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ENGINEERING MANAGEMENT

R
Rosalina A. Lioanag, MSChE/MBA rlioanag@yahoo.com 0917 8617915

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

Organizing & Staffing


Definition Structures of formal organization Principles of organization The Art of Delegation Situational Approach to Human Resource Management Performance Appraisal Career Strategies

Leading
Elements of Leadership Types of Leadership Motivation Theories Eight 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 Skills Technical Skills Middle Managers First-Line Managers 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 ones 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
Integrity Self-respect Rationality of individual Peace of mind Harmony Logical Consistency Platonic Justice Order,Plan Common Good

Happiness Desirable results Maximized Satisfactions Efficiency

AC TI O N
Lawfulness Precedents Customs ,Contracts, Authorization Survival Political Power Effect on friendfoe relations Loyalty Institutional Trend Social Causes

Ethical and Environmental Foundations of Management Total Corporate Social Responsibility

Discretionary Responsibility Ethical Responsibility Legal Responsibility Economic Responsibility

Contribute to the community and quality of life Be ethical . Do what is right. Avoid harm Obey the law. 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, alternatives are difficult to define, and information about outcomes is unavailable.

Planning - Decision Making


Condition that affect the Possibility of Decision Failure
Organizational Problem

Low Certainty Risk

Possibility of Failure Uncertainty

High Ambiguity

Programmed Decisions

Non-Programmed 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 organizations 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 Vague Uncertainty Limited Pluralistic, Conflicting Uncertainty/Ambiguity Inconsistent,ambiguous

Problem/ Goals Clear cut Condition Certainty Available Full Information Rational choice 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 Feedback Requirement Diagnosis 2. & Analysis of Causes Decision-Making Implementation of Chosen Alternatives 5. Selection of Desired Alternatives 4. Process Development of Alternatives 3.

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 Success Failure

Brand A 0.80 0.20

Brand B 0.50 0.50

Payoff Table
Strategy Stock Brand A Stock Brand B State of Nature Success Failure $200 $400 -$500 -$300

Planning - Decision Making

Expected Value Payoff Table


State of Nature Success Failure $200x .80=$160 $400x .50=$200 -$500x 0.20=-$100 -$300x 0.50=-$150

Strategy Stock Brand A Stock Brand B

EMV $60 $50

Planning - Decision Making Decision Tree


Alternatives Outcomes
Success Brand A $200x .80=$160 $60 Failure -$500x 0.20=-$100 Success $400x .50=$200 Brand B Failure -$300x 0.50=-$150 $50

Expected Values

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

Total Revenue

Total Variable Cost

Cost

Breakeven Point

Total Costs

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 organizations 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. 2. 3. 4. 5. 6. 7. A plan should be directed toward well defined objectives. Plans made by different specialists should be coordinated through adequate communications among specialists. Planning is a prerequisite to other functions of management. Adaptation of plans to current actions demands continual redrafting of plans. Planning pervades the heirarchy of an organization. A manager should relate the degree of commitment of his resources to the need for definite plans. 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; workeroriented

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