ENGINEERING MANAGEMENT 302

LECTURES (A) 1-2

BASIC PRINCIPLES of MANAGEMENT

Managers are individuals who achieve goals through other people. They make decisions,
allocate resources, and direct the activities of others to attain goals.

Organizations: A consciously coordinated social unit composed of two or more people that
functions in a relatively continuous basis to achieve common goal(s).

Functions of managers

Henry Fayol says that "Managers plan, organise, lead, coordinate and control"

 Planning includes: defining goals, establishing strategy, and coordinate activities

 Organising includes: determination of tasks, allocation of tasks, reporting, working out
communication channels, and decision making.
 Leading includes: motivation of subordinates, direction determination, resolving
conflicts, setting examples.
 Controlling Monitoring activities to ensure that they have been planned executed and
accomplished on time within expectations, and correcting significant deviations.

ROBERT KATZ identified the Management skills as follows

Technical Skills: Ability to apply specialized knowledge and expertise.

Human Skills: Ability to work with, understand and motivate other people both
individually and in groups.
Conceptual Skills: Ability to analyse and diagnose complex situations.
Networking: Socialising, politicking, and interactions with outsiders.

POWER HELD BY MANAGERS

Managers could not function without having power over their subordinates.

Power is defined as: the capacity of a person to influence the behaviour of others so that
others do thinks they would not do normally.

Power is used to attain group goals. It indicates a potential that can be exercised when
necessary, indicates dependence, and can be used in a discretionally manner.

Basis of Power is the things that a power holder controls and uses them to manipulate the
behaviour of others.

Types of power: FRENCH and RAVEN argue that there are five types of power

ENGINEERING MANAGEMENT 302 -1-

 1. Coercive power is based on fear.
2. Reward power is based on positive benefits to the subordinate
3. Persuasive power is based on the ability to allocate and manipulate symbolic rewards
4. Knowledge power is based on the ability to control unique and valuable information
5. Referent power is based on admiration.

Sources of power are the things that power holder controls.

 Position power is due to structural position in organizations

 Personal power is due to traits and personal characteristics, such as: articulate,
domineering, charismatic, physically imposing, etc.
 Expert power is based on special skills, knowledge, and control of information
 Opportunity power is basically being in the right place at the right time

Power tactics identify how individuals manipulate power bases.

Research identifies seven strategies for power tactics

 Reason: logical and rational presentation of ideas

 Friendliness: creation of goodwill, being humble, and being friendly
 Coalition: getting the support of others
 Bargaining: exchange of benefits or favours
 Assertiveness: use of direct and forceful approach, ordering, enforcing compliance
 Higher authority: getting support of higher authorities
 Sanctions: punishment denying the rights of persons, and so on.

MOTIVATION
Motivation: The willingness to exert high level of efforts towards organisational goals,
conditioned by the effort's ability to satisfy some individual need.

Motivation requires:
 Effort
 organisational goals
 Needs are some internal states of individuals or organisation that makes certain
outcomes to appear attractive.

Motivation and Personality

McGREGOR proposes that human beings are either X-type (negative) or Y-type (positive),
known as the theory X and theory Y.

Assumptions held on X-type are:

1. People inherently dislike work and whenever possible they will attempt to avoid it
2. Since they dislike work they must be coerced, controlled, and punished if necessary
3. They will avoid responsibilities and seek formalities whenever possible
4. They will place security as priority and will display little ambition.

Assumptions held on Y-type workers are:

1. Employees view work as a natural part of their living
2. They exercise self-direction and self-control
3. They accept and seek responsibility
4. They seek innovative ideas.

ENGINEERING MANAGEMENT 302 -2-

There are many other theories, such as motivation-hygiene theory, cognitive evaluation
theory, etc.

Motivation and Hierarchy of Needs

MASLOW formulated the theory of motivation as hierarchy of needs in five stages, Figure 1.1:

Self
actualisation

Esteem needs

Social/Affiliation needs

Safety/Security needs

Physiological needs

Figure 1.1 Maslow’s hierarchy of needs

 Physiological: hunger, shelter, thirst, etc.

