I. POINT OF VIEW
This case analysis takes the point of view of Mr. Harnett, the president of Tucker Company. Being the top manager, he is the one responsible for overseeing the current status and developments of the company. Moreover, he is the one in-charge for taking necessary actions regarding the inevitable occurrences of conflicts within the company and among the company’s employees. He is also capable of reorganizing or restructuring the organization. The group decided to take neither Ms. Hodge’s nor Mr. Franklin’s points of view because taking either of the two would be considered biased since they are the very persons involved in the issue and would only result to the one blaming the other, leaving the matter unresolved.
II. PROBLEM STATEMENT
Taking Mr. Harnett’s point of view, the group deems that the problem would be: What should be the most appropriate action to be done to the structure of the organization to minimize conflicts within the company divisions and among the employees?
III. ANALYSIS OF THE RELEVANT FACTS
Organizational Structure:
Fig. 3.1. Organizational chart of Tucker Company
In 1993, the Tucker Company underwent an extensive reorganization that divided the company into three divisions based from the three product lines – commercial jet engines, military jet engines, and utility turbines. Each division has its own vice president that reports directly to Mr. Harnett. For the most part, each division will be able to operate independently, thus, each division will have its own Accounting, Engineering, and Manufacturing departments. Under the manufacturing department of the Military jet engine Division is the Laboratory that reports directly to the manager of the said department and also serves as the testing facility to determine the properties of materials selected by the design engineers of all three divisions. So, functionally, the Laboratory still continues to support all of the major divisions.
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Work specialization and Departmentalization:
Tucker Company epitomizes specialization of work as it divides the undertakings in the company into three divisions. It uses Product Departmentalization as its three principal product lines – commercial jet engines, military jet engines, and utility turbines – serve as the new divisions of the company. Each division is further divided into functional units like the Accounting, Manufacturing, and Engineering departments.
Chain of command:
A vice president for each division is appointed and is given the authority and responsibility to handle the operations of their units. These vice presidents report directly to the president, Mr. Harnett. Under these divisions are their own manufacturing, accounting, and engineering departments. In this regard, the company laboratory, headed by Ms. Hodge, is under the manufacturing department of the Military Jet Engine Division. Hence, it is to the manager of the said department where Ms. Hodge reports.
Formalization and Case Issues:
The company may be having an issue in the procedures covering the work processes of the employees. Historically, the engineering departments had sought assistance from the laboratory in determining the properties of the materials selected by the design engineers. However, when Ms. Hodge assumed the managerial position in the laboratory, she, being a metallurgist, insists the involvement of her unit in the selection of materials and in the design of experiments and subsequent evaluations of the experimental data. Mr. Franklin, on the other hand, argues with Ms. Hodge’s claim and that the final say on material selection was charged to his department.
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He also raises his concern on the priority done by Ms. Hodge where the latter is alleged to be prioritizing the military jet engine divisional problems among others. Conversely, Ms. Hodge explains that the said divisional problems should be the first priority because of the administrative reporting structure. With all these said, it is clear that there is a need to work on the structure of the organization to clarify to both Ms. Hodge and Mr. Franklin on what the function of the laboratory manager is and if she has to be truly placed under and should report to the manager of the Manufacturing Department of Military Jet Engine Division only.
IV. ALTERNATIVE SOLUTIONS
The group considers three alternative solutions in solving the problem: first, setting the Laboratory into a staff position; second, restructuring the organization into functional areas where the Laboratory is under the Engineering Department; third, reorganizing the company into a matrix structure.
alternative solution No.1
Fig. 4.1. Alternative Solution No. 1’s Organizational chart of Tucker Company – the Laboratory Manager on a staff position Figure 4.1 presents what Alternative Solution No.1 suggests in the reorganization of the company. It shows that the three major product lines are retained as the company divisions. Moreover, under every division lies three functional units. These units report to the head of the respective division they belong to. On the other hand, the Laboratory is set to a staff position. It caters the need and provides assistance and its expertise to the three divisions. It does not, however, apply authority and command power to these divisions and the departments under them.
Pros
Cons
It emphasizes that the laboratory is intended to provide its expertise and assistance to the three divisions. It promotes Hodge’s equal treatment to the three divisions since she would have to report directly to no one but the president, Mr. Harnett. It is less costly and relatively easier to implement compared to the two alternative solutions since the action will only require the laboratory to be moved into a staff position. Hodge’s expertise as a metallurgist will not be utilized considerably since she has no authority over the three divisions and her assistance is limited to what the divisions solicit. The laboratory’s activity is limited to the things asked by the other divisions.
