In today’s world, organizations must keep pace with ever increasing changes. The complexity of the business requires numerous functions in order to be competitive. A brief description of common business functional responsibilities include the following:
The human resources (HR) department is responsible for an analysis of the needs and training of the workforce, employee turnover analysis, absenteeism analysis, and attitude surveys. In addition, the HR department may recruit, select, and hire people for the organization.
As a support service, production engineering is the problem solving arm of the company. The engineering department should be proactive (always searching) in their problem solving activities. The planning of new equipment or processes is a must for this department.
Sales and Marketing
It is up to sales and marketing to develop effective plans to identify customers and markets for the company’s current products and services, and to identify wants and needs for new products. They should work with engineering in order to pass along customer ideas or desires. The development of a marketing plan helps guide the production plan.
The financial department, in many plants, includes the accounting department. The accounting function compiles monthly statements and the proﬁt or loss statements for the company. A standard cost system should be in place so that data can be collected and based against it. Budget forecasts, capital project requests, and external funding can also be coordinated by the finance department.
In the manufacture of certain products, there are numerous legal ramiﬁcations. The theories based upon breach of warranty have a statutory basis in the Uniform Commercial Code. Product safety requirements and labeling laws not only protect the consumer, but also should reduce the liability risk to the company.
The manufacturing activity is associated with companies manufacturing a product or products. Manufacturing takes designs from engineering, schedules from planning and assembles, and tests the company products. For a service organization, this function is replaced by the personnel performing the service.
Safety and Health
The safety and health department aids the company in complying with local, state, federal, and industry regulations. The best known safety agencies include OSHA, state safety agencies, NFPA, etc. These agencies impact the establishment of a safety program, safety committee, and special safety task forces for the company.
Legal and Regulatory
A legal department (or attorneys on retainer) may be necessary to handle legal matters, especially in the very litigious society of today. A review of purchase agreements, land contracts, leases, right-of-ways, tax abatements, economic impact grants, etc. are examples.
Research and Development (R&D)
Research and development activities are critical for the future of the company. The customer is satisfied for a certain time span with the existing product or service, but eventually the customer will want a new and improved product. lnteraction with the marketing function and customer is needed to generate new ideas and products.
The securing of the proper raw materials, at the right time, is a basic requirement of the purchasing department. They must find ways to reduce the number of corporate suppliers, without increasing the risk of shutting down lines due to a lack of product. The forming of alliances and partnerships among suppliers and customers should always be of concern.
IT or MIS
The information technology (IT) or management information systems (MIS) function is a key ingredient in the factory of the future. Many companies have already exploited information technology. Some of the benefits of IT or MIS include electronic data interchange with customers and suppliers, electronic e-mail for communications, bar coding for all products, data collection for analysis, use of personal computers (PCs), online order status, and real time inventory.
Production Planning and Scheduling
Production planning and scheduling is a department that helps to coordinate the ﬂow of materials throughout the plant. It tracks the levels of materials and inventory, schedules the product, tracks the product, and informs customers and suppliers of progress.
The quality department has but one function in the corporation which is to coordinate the total quality effort of a company and direct the quality assurance activities.
An environmental department, separate from safety and health, is desirable. The proliferation of new regulations make this a very volatile and difficult ﬁeld. What was permissible in the past can be deemed a violation today. The impact of The Clean Air is presently a concern, as is effluent water.
A technology department is a luxury that many large companies can afford. This department is capable of scanning the magazines, journals, trade shows, conferences, patent applications, and libraries looking for new products and technology. Such an arrangement offers a competitive advantage.
Servicing relates to either manufactured or sold products, or the servicing of client accounts for non-manufacturing companies. Servicing is responsible for ﬁxing problems with the product, and assuring that customers are satisﬁed.
Types of organization structures
Some of the type of organization structures.
In flat organizations decision making is forced to lower organizational levels. Therefore, the decisions can be erratic and inconsistent. This statement is certainly dependent upon who makes the decision at any given point in time. There are fewer decision levels; therefore, the loss of key people can have a negative impact on these organizations. Resources may be so sparse that the culture can become extremely dependent upon the values of single individuals (such as the owner or CEO)
Tall (Vertical) Organizations
In a vertical organization, the lower levels have their decisions reviewed by the individuals above them. This also means that communications are not as rapid. Additionally, it can take much more time and effort to have people respond to certain directives. As jobs are added to handle the details of decision making, more layers of management are created. Sometimes, these levels become impediments. Decisions are made slowly. Vertical feedback is frequently ﬁltered. Upper management is often out of the loop on localized quality or customer issues. Some of these problems can fester into major issues. The vertical organizational culture can become too bureaucratic. Management attention can be directed at who gets the corner office or whose desk is bigger instead of servicing the customer or becoming more efficient.
