Organizational Approach and Human asset planning

B.E. (Mechanical) & Post Graduate Diploma in Business Management

Nirjhar Chakravorti has completed Graduation in Mechanical
Engineering in 2000 from Jalpaiguri Government Engineering College,
India.
Nirjhar has received & Post Graduate Diploma in Business
Management (PGDBM) certificate from Institute of Management
Technology (IMT), CDL, Ghaziabad.
Nirjhar has experience in design, development and project
engineering. During professional life, Nirjhar has worked on different
engineering activities, like core design, management planning and
project engineering, along with the analysis of life cycle costing for
capital expenditure of a profit making company.
Also, Nirjhar has worked on organizational re-structuring,
implementation of ISO, six sigma and total productive maintenance
(TPM).

The presentation caters following points:

• Organization Structures
• Concept of matrix system
• Case study:
- How a company can adopt matrix system
chronologically
- Designation system adaptation by the company
along with matrix system conversion
• Advantage and disadvantage of matrix system

Organizing is the most important function of
management.

Organizing involves preparation of well structured chain of
command and authority that flows from top to bottom.

The organizational structure also determines the levels of
the management.

Formal Organization
A formal organization typically consists of a classical
mechanistic hierarchical structure.

In such type of structure, the position, responsibility,
authority, accountability and the lines of command
are clearly defined and established.

A Nirjhar Chakravorti Presentation

Determinants of organizational structire

Environment
&
Geography

Philosophy
Organizational
Technology And
Structure
Business Strategy

Size of
organization


• Line Organization: Authority flows in direct line from the top to different
down level members. Applicable for small organization.
• Line & Staff Organizational structure: Functional specialties
(staff) are added to the line, thus giving the line advantages of specialists.
Staff members are advisor, having no authority.
• Functional Organization: Specialist in a given area can enforce his
directive within a clearly defined scope of his authority.
• Divisional Organization: Involves grouping of people or activities with
similar characteristics into a single department. These departments operate as
if these are small organizations under a large organizational umbrella.
Example for the same is departmentalization by product, or by customer, or by
area.
• Project Organization: Temporary organizational structures formed for
specific projects for a specific time period and once the project is over, these
are dismantled.
• Matrix Organization: Combination and interaction of project and
functional structure. It overcomes the problems associated with individual
project and functional structure.

Matrix System
 Matrix system is mostly applicable for project based
complex and bigger organization with cross functional
activities.
 Matrix organization is mos useful when there is
pressure for shared resources.
 In matrix structure, the functional and project lines of
authority are super-imposed with each other and
shared by both functional and project managers.


Matrix System
Role of project managers
 The project managers are generally responsible for
overall direction and integration of activities and
resources related to the particular project.
 Responsibility for project managers:
# Complete work on scheduled time
# Complete work within prescribed budget
# Integration of all functional managers to
accomplish the project
# Directing and evaluating project activity


Matrix System
Role of functional managers
 The functional managers are concerned with
operational aspects of the project.
 Responsibility for project managers:
# Providing technical guidance for each
project
# Providing highly skilled and specialized
functional staff
# Completing projects within prescribed
technical specifications


A case study
Example of matrix organization
A company engaged in material handling plant
engineering and construction business has set up a
business unit and manufacturing plant at India.
The company initially has small structure.
But with growing Indian economy, the organization is
expanding, and needs organizational re-structuring.
A proposed matrix system for the organization is
discussed in the case study.


•Marketing Department (3-4 persons) brings order
•Engineering department designs basics (based on design guidelines
and previous experiences) and creates 3D general arrangements for
detailing
•Draftsmen prepare detail drawings. There is no assigned authority of
checking drawings.
•Production Department manufactures items as per detail drawings
•Production Department procure raw materials through small Purchase
Department.
•Design Department interact with various department and customer, as
& when required.


Present Activity of Design Department at India *
Total number of design  Basic design done based on
department employee : 8
No. of engineer: 2
design handbook and previous
No. of diploma engineer: 6 knowledge
 Prepare GA drawing in 3D model
 Distributed among available man
power for detailing
 No assigned authority for
checking
 Design department activity is simple and linear
 Every employee has almost similar role
 As the job increases and man power increases the system may
creates confusion and lack leadership
* Only design department activity is discussed initially, as design is the backbone of the business,
and design department will split and form project management group in future.


