ENGINEERING MANAGEMENT

Course Outline

Management & Its Functions

Ethical & Environmental Foundations
Planning
Organizing
Leading
Controlling
Management & Its Functions

Definition of management
Functions of management
Management Skills
Management Types
What it is like to be a manager
Environment of Management

Value Systems and Management

Philosophy of management
Role of Objective Management
 Planning

Decision Making
Heirarchy of Plans
Management Objectives
Tools in Developing Good Strategies
 Organizing & Staffing
Definition
Structures of formal organization
Principles of organization
The Art of Delegation
Situational Approach to Human Resource
Management
Performance Appraisal
Career Strategies
Communicating & Controlling
Communication Flow in the organization
Barriers to Communication
Non-Verbal Communication
Essential Elements of a Control System
Principles of controlling
The PDCA Cycle
 Leading
Elements of Leadership
Types of Leadership
Motivation Theories
Seven Basic Habits of Highly
Effective People
 Management & Its Functions

Management – process by which

selected people design and maintain
an environment in which individuals
working together in groups,
efficiently accomplish specific
objectives and goals.
 Management & Its Functions

Management – attainment of
organizational goals in an effective
and efficient manner through
planning, organizing , leading and
controlling organizational resources.
 Management & Its Functions

Productivity – output-input ratio within a

time period with due consideration for
quality
Input- labor, capital, materials
Output – refers to products with
higher quality, cheaper price, higher
yield, simpler process, etc.
 Management & Its Functions

Productivity improvement through:

1. Inc O , same I
2. Dec I , same O
3. Inc O , dec I
 Management & Its Functions

Effectiveness – attainment of
objectives – “getting the job done”
Efficiency – attainment of ends with
least amount of resources
 Management & Its Functions

Management is…
- an economic resource
- a system of authority
- a class and status system
 Management & Its Functions
Roles of a Manager ( H. Mintzberg)

 Informational
Monitor, Disseminator , Spokeperson
 Interpersonal
Figurehead, Leader, Liason
 Decisional
Entrepreneur, Disturbance handler,
Resource Allocator, Negotiator
 Management & Its Functions

Three Fundamental Skills of Managers (R.Katz)

 Technical
 Human
 Conceptual
Management & Its Functions

Management Level

Top Managers
Conceptual
Skills Human Middle Managers
Skills
Technical First-Line Managers
Skills
Non-Managers
 Management & Its Functions

Three Important Factor in Developing Managers

(Charles E. Summer)

 Knowledge Factors- ideas , concepts, principles

 Attitude Factors- beliefs,feelings,desires,values
 Ability Factors- skill, art,judgement,wisdom
Ethical and Environmental Foundations of Management
Four Important Social Institutions Affecting Value
Systems of Management
 Family
 Educational System
 Church
 Government
Ethical and Environmental Foundations of Management

Four Schools of Thought Relative to Social Responsibility

1. Profit maximization as socially desirable

2. No long-run conflict between corporate and social
responsibility.
3. Improvement of one’s own organizational behavior
best leads to social betterment
4. Management as trustee
Ethical and Environmental Foundations of Management
Some Social Issues faced by modern managers:
- Policies on racial discrimination
- Position on divestment
- Willingness of business to accept voluntary restraints
- Controls over exports to certain countries
- Responsibilities to developing countries
- Support to educational institutions
- Involvement in political campaigns & organization
- Marketing policies in product promotion
- Operating policies on social costs
- Involvement in community and family life of employees
- Opportunities for women in roles traditionally for men
Ethical and Environmental Foundations of Management
Value Systems and Management
Two approaches to moral questions:
- Natural Law
- Situational Ethics
Three Types of Men According to source of moral
direction: (David Riesman)
1. Tradition – directed
2. Inner directed
3. Other directed
Ethical and Environmental Foundations of Management
Conflict of Six Kinds of Moral Values

Harmony Happiness
Integrity
Self-respect Logical Consistency Desirable results
Rationality of Platonic Justice Maximized
individual Order,Plan Satisfactions
Peace of mind Common Good Efficiency

ACTION
Lawfulness Loyalty
Survival
Precedents Institutional
Political Power
Customs Trend
,Contracts, Effect on friend-
foe relations Social Causes
Authorization
Ethical and Environmental Foundations of Management
Total Corporate Social Responsibility

Discretionary Contribute to the community and

Responsibility quality of life
Ethical
Responsibility Be ethical . Do what is right. Avoid harm

Legal Responsibility Obey the law.

Economic Responsibility Be profitable.

