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

Organizing Workplace

Developing Structure

Delegating Work

Establishing Relationship

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 communication
line loss
• Simplifies coordination
• Restricts development of
• Permits use of current managerial skills
technologies and • Limits personal growth
equipment
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
facilities
• Facilitates coordination
• Requires management
• Encourages management talents
development • Technical obsolescence of
• Provides for specialists
decentralization • Changes take time to effect
• Promotes growth

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 money/time)
individuals (to achieve • Communications
exposure and problems
interactions)
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
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(1) High Performance Enhanced
by Flexible Structure
• Dell Computer - Give P&L responsibilities
to more people running smaller business
units.
• 3M - 15% of time for creative work of own
choice, supported by extra grant money,
Group is to derive 30% of income from
inventions made in the last 4 years.

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 (1) High Performance Enhanced
by Flexible Structure
• COMPOUND ANNUAL GROWTH RATE (CAGR) - 1994 to 1998
• Name CAGR (%) Average Growth Rate of Next Three
Largest Competitors in Industry (%)
• Trilogy 75 49
• First USA 60 21
• Dell Computer 51 39
• Starbucks 46 23
• Home Depot 25 17
•
• Source: Nora A. Aufreiter, Teril Lawyer and Candance D. Lun, "A New Way
to Market," The McKinsey Quarterly, New York (2000).

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
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 (5) High-Tech Marketing
Interface (Cont’d)
• Market-Driven: Products fit to customers’ needs,
but may cause potential delay of innovations, giving
preemptive advantages to competitors
• Technology-Driven: New innovations may not be
needed by customers, producing no value to
company
• Teams with members from both camps

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
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 Benefits of
Cross-Functional Teams
• Reduction of product development time: 30%
to 70%
• Reduction of number of engineering changes:
65% to 90%
• Reduction of time to market: 20% to 90%
• Improvement in product quality: 200% to
600%

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)

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 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 2: Neither; if must,

1 3 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

P a u l W a r n e r
G e n e r a l M a n a g e r

J i m F o l e y R o y B l a i r
P r o g r a m ME na ng ai n g e e e r r i n g M

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.
b.
A threat to established authority
A source of future general managers

2. Project managers c.
d.
A cause of unwanted changes in ongoing procedures
A means to an end
e. A significant market for their services
3. Functional managers f.
g.
A place to build an empire
A necessary evil to traditional management
4. Project team members h.
i.
An opportunity for growth and advancement
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 #Department
3.15 Number of
Employees
• The organization chart
A 3
of Company X reveals
that different number B 7
of employees reports
C 4
to its five departments
shown. How would D 6
you explain the
E 9
difference?

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