Journey Towards Matrix Organization: Step 1
Design Department target for next 3 months
 To create small dynamic detail design groups
Electrical Group
Group Leader: One old Engineer
Head of Design Function: Electrical Engineering
No. of person: 5

Plant Belt Accessories
Design Conveyor Group
Group Group Leader: One Structural
Group
Group Leader: Group Leader:
new Engineer Group
Function: Other
One old Engineer One old Function: Prepare
conveyors (screw
Function: Basic Engineer structural
and chain type)
design and Function: Belt drawings
and other
engineering, conveyor No. of person: 2
mechanical area
Plant layout detailing
No. of person: 2
No. of person: 4 No. of person: 3

 Members of the groups are dynamic and move to different groups as required
 Total no of employee: 12 nos

Design Department target for next 6 months
 To create small dynamic detail design groups
Electrical Group
Group Leader: One old Engineer
Head of Engineering Function: Electrical Engineering
No. of person: 5

Project
Plant Belt Accessories
Structural Group
Design Conveyor Group Function: Co-
Group Leader: One Group ordination
Group Group new Engineer Group Leader: between different
Group Leader: Group Leader: Function: Other One new department &
One old Engineer One old Engineer conveyors (screw Engineer customer,
Function: Basic Function: Belt and chain type) Function: drawing interface
design and conveyor and other Structural design checking, project
engineering, detailing mechanical area and detailing planning and
Plant layout No. of person: 4 No. of person: 3 No. of person: 4 monitoring, each
No. of person: 5 member is
independent
 Members of the groups are dynamic and move to different groups as required project manager
 Total no of employee: 20 nos No. of person: 3

Design Department target for next 6 months (For
different design groups)
Plant Design Group Belt Conveyor Group Accessories Group
Group Leader: One new Engineer
Group Leader: One old Engineer Group Leader: One old Engineer Function of group leader:
Function of group leader: Function of group leader: • Project planning with project
• Project planning with project manager • Project planning with project manager manager
•Calculation •Drawing checking •Drawing checking
•Guide persons for layout preparation •Specification preparation for bought out •Specification preparation for bought
•Customer/ vendor meeting items, eg gear box, break, etc out items, eg gear box, break, etc
•Drafting as required •Drafting as required

Designer- 4 persons Designer – 3 persons
Function: Drafting and Function: Drafting
Designer – 2 persons
calculation
Function: Drafting

Structural Group
Group Leader: One new Engineer
Function of group leader:
• Project planning with project manager Designer- 3 persons
•Calculation Function: Drafting
•Drawing checking and correction of
drawings during checking, if required
•Customer/ vendor meeting

Organizational target for next 6 months
Managing Director Advisor s&
CFO

Director (Operation) Director (Marketing)

Head of Head of Head of
Engineering Purchase & Production
Quality

Design Project Team Leader
Groups Group Electrical


Journey Towards Matrix Organization: Step 3/ Final Step
Organizational target for next 12 months
Head HR, Managing Director Advisor s& CFO
Administration
HR & Admin Personnel Chief Operating Officer
Group Group

Director (Technical) Director (Operation) Director (Marketing)
with marketing team

Director
Head of
Head of Head of Head of (Electrical)
Purchase &
Project Engineering Production Quality Electrical
Control Group

Project
Group with Design Production Purchase QC
erection team Groups Planning Manufacturing
Project Group Groups
managers Internal External


Focus on Project Department
• Project department is going to play an important pivotal role, where
design and engineering remains backbone of the business.
• As a project based company Matrix organizational structure is more
desirable.
• When a new project will come, Director (Technical) & Head of Project will
decide a project manager.
• Marketing department will handover the contract to the concerned
project manager.
• Every head of department then announce concerned person from their
department for particular project, and inform to project manager and other
higher authorities.
• Only manufacturing department will work independently under co-
ordination with production planning. Project manager will interact with
concerned production planning person for the particular project.

Focus on Project Department
• MD is supreme in the organization.
•COO and CFO is next to MD.
•COO look after all the technical and marketing part.
•CFO look after complete finance and costing part.
•Even marketing is under COO, but for companies bigger
interest MD will also take equal part in marketing activities.
•COO will more frequently interact with Director Technical.
Operation and Electrical, Personnel Manager (who is under
Administration Head).
•MD will more frequently interact with CFO, Director
Marketing and Administration Head.

Designation System
• Designation system is very crucial for employee motivation and long run function of
company.
• For smooth operation, company designation system will have 3 tier.
3 Tier Management Level:
Intermediate Functional
Top
Management Management
Management
(TM 1-6) (IM 1-5) (FM 1-8)
Top Management

• DGM: IM 1-2
Intermediate Management

• Deputy Manager:

Functional Management
• MD: TM 1 FM 1-2
• AGM: IM 3
• COO & CFO: TM 2 • Assistant
• Sr. Manager: IM 4
• Director: TM 3 Manager: FM 3-4
• Manager: IM 5
• VP: TM 4 • Junior Manager:
• Sr. GM: TM 5 FM 5-6
• GM: TM 6 • Executive: FM 7-
8


If there is smaller organizational level (like lean organization), it is easy for
organization.
Problems of smaller organizational levels:
• As the organizations grows and man power of different experience increases,
then it becomes tough for organization to provide them suitable designation
and function.
• For long term run of the organization, if a person reaches a certain level very
quickly and remains at that designation for long time, then it creates a state of
discomfort to the employee. He becomes target less and de-motivated.
• Human psychology follows traditional hierarchical structure. If there are long
chain, almost every alternate year employee get promoted to next higher level,
so a positional satisfaction always remains in the mind of the employee.
• Even there are multiple tier of management, but functions are primarily same
for a group of levels. Only designation will change. Example, in design
department, persons will work as draftsman upto initial phase of manager level.
At later manager and senior manager level persons will draw as well as take
additional responsibility of co-ordination. At DGM level persons will mainly co-
ordinate and will involve in drawing for small corrections during checking.