 Safety: protection from physical and emotional harm
 Social: affection, belongingness, acceptance, and friendship
 Esteem: self-respect, autonomy, recognition, attention, etc.
 Self-actualisation: to drive to becoming what one is capable of, such achievement,
self-growth, self fulfilment

TEAM DEVELOPMENT
Team building is an important part of organisational success, which can be done in many ways

 Alignments / Workshops
 Feedback / Newsletters
 Reward and recognition schemes
 Training

Team Development – Situational Leadership (see Figure 1.2)

There is close link between success of the team and leadership managing that team as shown in
Figure 1.2. The leader of the team can take directive attitude or supporting attitude. In a
situational leadership combination of the two seem to work better.

GROUP BEHAVIOUR
Definition of Group: Two or more interacting and independent individuals who have come
together to achieve a particular goal(s).

ENGINEERING MANAGEMENT 302 -3-

Types of groups: In a work environment groups can be classified as:

 Formal groups are formed by organizations to execute designated tasks.

 Informal groups are due to alliances for the need of social contacts. They are not
organizationally determined.
 Command groups are organisational groups to help managers
 Task groups are those working together to complete an identified task
 Interest groups are formed by those working together to attain shared objectives
 Friendship groups are formed by those who share common characteristics.
(High) Supportive Behaviour Low)

High Supportive High Directive

& &
Low Directional High Supportive

Supporting Coaching

Low Supportive High Directive

& &
Low Directive Low
Supportive

Delegating Directing

(Low) Directive Behaviour (High)

Figure 1.2 the situational leadership chart

Formation of groups: Research indicates that group formations have five stages. This is
called the five-stage group model

1. Forming: characterised by uncertainties about the purpose of the group, structure and
leadership. This stage is complete when members accept that they are in this particular
group.
2. Storming: members accept the group but there is a resistance to the constraints that
the group imposes on individuals. There is also leadership problem at this stage.
3. Norming: Close understanding and relationships develop for cohesiveness. The group
structure solidifies and group has common expectations about functional member
behaviour.
4. Performing: Group structure is fully functional. The group energy is diverted to
execute the task in hand.
5. Adjourning: Attention is diverted to completion of the task.

Personality characteristics of group members: Group productivity is influenced by morale

and cohesiveness of the members. Other traits such as sociability, self-reliance, independence,
willingness to contribute, interactiveness, responsiveness and respect to the rights of other
members are equally important.

ENGINEERING MANAGEMENT 302 -4-

 ORGANISING GROUP
Groups are organized to perform task(s). They have structure that shapes the behaviour of
members by having leadership, roles, norms, group status, group size, and composition of the
group.

Leadership: Every work group tend to have a leader, such as department managers,
supervisors, foremen, project leader, committee chair, and so on. There are many
different types of leaderships. Participative leadership appears to be more effective
than autocratic leadership.
Roles: A role is defined as a set of expected behaviour patterns attributed to someone
occupying a given position in a social unit. Roles are shaped by role identity, which is
described by certain attitudes and behaviours consistent with a role.

Despite the role identity individuals have their own role perception. That is, an
individual's view of how he or she is supposed to act in a given situation. The roles
perceptions are shaped by personality of the individual, traits, and environment that
they are in.

In addition to role perception, there is role expectation. Role expectation is how

others believe a person should act in a given situation. For example, a football coach
is generally expected to be aggressive, dynamic and inspiring, although the opposite
appears to work equally well depending on the situation.

There is also unwritten psychological contract among the group members

themselves and group members and management. For example, manager is expected
to treat members of the group justly, provide acceptable conditions, and communicate
clearly. Group members are expected to demonstrate good attitude, follow directions,
and perform as required.

The role conflict can influence the group performance. Role conflict can arise if an
individual is confronted with divergent role expectations. In some situations, the roles
may be mutually contradictory among the group members as well as tasks that an
individual has to perform.

Norms: Acceptable standards of behaviour within a group that are shared by the group
members. Formalised norms are written by the organizations. Informal norms are
set the by the groups telling members what they can (cannot) do under certain
circumstances. Norms can:

 Facilitate the group survival

 Increase the predictability of group member behaviour
 Decrease embarrassing interpersonal problems
 Allow members to express core values of the group.

Norms develop gradually as group members learn what behaviours are necessary for
the group to function effectively. In some cases, groups might short cut this process
and make explicit statements about the expected norms.

