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64 SMT Magazine • February 2017 Next month, we'll wrap up our discussion on organizational structure by presenting a rad- ical alternative to the traditional hierarchical, pyramid-shaped one—one that greatly reduces the amount of indirect and overhead labor that needs to be absorbed by direct labor—one that ultimately permits a more efficient and cost effec- tive way to manage electronic product assembly. Hey, what do YOU say? I'd like to hear your thoughts and experiences. SMT References 1. Trump, Donald J., from Speech at Carri- er, a division of United Technologies. Decem- ber 1, 2016. 2. Electronic Product Assembly in the Glob- al Marketplace: "The Material Piece of the Com- petitive Puzzle." SMTA International Conference Proceedings, Orlando, Fl., October 2010. 3. T. Borkes, "Electronic Product Assembly in High Labor Rate Markets—A Case Study in Ex- ploiting the Counterweight to Low Labor Rate Competition: Automation," Pan Pacific Micro- electronics Symposium, Big Island of Hawaii, February 12, 2014, pp. 4-5. 4. T. Borkes, "'Like Holding the Wolf by the Ears…—The Key to Regaining Electronic Pro- duction Market Share: Breaking Free of the Di- vision of Labor Manufacturing Model in High Labor Cost Global Regions," SMTA International Conference Proceedings, Orlando, Florida, August 2008, pp. 4-7. 5. T. Borkes, "A New Manufacturing Model for Successfully Competing in High Labor Rate Markets," Pan Pacific Microelectronics Sympo- sium, Big Island of Hawaii, January 22, 2013. 6. T. Borkes, "Moving Beyond Paideia: Learn- ing for Earning," SMT Magazine, May 2016. 7. T. Borkes, "Toward a New Organizational Model Using Logic, Cost Effectiveness and Cus- tomer Service," SMT Magazine, December 2016. Tom Borkes is the founder of The Jefferson Project and the forthcom- ing Jefferson Institute of Technology. To read past columns or to contact Tom, click here. A NEW ORGANIZATIONAL MODEL USING LOGIC, PART 3 denial, blame and finger pointing. I've seen it many times; maybe you have as well. It's not a pretty picture. The tentacles that tie the employees togeth- er across departments in the power pyramid are projects and/or new products. Good company leadership is essential to have personnel who re- side in their department silos and are matrixed into a project team, work solely for the benefit of the project. The lesson here is that an organization should try to maximize direct labor and mini- mize indirect labor to the extent possible. Toward that end, a hierarchical, power-pyr- amid organizational structure biases labor in the opposite way, creating fractionalization built upon job specialization. This model in ef- fect creates many towns, each town requiring a mayor and town council. But, where towns can operate in a quasi-autonomous fashion within a county, most departments in a product pro- duction company are intimately connected and each one's performance is dependent on their neighbors. Isn't it amazing that we hire people to create and shorten an assembly process that reduces direct labor, but often don't give the indirect la- bor, labor paid for by direct personnel, the same scrutiny and academic treatment—maybe that's because many in these management ranks are academics. New Model Considerations I hope you recognize by now that it's a bit ironic that indirect costs are only paid for with direct labor. If we reduce direct labor content through automation, we can support less indi- rect labor. Maybe even more than a bit ironic and more of a way of protecting indirect labor, was keep- ing direct labor. So, box build assembly and oth- er labor-intensive processes were valuable. This worked, whether conscious or subconscious, until production companies in high labor rate markets were thrust into a global manufactur- ing marketplace. Alarmingly low labor offshore rates being available caused enormous pressure to reduce labor cost. Most companies took the easy route as they knee-jerked their production to the low labor rate sources.