• Tiers should be such that an graduate engineer trainee can reaches
maximum level of COO at the age of 50 (starting from FM 4 level,
after 1 year training).
• An employee (including engineers) in normal can reaches up to
DGM level (i.e. IM 1), for his long run employment in the company.
• Company should be selective to promote an employee from DGM
to GM. If any department requires a GM and nobody down stream is
not in company’s confidence, then better to hire a GM from outside.
• During promotion, every employee should pass through all the
tiers. If any dynamic employee is there, it is better to promote him/
her every year, but it is preferable to avoid double promotion (to
avoid internal conflict within the employees).

Designation & Hierarchy
Advisor s& CFO (TM 2)
Managing Director (TM 1)
Head HR & Admin (IM 3 to
TM 5) Director Marketing
HR & Admin Chief Operating Officer (TM 2) Group (FM
Personnel (Marketing)
Dept (FM 8-
Dept(FM 8-IM 1)
7-TM 6)
IM 1) (TM 3)

Director (Technical) (TM 3) Director (Operation) (TM 3)

Head of Head of Head of Pur & Director (Electrical)
Head of Project Engineering Production QC (TM 3)
GM (TM 6) to VP GM (TM 6) to VP GM (TM 6) to VP GM (TM 6) to VP
(TM 4) (TM 4) (TM 4) (TM 4)

Electrical
Group (FM 7-
TM 4)

Project Group (FM Design Groups
7-TM 6) (FM 7-TM 6) Production Manufacturing
Planning Groups (FM 7- QC
Group (FM 7- Purchase (FM 7-
Project managers Group Leaders TM 6)
TM 6) (FM 7-TM 6) TM 6)
(IM 5-TM 6) (IM 5-TM 6)


Designation, Experience & Promotion
• Every tier will have min-max locking period. Lock period varies for qualifications
(i.e. Engineers from grade 1 and grade 2 colleges, MBAs from grade 1 and grade 2
colleges, Diploma Engineers, ITIs, and General qualifications will have different lock
period).
• For example Company can promote an engineer (having degree of grade 1 college)
from DGM IM 2 level to next DGM IM 2 level within 1 year. Also, company can
promote him/ her to the next level after 4 years, depending on company’s confidence.
But after 4 years he/ she will automatically be promoted to IM 1 from IM 2.
•Instead of so many tires, many companies follow simple 5 levels, like Director,
General Manager, Manager, Assistant Manager, Executives. Also, sometimes they call
designation in different names, but try to keep designation level shorter in 5 to 6
tires, for ease of management control.
•But too many tiers may be helpful for bigger organization to accommodate various
age group and qualifications. Also, companies who try to retain employees for long
run, they can follow multiple layers of designation system. May be it is initially little
hectic for management to control, but once the process started and run for some
years, then it become a practice.

• Even though, this designation system does not comes in purview of matrix system
discussion, but it is put in this presentation as a guide line for formation of matrix
system alongside company’s management structure.


Important aspect of matrix system:
Each person who is working in particular project has two supervisors:
the project manager and the functional manager.
In matrix system, vertical and horizontal authority are combined and
the authority flows both down and across.


• Violation of unity of command principle: As there are more than one
supervisor for each worker, it causes confusion and conflict.
Top management needs to be active to avoid conflict. Project manager
will pass on demand to functional members, through functional head.
Functional head will decide priority on behalf of the functional member.
If the work for a particular project is not accomplished, then project
manager will discuss and settle issue with functional head, but he will
not order functional member to complete work at any means.
• Pressure of job: The individual will have too many demands placed
upon him by different project managers. It can create frustration.
Management should organized training and mental boosting for
employee to tackle such situation. Blame game should be stopped and
real cause for any mistake or failure should be analyzed with sensitivity.

• Increased co-ordination and control
• Full use of available resources
• Response to dynamic environment
• Excellence in inter-disciplinary specialization
• Top management has more time for strategic planning and policy
formulation
• Improving motivation and personal development


Like every system of the world, matrix system has positives and
negatives.
Some of the difficulties of matrix system can be avoided and the
structure can be fully utilized by carefully defining the individual
roles of functional and project managers. Training program can be
implemented for team building and conflict management.
Considering the competitive market and dynamics of project
related business, matrix system is the most useful organizational
structure so far envisaged.


One new Function: Belt and chain type) Function: Prepare No. of person: 2Engineer conveyor and other structural drawings Function: Basic detailing mechanical area No. of person: 2 engineering, No. of person: 3 No. of person: 2 Plant layout No. of person: 4No. of person: 3 Project group formed to coordinate between different groups and customer Assistant added to support head of engineering Total no of employee: 14 nos A Nirjhar Chakravorti PresentationJourney Towards Matrix Organization: Step 3Design Department

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