Size: the size of the group can affect the overall behaviour. For example, smaller groups can
complete a task quicker; lager groups can have diverse inputs. Size of group creates
Social Loafing "the tendency of group the members to do less then they are capable
of individually, resulting in an inverse relationship between group size and individual
performance". There are many reasons for social loafing, such as:

ENGINEERING MANAGEMENT 302 -5-

  Belief that other group members are not pulling their weights
 Seeing others lazy and inept
 Dispersion of responsibilities hence diminishing feeling of roles
 Non-measurability of contributions that are made by individuals.

Composition: Most groups require variety of skills. A heterogeneous group will have diverse
abilities, opinions, personalities, skills, and information, hence can be more effective

COMMUNICATIONS MANAGEMENT
Communication fundamentals are illustrated in Figure 1.3.

Elements of communication management: The basic elements of communication

management are:

1. Communications Planning
2. Information Distribution
3. Performance Reporting
COMMUNICATION PROCESS

Idea Encoding Message Decoding Meaning

initiated

Shared experiences

Meaning Decoding Message Encoding Idea

feedback

Distraction, interference, words,

culture, judgements, emotions,
personalities, interests, values,

Figure 1.3 Communication fundamentals

1. Communications Planning

Communications Planning enables all the requirements to be assembled and reported in an

orderly and effective manner. The Communications Plan should include:

o Collection and filing structure

o Distribution structure (who gets what?)
o Format and level of detail to be distributed
o Method for updating Communications Management Plan

2. Information Distribution

Effective information distribution is an essential part of successful communication. It requires:

ENGINEERING MANAGEMENT 302 -6-

  Communication skills
 Retrieval systems
 Distribution Systems

3. Performance Reporting

Performance reporting is the collecting and disseminating information for:

 Status Reports
 Progress Reports
 Forecasting, etc

ORGANIZATIONS
Organizations: A consciously coordinated social unit composed of two or more people that
functions in a relatively continuous basis to achieve common goals.

Organisations create structure to facilitate the coordination of its activities and to control the
actions of their members.

ORGANIZATIONAL STRUCTURE

Organisational structure is identified by:

1. Complexity
2. Formalisation
3. Centralisation.

1. Complexity is the degree of vertical, horizontal, and spatial differentiation in an

organization.

 Horizontal differentiation: is the degree of differentiation between the units based on

the orientation of members, the nature of tasks they perform, and their education and
training. If an organisation has a large diverse range of occupations specialised in
knowledge and skills, it becomes much more horizontally complex. Hence diversity
makes communication between the units and the management of the entire
organization becomes difficult.
 Vertical differentiation: refers to depth of the hierarchal levels of the organization.
The more levels that exist between the top management and the operatives the more
complex the organization gets. This is due to communication distortion and decision
making and decision dissemination.
 Spatial differentiation: is the degree to which the location of the physical facilities
and plant of the organization and personnel are geographically dispersed. As spatial
differentiation increases the complexity increases too due to communication,
coordination and control problems.

2. Formalisation is which jobs within the organization are standardised. Highly formalised
jobs can result in consistent and uniform outputs. Low formalised jobs give greater
freedom to the employees.

3. Centralisation: is the degree to which decision-making is concentrated at a single

point in the organization. In a centralised organization key decisions are taken by top
management. In a decentralised organization actions can be taken more quickly to
solve local problems.
ENGINEERING MANAGEMENT 302 -7-
 SPAN OF CONTROL

Span of control in organisations is the number of subordinates a manger can efficiently and
effectively direct.

Span of 4
1 4,096 Operatives Span of 8
1,365 Managers 4,096 Operatives
1 585 Managers
4
8
16
64 64

256 512

1,024
4,096
4,096
Figure 1.4 Span of control

Classical theorists prefer small span, no more than 6 in order to maintain close control. They
thought that the wider or larger the span the more efficient the organization becomes as
illustrated in Figure 1.4.

Contemporary view is leaning towards flat structures with wide span of control.

Note: Research indicates that in many cases jobs may be highly technical and specialised. This
may create a gap between the authority and employee. Since managers may not be
competent in these jobs they rely on authority to exercise their power, which can result in less
satisfied employees.