The people in functional organizations can become very specialized in their field of expertise. Well rounded individuals may be difﬁcult to ﬁnd. Coordination of projects or problems can be more difficult than in a ﬂat organization. There is a danger that sub-organizational values and shared assumptions may become too inbred.
In a product organization, there can be a duplication of selected services. Individuals may lack overall corporate focus since they are concerned with a smaller piece of the pie. Although segments of the company are better directed at meeting competitor challenges, they can also compete against each other for company resources and consumer markets.
This arrangement presents similar problems as encountered with functional organizations. Additionally, many undesirable nationalistic or regional cultural features may arise.
In matrix organizations, a specialist can report to two or more people, violating the one boss rule. It is often difﬁcult for the specialist to decide which superior to respond to ﬁrst. It is somewhat important not to upset the manager who evaluates performance and awards merit raises. The biggest problems with organizational culture in a matrix organization can be competing values and occupational subcultures.
Team Based Organizations
The entire employee selection process is much more stringent for a team based structure. Additionally, management time is directed at employee training and support. An organization that is experiencing severe short-term threats should not undertake this rather lengthy organizational rollout. There are also threats to all levels of management, particularly middle management. The loss of some of these individuals would mean a tremendous loss in job knowledge and expertise. A multitude of teams can spawn a multitude of occupational subcultures. There can also be a loss of clarity in business goals based on the numerous communication channels.
Cross Functional Collaboration
In traditional, functionally designed organizations, segments of vital activities are captive within and across many departments. For any customer order, each department has the responsibility to process its part of the order as efﬁciently and as effectively as possible. Various department heads are responsible for the activities within their department, which allows for good management controls and procedures, but no one owns the overall process and the results.
Functional departments develop strong functional mindsets and will approach problems differently than other functional units. It is difficult when departments speak different “languages,” or have conflicting goals. The functional specialists will tend to focus on departmental matters and the immediate superior’s goals, not the customer or the industry. This describes the creation of a silo mindset. An example of such a conflict occurs when manufacturing is trying to meet the end of the month shipments, but quality is holding the shipments because of
nonconforming product. Galbraith describes cross functional efforts as a lateral coordination effort.
Departments or functions at the same level (lateral) should be grouped together to produce the required output. The units are all interdependent of each other, if the ﬁrm is to succeed.
- Rules and procedures: everyone understands what to do
- Hierarchical referral: coordination problems go to a common superior
- Planning: objectives and targets are known by everyone
- Direct contact among managers: face-to-face contact among managers
- Liaison roles: cross trading of personnel to work in each other’s units
- Task forces and teams: people from different units on task forces
- Matrix organization: create a matrix structure for specific projects
This concept is also worthwhile for many other aspects of organizational improvement and rapid customer response.
Business and technological changes have accelerated at an alarming rate. The world is becoming smaller, and companies in today’s environment must face global competitors in their own backyards. Customer expectations of products and services are also increasing at the same exponential rate. What was delightful to the customer yesterday, is now expected. A company must improve its products to meet the customers’ new expectations and must perpetually improve operations, processes, costs, cycle time, technology, productivity, etc. In times of change, everyone is involved in the change effort. Most managers and process owners are expected to be change agents. The change agent role is not limited to the top leaders of the corporation.
The Change Process
The classical model for a change process consists of three phases: unfreezing, movement, and refreezing.
To the change agent, the first phase means unfreezing the existing behavior patterns and practices of the work group. This is where resistance to new programs appears and must be dealt with.
The next step would be to move the people or practices to a new arrangement. This could be accomplished through training or technology.
At the proper moment in time (with the skills, technology, or practices in place) the process, including the people, are refrozen. This is where the company wants to be. A process, procedure or department is now aligned for optimum organizational effectiveness.
The acceleration of change in the world can be described as being in “permanent whitewater.” As soon as a program is completed, it is time to change again. That is, unfreeze the process, move in a new direction, refreeze, pause, and start again.
