Industrial Engineer Engineering and Management Solutions at Work

June 2013    |    Volume: 45    |    Number: 6

The member magazine of the Institute of Industrial Engineers

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Member Forum by Thomas S. Fiske

Industrial Engineer’s column for IIE members to share their perspectives (June 2013) 

The IE-stockholder relationship

When I first walked into General Electric’s corporate manufacturing staff offices in 1969, I found an atmosphere totally different than the usual GE busi­ness. The focus was on the stockholder, the real owner of GE. This entailed having a much longer and wider view than the average employee.

The focus was long because it dealt with the future, and it was wide because it dealt with practices that could spread easily from one business to another. Therefore, corporate staff had to exercise a modicum of power to enforce wise busi­ness practices and avoid the other kind.

The staff was a selection of the very best the company had. These experts were able to take a longer view than many others. Corporate staff offices were modest, as the budget was spent on obtaining good people. Even so, GE managers began to grumble about the cost of maintaining such a staff, so it was allowed to crumble.

As a result, businesses that needed staff help the most were sold off, with labor-intensive small appliance businesses being the first to go. They are nearly all gone, and few have connected their disap­pearance with the loss of the corporate staff. GE had given up its concentration of experts in various forms of industrial engineering.

Most businesses still need IEs prepared to make long-term decisions that have wide implications – decisions dealing with wage rates, methods, time studies, work simplification and incen­tive systems. However, from the letters I see in Industrial Engineer magazine, I have inferred that people are not getting a full IE education in colleges and universities.

Managers need advice in many areas for IE functions. They cannot depend on human resources when it has a “peace at any cost” philosophy. Look at what happened to General Motors with its expansive retirement policies.

Later, when I left GE and became both a stockholder and a manager of divisions in a smaller company, I realized what could happen when lower-level people made poor long-term decisions. I had to iden­tify the areas that could cripple or severely impact the company’s ability to compete for myself and for future managers.

One theory of wages is people should be paid based on their impact on the company’s future. A floor sweeper is paid relatively little because his influence is limited to a few hours. A machinery repairman is paid more because his influ­ence may last for months. A manager makes decisions that affect the enterprise for years and usually is paid much more than a sweeper or a repairman.

What about an IE? Industrial engineers make decisions that influence the enter­prise for years to come. Few others in a company have such an impact. Yet IEs are not always paid appropriately.

Few companies want to invest in a corporate staff of experts. I suspect that the “golden days” when large companies such as GM and GE had large IE staffs are over, increasing demands on the lone IE at each production site. He or she must take a long-term view while pursuing the more mundane daily goals. If I were hiring for that position, I would ask for at least one high-quality IE and one clerk. If such a combination were not available, then I would purchase more of my product and manufacture less of it.

Truly, the design of the operation would depend on management’s ability to control it.

Life member Thomas S. Fiske spent 16 years in manufacturing at GE before departing to work for other companies. Now retired, he writes magazine articles and books. His latest book is The Insider: NASA’s Man at Baikonur. 

VOICE YOUR OPINION

To submit an opinion for this column, e-mail the text to Michael Hughes at mhughes@iienet.org. Columns must be 500 to 600 words in length. All submissions are subject to editing. Include a brief bio that includes your IIE membership status.