager: Engineor Jesus Ualat Corporate Secretary: Mrs. Mildred Salazar ‘Treasurer: Ms, Parita Toquilar Auditor: Ms, Elsa Marzo Engincering Manager; Engineer Silvino Santiago Production Manager: Engineer Severo Lagayan ‘The organization chart of BPIC is shown in Exhibit 1 ‘The company, classified as « manufacturing corpo: ration, operates on two activities. 1. production ofstacks to be sold to the loeal market 2. production as a subeontractor BPIC does not maintain a sales force. The general manager acts as marketing executive and directly tran- ssacts business with customers, 8‘The company’s average salos por month are as follows Product ‘Average Sales Per Month Ball Pen ipa 840,000 Sputum Cops 900,000 (Grosse Cups 100,000 Bottle Cape 100,000 PVC Fittings 200,000, Total 73,640,000 At current output levels, the company was declared profitable, ‘The following financial data were provided: profit margin (not incomezales) = 32% 2. return on total assets (net income/total assets) = 12% 3. annual turnover = 16 timee 4. current ratio = 1.1 5. acid test ratio = 1.05 ‘An analysis of the company’s market potential con vinced the top management to consider expansion, It was also decided that a new product, the tissue holder, must bo added to its existing line of products, ‘The target sales for the next three years are aa fillows: Products Year1 Yea2 Years Ball Pen Tips rom PM Pp eM Sputum Cups: BM MoM Grease Cups mM uM aM Bottle Caps 2M 36M aM PVC Fittings 4M 58M 70M ‘Tine Holder 4M __ssM __70M ‘Total Pisa PIsM P2i0MK ‘The company made provisions for improving ite facilities including land, building, machinery, and equip- ‘ment, The hiring of additional manpower was also pro- posed, ‘The following constitute the positions proposed: Position Quantity Finanee Manager 1 ‘Quality Control and Research and Development! Manager 1 Senior Machinist 1 JTupior Machinist 2 Helpers 2 ‘The president ordered the general manager to'prepare ‘an organization chart for the new set up. The key officers of the company were dircetod to review the proposed set- up and present their comments on an executive meeting scheduled next week. The proposed organization chart is shown in Exhibit 2. Engineor Lagayan is now contemplating on what. credible points he is going to raise in the mecting.Exhibit 4. Bite and Ploces Intemational Corporation Current Exhibit 2. Bits and Places international Corporation Proposed Organization Chart PRESIDENT/ Sc ee Ss eam (eae ge Sem eTTS temce.] [Ses] Lee mare cos vom |[ecariee| [Sey | [ae = eee ee ee Manager Mange ‘new position ‘new position SD Bina fn [nan] oo S | ===] ® fener] Baal ee meee Unityman | wsityman | | vatiyman ‘Junior feos ‘Machinist oe =r eee ES een Qperatoe || Oper de new position as => = new positon ee = = oa ae Son) (ee Au ean vninyman] |“ osyran] aan] ee Eos 3 e