The change agent is the person or group that acts as the catalyst and assumes the responsibility for managing the change process. As CEOs, Lee lacocca and Jack Welch could drive the change effort. A manager may act as a sponsor or patron of the change process. The sponsor is a key political supporter and may provide the change agent with funds, staff, and resources. The process to be changed is deﬁned as the target. Change agents can be managers or other employees of the organization. They would be termed internal change agents. External change agents are outside individuals who are free from the political restraints of the organization. They can offer more objective viewpoints and analysis of the situation at hand. However, outside change agents will not have the insider’s knowledge of the organization’s culture, history, procedures, and personnel. Some characteristics of a good change agent include: being empathetic, sensitive, open, tolerant, flexible, patient, friendly, cooperative, imaginative, confident, self-reliant, and risk taking.
Internal Change Agents External Change Agents Advantages
- More knowledge company
- May be more available
- Lower cost
- A known quantity
- More local authority
- More objective
- More diverse experience
- Has a broader network
- Technically prepared
- Too close to the problem
- May be part of the problem
- May be biased
- May be unwilling
- Less company knowledge
- Higher cost
- An unknown quantity
- Long startup time
- Bad Management image
Comparison of Internal and External Change Agents
Types of Organizational Change
Organizations generally undergo change in four major areas: strategy, technology, structure, and personnel.
- Strategic changes occur when the company shifts its direction and resources toward new businesses or markets
- Technological changes occur when the company decides that automation or modernization of key processes are essential for overall competitiveness
- Structural changes occur when the company undergoes a management delayering process, or goes from a functional structure to a product structure
- Changing the attitudes and behaviors of company personnel is often undertaken through organizational development techniques
Large Scale Change
Most change agents, enacting revolutionary organizational changes, will advise management to allow 3 to 5 years for the change to take effect. The chief executive officer is often anxious for results to appear much quicker than that. The efforts to remodel an organization and to align personnel takes years due to the current methods of imparting the philosophy of change. To train everyone in a large organization could take 6 months or a year. By that time, the emphasis on the direction of the company and the intensity of the effort could be waning. Little wonder then, that more time and effort must be expended to realign people toward the direction or focus of the effort. A new movement coming from the organizational development area is the concept of very large groups coming together to work on a change. The idea is to involve people at the start and to have them enrolled in the cause. Teams of large size will definitely shorten the time to transmit the vision and mission and to enroll people in the change effort. A key element is to make sure that everyone who can make a decision is in the room. A result of this effort will be people committing and agreeing to specific action plans. A large scale change effort of this type generally lasts several days, but organizations can see results immediately.
Resistance to Change
People resist change because they will be asked to do something that they may be unfamiliar with. They could also be asked to accept a change which could cause them a personal loss. For example, certain older employees may reject change because they might be uncomfortable doing their job with a slightly different twist. Younger employees may not have invested as much time with the old process and may be more accommodating of change. The change agent must anticipate resistance to change and find ways to overcome it. Strategy for dealing with resistance to change:
- Educate and communicate the change
- Enlist employee participation in the project
- Provide support efforts such as training or counseling
- Have negotiated arrangements for change
- Use manipulation to obtain support
- Use threats or direct force, but only as a last resort
Linking Improvement Projects to Organizational Goals
Embarking on a Improvement initiative begins with a management decision to embrace a change that says “There’s a better way to run our organization.” The readiness assessment includes a review of the following areas:
- Assess the outlook and future path of the business:
- is the strategy course clear for the company?
- Can we meet our ﬁnancial and growth goals?
- Does our organization respond effectively to new circumstances?
- Evaluate the current organizational performance:
- What are our current overall business results?
- How effectively do we meet customer requirements?
- How effectively are we operating?
- Review the capacity for systems change and improvement:
- How effective are we in managing system changes?
- How well are our cross functional processes managed?
- Are our current efforts in conflict with six sigma?