Ethical and Environmental Foundations of Management
Philosophy of Management
- refers to the general concepts and integrated
attitudes that are fundamental to the cooperation of a
social group. The concept of the firm is the total of how
the firm got where it is, the place it occupies in the
industry, its strengths and weaknesses, the viewpoints
of its managers, and its relationship to social and
political institutions.
Ethical and Environmental Foundations of Management
Total Corporate Social Responsibility

Discretioanary
Responsibility

Ethical Responsibility

Legal Responsibility

Economic Responsibility
 Planning - Decision Making

Decision Making
- process of identifying problems and opportunities
and then resolving them.
Decision - refers to the choice made from available
alternatives.
 Planning - Decision Making

Programmed & Non-programmed Decisions

Programmed decision - made in response to a situation
that has occurred often enough to enable decision
rules to be developed and applied in the future.
Non - Programmed decision - made in response to a
situation that is unique, poorly defined and largely
unstructured, and has important consequence for
the organization.
 Planning - Decision Making

Certainty, Risk, Uncertainty, & Ambiguity

Certainty - means all the information that the
decision maker needs are fully available.
Risk – means that a decision has a clear-cut
goals and that good information is available,
but future outcomes associated with each
alternative are subject to chance.
 Planning - Decision Making

Uncertainty - means that manager know which

goals they wish to achieve, but information
about alternatives and future events are not
complete.
Ambiguity – means that goals to be achieved or
the problem to be solved is unclear, alterna-
tives are difficult to define, and information
about outcomes is unavailable.
 Planning - Decision Making
Condition that affect the Possibility of Decision Failure

Organizational Problem

Low Possibility of Failure High

Certainty Risk Uncertainty Ambiguity

Programmed Non-Programmed
Decisions Decisions

Problem Solution
 Planning - Decision Making

Decision Making Models

Classical Model – based on the assumption that
managers should make logical decisions that will
be in the organization’s best economic interests.
Administrative Model – describes how managers
actually make decisions in situations characterized
by non-programmed decisions,uncertainty and
ambiguity ( descriptive, intuition)
 Planning - Decision Making

Political Model – useful for non-programmed

decisions when conditions are uncertain,
information is limited, and there is disagreement
among managers about what goals to pursue or
what course of action to take.

“Coalition” – informal alliance among

managers to support a specific goal.
 Planning - Decision Making

Model Classical Administrative Political

Problem/
Goals Clear cut Vague Pluralistic, Conflicting
Condition Certainty Uncertainty Uncertainty/Ambiguity
Available Full Limited Inconsistent,ambiguous
Information
Choice Rational choice Satisficing choice Bargaining & discussion
by individual for resolving problem among coalition members
for max. outcomes using intuition
Planning - Decision Making Steps

1.
Recognition of
Decision

6. Evaluation and Requirement

Feedback Diagnosis 2.
& Analysis
of Causes
Decision-Making

Implementation of Process
Development of
Chosen Alternatives Alternatives
3.
5.
Selection of Desired
Alternatives

4.
 Planning - Decision Making

Decision Making By Groups

Cooperative decision making – process by which group

attempts to develop a composite organization mind.

Committee- any group interacting in regard to a

common explicit purpose with formal authority
delegated from an appointing executive.
 Planning - Decision Making

Purposes of Commitees
 For fact-finding, investigation, and collecting
information
 To avoid appearance of arbitrary decisions and to
secure support for a position
 To make a decision – a choice among alternatives
 To negotiate between conflicting positions taken by
opposing interests
 To stimulate human beings to think creatively, to
generate ideas, and to reinforce thoughts advanced by
others.
 Planning - Decision Making

Purposes of Commitees
 To distribute information – to brief members of the
organization on plans and facts
 To provide representation for important elements of an
organization .
 To coordinate different parts and subgroups of an
organization toward common , overall goals.
 To train inexperienced personnel through
participation of groups with experienced members.
 Planning - Decision Making

Advantages of Group Decision Making Process

 Decision can be approached from different viewpoints
by individual specialists on a committee.
 Coordination of activities of separate departments can
be attained through joint interactions in meetings.
 Motivation of individual members to carry out a
decision may be increased by the feeling of
participation in the decision making process.
 It is a means by which executives can be trained
 It permits representation of different interest groups
 Provides venue for creative thinking
 Planning - Decision Making

