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Case II: Power Terrain Analysis
MANA 6332
Jane Samplecase
October 28, 1999
Instructor: Rude
To: Dale Rude
From: Jane Samplecase
RE: Case II, Power Terrain Analysis
Executive Summary
To effectively operate within an organization, one must first understand the structure of
power and interrelationships within that organization. In this memo, I have mapped the power
distribution, identify powerful individuals and their sources of power, the patterns of
interrelationships, and the flow of resources within my company.
Background
The main business of our company is the engineering, design, and construction of
commercial structures within an industrial environment. The majority of our revenue comes
from work done for the petrochemical industry within the state of Texas. Work is organized by
projects, which are organized by type of construction or engineering. As a project comes in, it
will be assigned to the manager who is best suited for it. Typically, our projects are done for
plants that are in the midst of an expansion. A plant expansion will normally consist of
structures including motor control centers, laboratories, change rooms, and warehouses. These
are all necessary to handle the increased capacity created by the expansion of a plant.
Power Distribution
The power organization of my employer is typical of small, privately owned businesses.
The individual who has final say over all matters is the individual who first started the business
twenty five years ago. He holds the title of president and influences the overall direction of the
company and its departments.
Our company consists of four completely separate departments. Not only is the president
the manager of one department, he is also responsible for the actions of the other department
managers. He must approve all substantial expenditures, personnel decisions, and profit margins
for projects.
The vice president is the co-founder of the company. The vice president also acts as the
manager of the construction department. Together, the president and vice president make all
decisions concerning money and the direction of the company as a whole.
The department managers control the day to day activity of their respective departments,
although all decisions of major impact (i.e. profit margins on major projects, departmental
growth) are generally "run through" the president. The construction manager distributes
projects, researches technological advancements, and directs the overall efforts of the
department. He answers to the president of the company and is directly responsible for the
project managers.
The project managers are responsible for the projects to which they are assigned. They
are responsible for all that occurs on the project and organizationally, have control over the
manager of field operations and the field work force.
The manager of accounting is responsible for payroll, bills, and invoicing. She has direct
control over the payroll clerks and is responsible for approving all monies spent outside of
specific projects. She must answer to the president, but has the ability to allot substantial sums
of money without approval of the president.
The manager of the engineering department is responsible for distributing engineering
projects, along with potential engineering projects, to the project engineers. The manager of
engineering also takes an active role in controlling the actions of the drafting department because
the project managers often use engineers. Because the majority of the revenue earned by the
company is brought in via the construction department and the two departments often work
together, fair and unbiased consideration is given to all matters before the President even though
he also serves as the manager of engineering.
The manager of marketing controls the direction of the sales effort although the president
and vice president give input. He is directly responsible for the action of his sales staff. He
answers to the president and vice president.
My employer is a small company and many people have a variety of responsibilities,
nevertheless, the organizational structure is not much different than similar larger companies.
Refer to "Attachment A" to see a chart depicting the chain of power within the company.
Sources of Power
President. The president, without question, enjoys the most power within the organization.
His position allows him authority, centrality, and ultimate control of rewards and punishments.
He is extremely charismatic and his knowledge of the industry and formal training offers him a
great deal of personal power.
Vice President. Although the power base of the vice president is not as great as that of the
president, he still enjoys a great deal of power within the organization. This is largely due to his
position power in that he has formal authority and his expertise gained through many years of
experience in the industry. He also derives power from his longtime partnership with the
president.
Construction Manager. The construction manager enjoys position power and controls the
rewards and punishments of his subordinates. Because he is also the vice president, he enjoys
power due to centrality and again, his relationship with the president. When dealing with his
direct subordinates, the construction manager is charismatic. When dealing with lateral
departments, however, the construction manager is able to use coercion to get things done. This
base of power is available to him, although he has no formal authority over the lateral
departments within the company, due to his relationship with the president and his title of vice
president.
Project Managers. Project managers derive the majority of their power through their position.
However, the group cherishes its informal relationships with the accounting and engineering
departments. For the most part, the project managers use personal power to get things done in
that they are charismatic with their subordinates and have the authority to control rewards and
punishments.
Manager of Accounting. The accounting manager is not given a great deal of power directly
over people by her position. However, her position is central in that she approves all monies
spent outside of projects and has the ability to control financial resources.
Manager of Engineering. Because the manager of engineering enjoys the luxury of also being
the president, the power he enjoys as the manager of engineering is no less than that which he
enjoys as president of the company. He has direct authority over all project engineers, architects,
and drafting.
Manager of Marketing. Much like the accounting manager, the marketing manager does not
receive a great deal of power within the organization due to his position. However, he does
demand power because of his vast network of clients, many of which, he or one of his
subordinates is the only contact within the company. He has a great deal of charisma and gets
what support he needs from the other departments within the organization using his personal
power.
Patterns of Interrelationships
The president ultimately makes all decisions effecting the overall direction of the
company, whereas the department managers make all decisions involved with running the day to
day business of the company. Project managers and project engineers are given total control of
the projects for which they are held responsible. The accounting department and marketing
department are given the necessary power to do their jobs and contribute to the success of the
company.