The above assessment will go a long way towards deciding if current efforts are sufficient or whether the timing is appropriate to undertake a Improvement Project effort. Continual Improvement can be measured in three categories:
Performance Do Don’t Do Low
- Concentrate on basics
- Using Problem Solving Team
- Apply cost management
- Engage in customer innovation
- Strategic planning
- Set goals and monitor them
- Use process simpliﬁcation
- Use department improvement teams
- Get middle management involved
- Benchmark other ﬁrms
- Empower employees
- Communicate strategic plans
- Continuously improve
Best Company Strategies Based on Performance Level
A decision on Process Improvement might be negative if the following conditions exist:
- The company already has an effective improvement effort in place
- Current changes are already overwhelming the company’s resources
- The potential gains aren’t sufficient to finance the necessary investments
There are a considerable number of options, dependent upon the goals and objectives of the organization. while implement improvement projects considerations include:
- Focus on project cost savings
- Focus on customer satisfaction deliverables
- Focus on processes
- Focus on problems
- Focus on a targeted location
- Focus on design
- Focus on supplier processes
- Assess the outlook and future path of the business:
As a prerequisite to team formation, team members must:
- Have a reason to work together
- Accept an interdependent relationship
- Commit to team values
Management supports the team process by:
- Ensuring a constancy of purpose
- Reinforcing positive results
- Sharing business results
- Giving people a sense of mission
- Developing a realistic and integrated plan
- Providing direction and support
Management as part of some mechanism such as a steering committee, should provide relief from potential team constraints such as work schedules, or lack of technology. The six sigma black belt, champion, or team leader may also be involved in easing other team constraints.
Types of Teams
The following types of teams are used by industries throughout the world today:
A group belonging to any department chooses to solve a quality/productivity problem. It will continue until a reasonable solution is found and implemented. The problem may be management selected, but the solution is team directed.
Process Improvement Teams
For a process improvement team, employees may be drawn from more than one department to look into the flow of material and semi-finished goods required to streamline the process.
Project Teams/T ask Forces/Ad Hoc Teams
Members are selected based on their experience and directed by management to look into specific areas such as the modernization of a piece of equipment or solution to a customer complaint. These teams are generally ad hoc and disband upon the completion of their assignments. Team membership can be all management, all work area, or a composite of the two. Usually, the boundaries of the assignment are tightly drawn for project teams or ad hoc teams. Some taskforces may have broader mandates.
Cellular teams are a variant of natural work teams. The name derives from the work cell arrangement in which a number of employees either fabricate or assemble parts. These teams can be led by a supervisor or may be self-directed.
After a team understands its charter and has worked through its norms, it is ready to get down to the business of solution building and improvement. Ideally, the team should select its own leader to interface with other teams and coordinate team activities. As the team meets and works together, the team leader should assume an equal position with the other team members. Some teams find it helpful to rotate team leadership to give everyone experience. At the pinnacle of performance, anyone on the team should be able to lead the team. This type of team operates with minimal day-to-day direction from management. Self-directed teams are asked to accomplish objectives within time frames that are truly stretch objectives. Management must give the team the maximum latitude possible for achieving their objectives.
Cross Functional Teams
Cross functional teams are made up of individuals who represent different if departments or functional areas in the organization. Individuals who represent a department or functional area should be subject matter experts. That is, they should be very knowledgeable about the policies, practices, and operations of their department or functional area. The thoughtful selection of the members is an important aspect of building an effective team. This becomes even more critical if the team is to work only on a single project for several months or more. Team involvement promotes sharing of the problem and minimizes “finger pointing.” Representation from various departments also promotes the acceptance and implementation of change throughout the organization. Solutions designed with the active participation of affected departments tend to be technically superior and accepted more readily by those who must implement them.
Natural Work Team Organization
Leadership is usually given to the area supervisor. Members come from the supervisor’s work force. Outside members from specialist organizations can be included in the membership, either as active members or as contributing guests. Often, a facilitator is another important person in this team organizational structure. He or she is specifically trained to coordinate multiple team activities, oversee team progress, document results, and train team members in their assorted duties.
Quality Circles .
The concept of circles originated in Japan after WW II. They were so successful in Japan that many managers in the United States tried to duplicate them. The circle is a means of allowing and encouraging people on the production floor to participate in decisions that will improve quality and/or reduce manufacturing costs. Quality is only a part of circle involvement. Most ideas worthy of implementation must be justified on the basis of cost savings in some way. Department members voluntarily participate to improve departmental performance. Quality circles are effective forums to exchange suggestions and find solutions. Since membership is voluntary, people are highly motivated to continue the improvement process.