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Table 4.1. Pros and Cons of Alternative Solution No. 1
Alternative Solution No.2
Fig. 4.2. Alternative Solution No. 2’s Organizational chart of Tucker Company – rearrangement of the organization into a functional structure
Figure 4.2 presents the suggested structure of Alternative Solution No.2. It shows that instead of the three major product lines on the line positions immediately under the president, the functional units – Accounting, Manufacturing, and Engineering departments – replace them. The division of the product lines is still retained, only now, each of the three functional units has these three divisions under them. In addition, the Laboratory is also under the Engineering Department.
The group believes that this should be where the Laboratory is placed since the materials used in the Manufacturing Department would have to get passed the Engineering Department first, and the latter is believed to be authorizing only those selected materials which properties were determined during the tests run by the Laboratory.
The Laboratory, particularly the laboratory manager, automatically has functional authority over the Engineering Department. This means that Ms. Hodge may now be officially involved in the selection of materials by using her expertise as a metallurgist in recommending such materials in the department. The final say is still charged, however, to the Engineering Department.
Pros
Cons
Ms. Hodge may employ her functional authority as the Laboratory Manager under the Engineering Department and may advise the said department in selection of materials, therefore utilizing her skill as a metallurgist. It applies Ms. Hodge’s equal priority rating to the three divisions and promotes order in the reporting system, that is, all four units will report solely to the Engineering Department. It may be time consuming for the company to rearrange and make some alterations the organizational structure. It may be relatively costly compared to the first alternative solution due to these substantial changes in the organizational structure. There are duplications of functions.
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Table 4.2. Pros and Cons of Alternative Solution No. 2
Alternative Solution No.3
Fig. 4.3. Alternative Solution No. 3’s Organizational chart of Tucker Company – restructuring of the organization into a matrix-project organization
It shows in Figure 4.3 a matrix structure of organization where each functional unit is divided into three subgroups – three because there are three company divisions. Each subgroup has two bosses – the Vice President of the division (divisional manager) and the Manager of the department (functional manager) it belongs to. So, managers and staff personnel in each subgroup report to both the Division Vice President (represented by the red lines) and to the Department Manager (represented by the green lines).
Meanwhile, the three divisional and four functional managers report directly to the President (represented by the blue lines).
Pros
Cons
Ms. Hodge’s specialization as a metallurgist will be fully utilized since she will have the authority over her subgroups, and her subgroups may exercise functional authority over the division heads. It is flexible and can solve specific problems in relation to the complexity of the environment. It is costly.
Difficulty in the implementation may be experienced since assigning of people to projects may be more complex. There is a dual chain of command that may cause confusion among the subordinates.
Table 4.3. Pros and Cons of Alternative Solution No. 3
Evaluation of the Alternative solutions
After a brief discussion, the group came up with a set of criteria with the corresponding weight set to each decisive factor where top priority bears the highest percentage. First one is the Acceptability to Management. Since the company is experiencing an internal organizational conflict which concerns the management and is seeking for the best solution that is within the acceptable limits of the organization, the group set 45% for this criterion. Second is the Ease of Implementation. The group allocated 30% for this criterion because there is a need for an immediate solution to the building up of tensions between Ms. Hodge and Mr. Franklin to avoid incurrence of additional losses, like the failure in scheduling of one of the critical projects of the department where Franklin belongs. Lastly is the Cost of Implementation.
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Though the company is concerned on unreasonable outflow of money by acquiring additional staff facilities, it is relatively least important compared to the first two criteria. Still, financial matters should also be considered in decision making. With this thinking, the group assigned a 25% weight for this criterion.
Below is a table that shows how the group came up with the decision. The alternatives were ranked from 1 to 3, 1 being assigned to the most likely to meet the criterion. After which, the assigned figures were multiplied to the weight of each criterion they are under. And to get the total, all the subtotals for each alternative were summed. The alternative that got the lowest total sum was considered the best solution for the problem.
Table 4.4. Tabulation of the evaluation of alternative solutions V. DECISION AND RECOMMENDATION
Decision and Rationale
After making a complete analysis of the case, the group deems that setting the Laboratory into a staff position is the best solution to the problem. By doing this, Ms. Hodge will be able to utilize her skills as a metallurgist; there is equal priority among the three divisions.
Implementation Plan
1. The President will issue a memorandum regarding the reorganization of the company. 2. The President will then set a meeting with his subordinates to discuss this relocation of the Laboratory at a staff position. 3. The President will include in the meeting agenda the discussion of the new reporting system and how the Laboratory is going to function and is going to be utilized by the three divisions. 4. The President will be open for questions and clarifications on the restructuring of the organization. 5. The President will impose strict compliance to the division and department functions and to the new reporting system to minimize the chance of misunderstandings between the employees, and to lessen the possibility of delays in the company projects.
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Contingency Plan
In case that the initial plan fails, the contingency plan is the second best alternative solution that is, restructuring the organization into functional areas where the Laboratory is under the Engineering Department. By doing this, it would require Tucker Company to invest on another organizational reform.