Disadvantages of Group Decision Making Process

 Costly; considering the value of time spent by
individual members
 Time consuming
 Group action may lead to compromise & indecision
 A superior line executive at the meeting may make
decision individually , with subordinates attempting to
appear competent by proposing ideas they believe will
make good impression
 Committee decisions may be reached by method in
which no one is held responsible for decision ; “buck
passing” may results
 Planning - Decision Making

Decision Making Style

 Directive
 Analytical
 Conceptual
 Behavioral
 Planning - Decision Making

Decision Making Style

Directive Style
- used by people who prefer simple, clear-cut solutions
to problems
- for quick decisions, do not want lot of informations
- are generally efficient and rational, prefer to rely on
existing rules
 Planning - Decision Making

Decision Making Style

Analytical Style
- considers complex solutions based on as much data
they can gather
- carefully considers alternatives
- based their decisions on objective rational data from
management control systems and other sources
- search for best possible decision based on available
information
 Planning - Decision Making

Decision Making Style

Conceptual Style
- considers broad amount of information
- are more socially oriented
- considers broad amount of alternatives
- rely on information both from people and systems
- likes to solve problems creatively
 Planning - Decision Making

Decision Making Style

Behavioral Style
- prefers to talk to people one-on-one to understand
their feelings about the problem and the effect of a
given decision upon them.
- concerned with the people development
- make decisions that help others achieve their goals
 Planning - Decision Making

Decision Making Tools

 Stochastic Methods
 Simulation Techniques
 Breakeven Analysis
 Incremental Concept
 Planning - Decision Making

Decision Making Involving Probabilities

1. Decision maker should lay out all possible action /
seem reasonable to consider and all the possible
outcomes of these actions.
2. State “ probability distribution “ projecting
chances of each outcome that might result from
each act.
3. Decision maker must use some quantitative
yardstick of value that measures the value of
each outcome. Calculate weighted average by
using the assigned probabilities. Calculate EMVs.
 Planning - Decision Making

Payoff Table / Decision Tree

Sample Problem: A manager must decide whether to
stock Brand A or Brand B. Either brand can be stocked,
but not both. If A is stocked and it is a success, the
Manager can make $200, but if it is a failure , there can
be a loss of $500. If Brand B is stocked and it is a
Success, the manager can make $400, but if it is a
Failure, there can be a loss of $300. Which brand should
be stocked?
 Planning - Decision Making

Probability of Brand A Brand B

Success 0.80 0.50
Failure 0.20 0.50

Payoff Table
State of Nature
Strategy Success Failure

Stock Brand A $200 -$500

Stock Brand B $400 -$300

 Planning - Decision Making

Expected Value Payoff Table

State of Nature
Strategy EMV
Success Failure

Stock Brand A $200x .80=$160 -$500x 0.20=-$100 $60

Stock Brand B $400x .50=$200 -$300x 0.50=-$150 $50

 Planning - Decision Making

Decision Tree
Alternatives Outcomes Expected Values
Success $200x .80=$160
$60
Brand A Failure
-$500x 0.20=-$100

Success $400x .50=$200

Brand B $50
Failure
-$300x 0.50=-$150
 Planning - Decision Making

Breakeven Analysis

 Variable costs - costs that varies with volume

eg. Direct materials, direct labor, etc.

 Fixed costs – costs that remains constant regardless

of the quantity of ouput.
eg. Equipment cost, rentals, depreciation, etc.
 Planning - Decision Making
Cost (P ‘ooo)

Output
 Planning and Strategic Management

Goals – desired future state of the organization.

Plan - a predetermined course of action

- blueprint specifying the resource allocations,
schedules and other actions necessary for
attaining goals.

Planning - determining what organization’s goal and

defining the means to achieve them.
 Planning and Strategic Management

Importance of Planning
- change in technology
- changes in the government policy
- changes in the overall economic activity
(including prices, employment of labor, raw
materials, etc)
- changes in nature of competition
- changes in the social norms and attitudes
 Planning and Strategic Management

Elements of the Planning Process

1. Setting Primary and Intermediate Goals
2. Search for Opportunities
3. Formulators of Plans (conversion of
opportunities into strategies and policies)
4. Target Setters
5. Follow- up of Plan
 Planning and Strategic Management
Useful Generalization of Planning

1. A plan should be directed toward well defined objectives.

2. Plans made by different specialists should be coordinated through
adequate communications among specialists.
3. Planning is a prerequisite to other functions of management.
4. Adaptation of plans to current actions demands continual redrafting
of plans.
5. Planning pervades the heirarchy of an organization.
6. A manager should relate the degree of commitment of his resources
to the need for definite plans.
7. Plans should retain flexibility.
 Planning and Strategic Management