The quality circle approach has been on the decline in the U.S. for some time. Replacing circles have been a variety of quality team nomenclatures. The major reasons for the shift appear to be two-fold. First, the term “quality circle” has a strong Japanese connotation. And secondly, most circle projects tend to be employee selected, while most team efforts are management selected, but team directed. The fundamental purpose of establishing quality teams is to improve the internal efficiencies of the company and both internal and external products and service quality. This is done through the efforts of the team members to improve quality, methods, and/or productivity.
The world is becoming increasingly flat due to the advent of a variety of synchronous (chat rooms, teleconferencing, and videoconferencing) and asynchronous (web sites, e-mail, faxes, voice mail) tools. Since many companies are international, there is a growing need for a variety of project or ad hoc teams to address issues such as product quality, service instructions, delivery issues, and technical requirements.
Six Sigma Teams
Many organizations have implemented the following roles in their six sigma programs.
- Master black belts
- Black Belts
- Process owner
- Executive Sponsors
Six sigma black belts are most effective in full-time process improvement positions. The term black belt is borrowed from the martial arts, where the black belt is the expert who coaches and trains others as well as demonstrates a mastery of the art. In a similar way, six sigma black belts are individuals who have studied and demonstrated skill in implementation of the principles, practices, and techniques of six sigma for maximum cost reduction and profit improvement. Black belts typically demonstrate their skills through signiﬁcant ﬁnancial improvement and customer benefits on multiple projects. Black belts may be utilized as team leaders responsible for measuring, analyzing, improving, and controlling key processes that influence customer satisfaction andlor productivity growth. Black belts may also operate as internal consultants, working with a number of teams at once. They may also be utilized as instructors for problem solving and statistics classes. Black belts are encouraged to mentor green belt and black belt candidates.
Potential black belts often undertake four weeks of instruction over a three or four month period. A set of software packages can be used to aid in the presentation of projects, including Excel or MINITAB for the statistical portions. Specific elements will differ, but all stress an understanding of variation reduction, training, and project management.
Black belts often receive coaching from a master black belt to guide them through projects. Black belts have the following duties in their company:
- Mentor: Have a network of six sigma individuals in the company
- Teacher: Train local personnel
- Coach: Provide support to personnel on local projects
- Identifier: Discover opportunities for improvement
- influencer: Be an advocate of six sigma tools and strategy
Master Black Belts
Six sigma master black belts are typically in full-time process improvement positions. They are, first and foremost, teachers who mentor black belts and review their projects. Selection criteria for master black belts includes both quantitative skills and the ability to teach and mentor. For master black belt recognition, an individual must be an active black belt who continues to demonstrate skill through signiﬁcant positive financial impact and customer benefits on projects. The ability to teach and mentor is evaluated by reviewing the number and caliber of people they have developed. Teaching may also be demonstrated in classroom environments.
Six sigma green belts are not usually in full-time process improvement positions. The term green belt is also borrowed from the martial arts, referring to an individual who has mastered the basic skills, but has less experience than black belts. Green belts must demonstrate proficiency with statistical tools by using them for positive financial impact and customer benefits. Individuals may remain green belts or, with experience, they may become black belts. Green belts operate under the supervision and guidance of a black belt or master black belt.
Executive sponsorship is a key element in an effective black belt program. Executive leadership sets the direction and priorities for the organization. The executive team is comprised of the leaders that will communicate, lead, and direct the company’s overall objectives towards successful and profitable six sigma deployment. Executives typically receive training that includes a six sigma program overview, examples of successful deployment and strategies, and tools and methods for definition, measurement, analysis, improvement, and control.
Six sigma champions are typically upper level managers that control and allocate resources to promote process improvements and black belt development. Champions are trained in the core concepts of six sigma and deployment strategies used by their organization. With this training, six sigma champions lead the implementation of the six sigma program. Champions also work with black belts to ensure that senior management is aware of the status of six sigma deployment. Champions ensure that resources are available for training and project completion.
Key processes should have a process owner. A process owner coordinates process improvement activities and monitors progress on a regular basis. Process owners work with black belts to improve the processes for which they are responsible. Process owners should have basic training in the core statistical tools but will typically only gain proficiency with those techniques used to improve their individual processes. In some organizations, process owners may be six sigma champions.
Six Sigma Structure
Companies have differing duties and terminologies for organizational roles that support six sigma improvement. Some of the common functions and optional structures are listed below:
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