DEPARTMENTALISATION

Classical theorists argued that activities in an organization should be specialised and grouped
into department. Creation of these departments should be based on work functions being
performed, products and services being offered, target clients, geographic locations and the
process of production.

Functional departmentalisation: is based on group activities by functions performed. For

example, in manufacturing industry engineering, accounting, manufacturing, personnel, etc
form different departments as shown in Figure 1.5. Functional departmentalisation seeks
economies of scale by placing people with common skills.

Plant
Manager

Manager Manager Manager Manager

Engineering Accounting Manufacturing Purchasing

Figure 1.5 Departmentalisation by functions

ENGINEERING MANAGEMENT 302 -8-
 ORGANISATIONAL STRUCTURES AND DESIGN
In an organization design, three main components may be mixed and matched for maximum
efficiency. These are complexity, formalisation, and centralisation. There are two ways of
designing organizations, Figure 1.6:

1) Mechanistic structure
2) Organic structure.

Mechanistic structure is characterised by high complexity (large horizontal differentiation),

high formalisation (limited downward communication) and high centralisation (rigid pyramid
type structure)

Organic structure has low complexity and formalisation and it is decentralised.

Communication sideways is effective. It involves participation of many in decision-making.

Mechanistic structure Organic structure

High horizontal differentiation Low horizontal differentiation
Rigid hierarchical relationship Collaboration (horizontal and
Fixed duties vertical)
Formalised communication Adaptable duties
channels Low formalisation
Centralised decision authority Informal communication
Decentralised decision authority

Figure 1.6 Mechanistic and Organic structures

REASONS FOR STRUCTURAL DIFFERENCES OF ORGANIZATIONS

Organisations structure themselves for many reasons, e.g.

1. Strategy
2. Organization size
3. Technology
4. Environment
5. Power-Control

STRATEGY

ENGINEERING MANAGEMENT 302 -9-

CHANDLER suggests that as the organization grows they get more ambitious and their
products diversify, thus prompting restructuring periodically. Strategy theory suggests that
organizations go through restructure for three reasons:

1) Innovation strategy
2) Cost minimisations strategy
3) Imitation strategy.

1. Innovation strategy emphasizes the introduction of major new products and services.
Organic structure is suitable since it has loose formation, low division of labour, low
formalisation and also decentralised.
2. Cost minimisation emphasizes tight cost control, avoidance of unnecessary innovation
or marketing expenses and price-cutting. Mechanistic structure is suitable since it has
tight control, extensive division of labour and high formalisation.
3. Imitation strategy emphasizes to move into new products or new markets only after
their viability has been already proven. Mix and match mechanistic and organic
structure.

ORGANIZATION SIZE

The number of people employed in an organization can shape the structure. For example,
there is an inverse relationship between size and centralisation.

TECHNOLOGY

Refers to how an organization transfers its inputs to outputs. Organizations may be involved in
unit production (items in units or small batches), mass production (large batches), and process
production (continuous process), and so on.

Management for unit production can be characterised by low vertical differentiation, low
horizontal differentiation, and low formalisation, therefore organic structure is most suitable.

Management for mass production can be characterised by moderate vertical differentiation,

high horizontal differentiation, and high formalisation, therefore mechanistic structure is most
suitable.

Management for process production can be characterised by high vertical differentiation, low
horizontal differentiation, and low formalisation, therefore organic structure is most suitable.

ENVIRONMENT

Business environmental factors inside an organisation or forces from outside strongly affect its
performance.

EMERY and TRIST identify four kinds of business environments

1. Placid-randomised environment in which demands are randomly distributed and

changes occur slowly such as the farming organisations.
2. Placid-clustered environment in which changes occur slowly but threats occur in
clusters such as the mining industry. Organization must have long range strategic plan
and centralised decision making.
3. Disturbed-reactive environment in which environment is dominated by one or more
large organizations. Examples are computer industries, automobile industry, etc.

ENGINEERING MANAGEMENT 302 - 10 -

 4. Turbulent-field environment in which environment changes constantly such as the
stock exchange, most electronics and software industries.

