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56 SMT Magazine • March 2017 the non-direct labor costs that the direct labor must to absorb. The New Organizational Model The traditional hierarchical organizational model is laden with non-direct labor costs (Fig- ure 1). Figures 2 and 3 represent two of the 22 organization charts for a typical tier 1 or 2 hier- archical business structure. All of the personnel costs represented on the charts are G&A (gener- al and administrative) and must be absorbed by direct labor to form a labor sell rate. The new model replaces the traditional mod- el with just two groups: Self-managed product teams and a leadership team. 1. The Product Team: a small, self-managed, multi-skilled group of engineers that directly A NEW ORGANIZATIONAL MODEL USING LOGIC, PART 4 Figure 3: Typical operational hierarchical organization chart (Cost category: Salary/year). Figure 2: Typical top level hierarchical organization chart (Cost category: Salary/year).