Forecasting Techniques
- Quantitative time series analysis
- Derived forecasts
- Causal Models
- Survey of plans and attitudes
- Brainstorming
- Delphi Method
 Planning and Strategic Management

Forecasting Techniques
- Quantitative time series analysis
- Derived forecasts
- Causal Models
- Survey of plans and attitudes
- Brainstorming
- Delphi Method
 Planning and Strategic Management

Components of Strategic Management

- Goals of Organization
- Mission of Organizations
- Strategy of Organization
- Policies
 Organizing and Staffing

Organizing – structure and process of

job allocation ; job-oriented

Staffing – pertains to people; worker-

oriented
 Organizing and Staffing

Classical Theory of Organization

Contributions:
 Clear definition of types of formal organization
 Certain generalizations that offer first
approximations for planning an organization
structure
 Limited models for organizing activities
 Organizing and Staffing

Types of Formal Organization

 Line Organization
 Staff Organization
 Functional Organization
 Organizing and Staffing

Types of Formal Organization

 Line Organization - simplest, most direct type, observes

heirarchy

 Staff Organization – purely advisory (generalist/specialist) to

the line structure, with no authority to place
recommendations into action.

 Functional Organization- permits specialist in a given area to

enforce directives within a limited and clearly defined
scope of authority.
 Organizing and Staffing

Comparison of the various types of organization

 Line Organization

Advantages:
- Maintains simplicity
- Makes clear division of authority
- Encourages speedy action

Disadvantages:
- Neglects specialists in planning
- Overworks key people
- Depends upon retention of a few key people
 Organizing and Staffing

Comparison of the various types of organization

 Staff Organization

Advantages:
- Enables specialist to give expert advice
- Frees the line executive of detailed analysis
- Affords young specialists a means of training

Disadvantages:
- Confuses organization if functions are not clear
- Reduces power experts –to place recommendations to action
- Tends toward centralization of organization
 Organizing and Staffing

Comparison of the various types of organization

 Functional Organization

Advantages:
- Relieves line executives of routine , specialized decisions
- Provides framework for applying expert knowledge
- Relieves pressure of need for large numbers of well rounded
executives

Disadvantages:
- Makes relationships more complex
- Makes limits of authority of each specialist a difficult
coordination problem
- Tends toward centralization of organization
 Organizing and Staffing

Classical Principles of Organizations

 Unity of Command
 Exception Principle
 Span of Control
 Scalar Principle
 Departmentation
 Decentralization
 Organizing and Staffing

Classical Principles of Organization

 Unity of command - no member of an organization should

report to more than one superior on any single function.

 Exception Rule – recurring decisions should be handled in a

routine manner by lower level managers, whereas problems
involving unusual matters should be referred to higher levels

 Span of control -there is a limit to the number of

subordinates that one superior should supervise.
 Organizing and Staffing

Classical Principles of Organization

 Scalar Principle - authority and responsibility should flow in a clear

unbroken line from highest executive to the lowest. “chain of
command”

 Departmentation – activities should be divided and formed into

specialized groups usually referred to as departments.
common types: geographical, commodity or functional

 Decentralization -an organizing concept which pushes decision

making to lower levels of the heirarchy.
 Organizing and Staffing

Departmentation Criteria
 Similar activities may be grouped together, based upon likeness of
personal qualifications or common purpose
 An activity may be grouped with other activities with which it is
used, eg. Safety with Production
 Functions may be assigned to the executive who is most interested in
performing them well.
 Activities may be grouped to encourage competition among
departments or to avoid friction.
 If it is difficult to make definite distinctions between two activities,
they may be grouped together
 Certain functions require close coordination and if separated ,
would increase problems of higher level managers; in this case
they are grouped together.
 Organizing and Staffing

Bureaucracy

 Regular activities aimed at organization goals are distributed as fixed official duties

 Organization follows the principles of heirarchy.

 Operations are governed by a consistent system of abstract rules that are applied to
individual cases.
 The ideal official operates as a formalistic impersonality w/out emotion
 Employment in the organization is based on technical qualifications and not subject to
arbitrary termination.
 From purely technical point of view, bureaucracy attains the highest degree of
efficiency.
 Organizing and Staffing

Staffing – Filling, keeping filled, positions in the organization

which includes identifying the workforce requirement, recruiting,
selecting, placing, promoting, training, appraising, compensating
and planning for the general welfare of the employees.
Situational Approach to Human Resource Management

External Environment
1. Equal employment opportunity
2. Women in management
3. Staffing for international environment