Although the company does seem centralized by its power structure, the departments
within the company are very separate due to their nature. Both the engineering department and
the construction department have clients other than each other. In many instances, a company
will hire the engineering department to do an engineering only package. The construction
department, on the other hand, often does construction only projects. In this situation, a client
will approach our marketing department with a project that has been engineered and designed by
another company. The construction department will then put together a proposal to perform the
construction part of the contract. In many cases, however, the departments hire each other on
projects. When the construction department is awarded a contract that requires engineering or
drafting, it consults the engineering department. Although this may seem like an ideal situation,
conflict often arises because the engineering department has a tendency to treat the jobs given to
them by the construction department with less attention than those given to them by outside
sources. The engineering department often uses the construction department for tasks such as
cost estimating and value engineering. The departments do not necessarily charge each other for
these services, though. Job numbers are assigned to projects and if the construction department
is consulting with the engineering department, the construction department will supply the
engineer with a job number. The engineer will then charge his or her time spent on a specific job
to its job number when reporting his or her time at the end of the week. The cost of the engineer
for the time charged for the services will then be billed to the client or absorbed in an
engineering phase of the project. If the engineering phase is used, it will be anticipated during
the bidding phase of the project and the project manager will estimate the time required of an
engineer, and include it in his lump sum proposal.
The most important interrelationships among departments are their relationships with
accounting. The accounting department controls the majority of the resources including money
to be allocated for new equipment or supplies and information regarding finances of specific
projects. If a project manager has a poor relationship with the accounting manager, it is likely
that he will have difficulty obtaining profit management reports and job cost reports. This
adversely affects his ability to manage a project in that he is unsure of the monies available to
him at any one time. The marketing manager and those within his department must have an even
better relationship than the project managers with the accounting manager. Because the
marketing department is not project oriented, they can do very little without the accounting
manager's knowledge. They must obtain approval of all expense reports and any costs associated
with producing tools for marketing such as brochures, signs and advertisements.
Although all departments must count on one another at one point in time, not all
departments have positive relationships. For instance, the marketing department is constantly at
odds with the accounting department concerning expense reports. The salesmen are given
company credit cards, however, they are required to explain their charges to the cards at the end
of each month. Conflict often arises between the salesmen and the accounting manager
concerning the salesmen's perception of a business expense versus the accounting manager's.
Another example of departments having conflict is the project managers and the drafting
department. Because the drafting department is part of the engineering department, the
engineering package deadlines are often given more importance than construction deadlines. A
project manager's performance is rated by the profit his projects make. If a project is delayed in
drafting, that causes an extension in overhead costs not originally anticipated during the bidding
process. This delay causes an overall reduction in the profit margin on the project, causing
dissention between the two departments.
Refer to "Attachment B" for a diagram depicting the "power terrain" of our company.
Flow of Resources
The flow of resources through our company depends highly on the type of project. Our
company does four different categories of projects: engineering only, construction only,
design/construct, and design only. Our specialization and the majority of our projects are
design/construct. Therefore, following is an analysis of the flow of a typical design/construct
project.
As with every type of project we do, design/construct projects begin with the marketing
department. Through industry periodicals, references, or people contacting our company, the
marketing department brings in potential clients who wish to have a project of some type
designed and constructed under the same contract. The salesman who brings in the client will
pass word to the marketing manager, who will contact the construction manager. Based on
workload and experience with the particular type of project, the construction manager will then
pass the lead on to a project manager, who will contact the client. The project manager will meet
with the client to clarify a scope of work. Once the scope is defined, the project manager will
assign a price to design and construct the job. Once a contract is awarded, the project manager
will begin doing the design for the project. If there are any portions of the design the project
manager is not qualified to do, he will contact the engineering manager who will assign an
engineer and/or architect to assist with the design of the project.
Once the general design is complete, it will be turned over to the engineering manager
who will assign a draftsman to it. The draftsman will then transfer the design to computer aided
drafting (CAD).
At the completion of this phase, the project manager will contact the manager of field
operations to request a superintendent and the necessary labor required to complete the job.
As certain milestones of the project are met, the project manager will have the accounting
manager bill the client. Once the project is complete, all outstanding bills and billings are turned
over to the accounting manager, at which point, the accounting manager closes out the project.
Attachment A
PRESIDENT
VICE PRESIDENT
MANAGER OF
CONSTRUCTION
PROJECT
MANAGERS
MANAGER OF
ACCOUNTING
PAYROLL
CLERKS
MANAGER OF
ENGINEERING
PROJECT
ENGINEERS
MGR. OF FIELD
OPERATIONS
ARCHITECTS
FIELD WORKFORCE
DRAFTING
MANAGER OF
MARKETING
SALES
Attachment B
PRESIDENT
VICE PRESIDENT
MANAGER OF
CONSTRUCTION
PROJECT
MANAGERS
MGR. OF FIELD
OPERATIONS
FIELD WORKFORCE
MANAGER OF
ACCOUNTING
PAYROLL
CLERKS
MANAGER OF
ENGINEERING
PROJECT
ENGINEERS
ARCHITECTS
DRAFTING
MANAGER OF
MARKETING
SALES