ETHICS
Among many some of the Web definitions of ethics are:

“Ethics is a general term for what is often described as the "science (study) of morality". In
philosophy, ethical behaviour is that which is "good" or "right." The Western tradition of ethics
is sometimes called moral philosophy. This is one part of value theory (axiology) – the other
part is aesthetics – one of the four major branches of philosophy, alongside metaphysics,
epistemology, and logic”
(http://www.google.com.au/search?hl=en&defl=en&q=define:ethics&sa=X&oi=glossary_defini
tion&ct=title )

“Values are those things that really matter to each of us ... the ideas and beliefs we hold as
special. Caring for others, for example, is a value; so is the freedom to express our opinions."

"Ethics deals with what we believe to be good or bad and with the moral obligations that these
beliefs imply. Ethics involves the rules for deciding right and wrong and the code of conduct
that is based on our decisions. While there are some things that not everybody sees eye-to-
eye with in this area, there are a whole lot more that we do agree about. For example, to steal
is wrong, for most of us. So too is physical assault. Most of us don't think it is right to cheat in
school; many of us think it is injustice to punish someone who didn't do anything wrong. As an
idea, ethics is simple, but the consequences re profound!"
(http://www.ethicscommittee.ca/definition-of-ethics.php )

Responsibilities of Engineers

Engineers have a responsibility to act in an ethical and responsible manner in all their
professional dealings. Essentially we are required to “act in a rational and objective manner
that is transparent and easily defendable”

Ethical & Philosophical Dilemmas

Many projects involve subjective decision making that may result in an outcome that is not
consistent with a person’s own values, but which protect the companies interests. These
decisions can best be broken down into the three categories as outlined below:

 Environmental Dilemmas e.g. local pollution vs world pollution

 Social Dilemmas
 Working on a job which has “real” adverse impacts on local communities
– Many examples in our own backyard
 Need to be objective and look at “bigger picture”
 Commercial / Contractual Dilemmas
 Project Budget and conflict of contractor and sub-contractor profit.
 Being “hard-nosed” with timely payments and approval of variations to
contractors

Different Countries – Different Ethical Values

AUSTRALIA
 Companies operating on Australian being compliant with Australian laws and
regulations, including:
 Environmental Management issues, and
ENGINEERING MANAGEMENT 302 - 11 -
  Social Responsibilities
 Shareholder responsibility is still a key driver, but not often at the expense of the “bad
publicity”
 Australian Companies operating abroad
 Obey the local laws
 Avoid potential abuse of power

Conclusions for ethical behaviour in Engineering

 Engineers are required to act in a rational, objective, transparent, and defensible

manner
 Engineers engaged in Project Management must understand ethical issues and make
judgements objectively
 Lessons Learned over the past fifty years of past bad ethical practises resulting in
protracted expensive litigations and project close downs have contributed to a better
approach by companies
 Reputable companies do not place Engineers in ethically compromised situations

IEEE Codes of Ethics

We, the members of the IEEE, in recognition of the importance of our technologies in affecting
the quality of life throughout the world, and in accepting a personal obligation to our
profession, its members and the communities we serve, do hereby commit ourselves to the
highest ethical and professional conduct and agree:

1. To accept responsibility in making decisions consistent with the safety, health and welfare
of the public, and to disclose promptly factors that might endanger the public or the
environment;

2. To avoid real or perceived conflicts of interest whenever possible, and to disclose them to
affected parties when they do exist;

3. To be honest and realistic in stating claims or estimates based on available data;

4. To reject bribery in all its forms;

5. To improve the understanding of technology, its appropriate application, and potential

consequences;

6. To maintain and improve our technical competence and to undertake technological tasks
for others only if qualified by training or experience, or after full disclosure of pertinent
limitations;

7. To seek, accept, and offer honest criticism of technical work, to acknowledge and correct
errors, and to credit properly the contributions of others;

8. To treat fairly all persons regardless of such factors as race, religion, gender, disability,
age, or national origin;

9. To avoid injuring others, their property, reputation, or employment by false action;

10. To assist colleagues and co-workers in their professional development and to support them
in following this code of ethics.

Approved by the IEEE Board of Directors February 2006

ENGINEERING MANAGEMENT 302 - 12 -

Download a copy of the IEEE Code of Ethics (PDF)

Source: http://www.ieee.org/portal/cms_docs/about/CoE_poster.pdf

ENGINEERING MANAGEMENT 302 - 13 -