06. Engineering Management 3 - Organising

Petronius Arbiter: reorganizing creates the illusion of progress while producing confusion, inefficiency, and demoralisation.

Organizing as a management function:

• Design jobs
• Group jobs
• Distribute authority
• Coordinate activities

The middle two points are part of designing organizational structure.

Often, a lot of organizations evolve naturally without a plan which leads to inappropriate structure.

Organizational Structure

Definitions:

• How the organization divides its work into tasks and achieves coordination amongst them
• The arrangement of and relationship between the components and positions of a company
• Method of arranging behavior to achieve a common purpose in a coordinated manner

Basic Organizational Structure

Three components:

• Complexity; how much are tasks, roles etc. broken up?
• Centralization: is decision-making power dispersed or centralized
• Formalization/bureaucracy: how many rules are there

Determinants of Organizational Complexity

• Departmental principle: is it big enough to have actual departments?
• Span-of-control principle: someone can only directly supervise so many people
  • Flatter structure reduces number of managers, but only works if the managers can support their subordinates well
  • 4 direct subordinates/supervisor: tall. 8: flat
  • Theory X managers require tall span of control
• Line-staff principle:
  • Line workers directly involved in production
  • Staff are support people: marketing, engineering, cleaners etc.
• Scalar principle

Types of Structures

Traditional:

• Functional
• Divisional
• Matrix

New Developments:

• Team
• Network
• ‘Holocracy’

Some structures may be so dysfunctional that the only way to ‘get things done’ is through informal routes.

Functional structure:

• CEO, then general managers (operations, marketing, HR, R&D etc.), then managers, …

Divisional structures:

• By product: good or services produced (e.g. iPhone, Mac)
• By geography: location (e.g. Asia/Europe division)
• Customer: customer or client-serviced
• Process: activities that are part of some process (e.g. order fulfillment/product purchasing)

Functional/divisional hybrid structure:

• e.g. top level structure by product type, lower levels by department or location
• There may also be some centralized departments, leading to tension between department or location-specific departments fulfilling the same role

Team structures:

• Cross-functional teams: members from different departments
• Project teams: convened for a specific project and disbanded
• Self-managed/leaderless teams: make decision and delegate tasks as a group
  • May work great if all people similarly motivated, but may also crash and burn

Cross functional project groups - matrix structures:

• Personnel assigned to both projects and departments
  • Two managers; one for (e.g. sales, marketing) and one for the project
  • No clear line of authority

Network Structures:

• Have a core business team and hire people or businesses to do work when the work needs to be done

Bureaucratic vs Adaptive Organizations

Bureaucratic vs Adaptive, Mechanistic vs Organic, and kind of Theory X vs Y:

Mechanistic designs useful for simple and repetitive tasks, production efficiency, well-defined jobs.

Organic designs useful when work efforts are highly interdependent, require high information-processing capabilities, for doing complex/unique tasks or creativity.

The whole company does not need to follow the same type of structure: different departments may have different needs and priorities that lead to some structures being preferred.

e.g. Engineering can be adaptive while legal, HR, finance etc. are bureaucratic.

Organizational Design

The process of creating structures that best serve the company’s mission and objectives.

Size, strategy, tasks, HR, environment, technology and life cycle all influence the organizational design.

The more uncertainty there is in the environment, the more adaptive the organizational structure needs to be. Trade-offs between efficiency/predictability and innovation/flexibility.

Technology and Organizational Design

Technology: knowledge, skills, equipment, methods used to transform inputs into outputs

Manufacturing:

• Small-batch/unit production: each batch made to fit different customer specifications
  • Has low formalizations; suited to organic structures
• Mass production: large numbers of uniform items in an assembly line
  • Has moderate vertical integration and high horizontal differentiation; best suited to mechanistic structures
• Continuous-process production: highly-automated production
  • High vertical differentiation and low horizontal differentiation; best suited to organic structures

Job Design

Matrix; columns:

• Job simplification (e.g. manufacturing line); very boring
• Job rotation and enlargement
  • Job rotation reduces effect of boredom
• Job enrichment
  • Letting people see how they fit in the bigger picture to (hopefully provide) better satisfaction
  • e.g. letting workers go through the whole process rather than making a production line

Matrix; rows:

• Job scope: number/variety of tasks
• Job depth: extend of planning, controlling responsibility
• Task specialization

Core Characteristics Model

Allows managers to create a job that best fits people’s needs.

A job high in the five core characteristics is ‘enriched’:

• Skill variety
• Task identity
• Task significance
• Autonomy
• Feedback from the job itself

Outcomes:

• Skill variety, task identity and significance lead to the work being meaningful
• Autonomy leads to responsibility for outcomes
• Feedback leads to knowledge of the actual results of the work

Alternative Job Arrangements

• Flexible working hours
• Compressed work week
• Job sharing
  • e.g. one person works mornings, another only in evening
• Work sharing
• Telecommuting
  • Downsides: loneliness, lack of feedback, ‘water-cooler’ talk
• Part time
• Casual

Stress

Does the structure increase stress? Can this be mitigated or removed?

Stress factors:

• Work factors: task/role demands, interpersonal relationships, career progress
• Individual factors: needs, capability, personality
• Non-work factors: family, economics, personal affairs

NZ: employers have an obligation to ensure workers are not put under inappropriate stress.