EE2063 Chapter 1

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Modern-day Economy
Customer needs are changing rapidly Intense Global competition Very Fast advancement in technology

Companies need leaders who understand technology and business

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Engineers with proper management training have great opportunities to make valuable and lasting contributions. (Babcock 1996)

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Managers
Employees entrusted with: Taking decisive actions Utilizing resources Controlling internal teams Guiding external business partners

Company Goals

Main Areas

Planning, Organizing, Leading and Controlling

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The driving force behind the evolution of management theory is the search for better ways to utilize organisational resources.
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Evolution of Management Theory

Organisational Environment Theory Management Science Theory Behavioural Management Theory Administrative Management Theory Scientific Management Theory
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

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Ancient Management Thoughts

2500BC Pyramids- 100 000 men from 20 ~30 years to complete one pyramid. Based on trial and error . No systematic documentation of the management strategy and practices

Mayan temples

Chinese emperors applied principles of organizing , planning, directing and controlling

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Cottage industry
An industry where the creation of products and services is home-based, rather than factory-based. While products and services created by cottage industry are often unique and distinctive given the fact that they are usually not mass-produced, producers in this sector often face numerous disadvantages when trying to compete with much larger factory-based companies.

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Industrial Revolution ( 18 century)

Industrial engineering started in England during the industrial revolution in mid 18th century ( 1750 1850) Mainly due to developments in technological innovations that helped mechanise many traditional manual tasks Most important invention Steam engine by James Watt

Three basic innovation that brought about the Industrial Revolution 1. Replacement of hand tools with power tools and machines 2. Introduction of new power source 3. Operation of factories as a new form of organising for production of goods

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Accomplishments / Effects
Factories are formed involving equipment and workers Destroyed the cottage industry in England Created problem related to child labour Poor living conditions for workers, crime, and brutality This induced the creation of factory layout, inventory control, production planning, work-flow analysis and cost analysis.

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Small-scale Crafts Production

Large-scale Mechanised Manufacturing

Managed by engineers who only had Technical orientation

Problems faced: How to handle people Social problems relating to working together in large groups How to increase efficiency of the worker-task mix

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Famous economist, Adam Smith, journeyed around England in 1700s studying the effects of industrial revolution.
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Crafts-style
Each worker responsible for All tasks

Factory System
Each worker performed only 1 or a few tasks to produce

Poorer performance Few thousands per/day Cannot be equally Skilled in all tasks

Better performance 48,000 pins per day More skilled at their tasks

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Job Specialisation

Division of Labour

Better Organisational performance

Increased Efficiency

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With insights gained from Adam Smiths observations, other managers and researchers began to investigate how to improve job specialisation to increase performance. They focused on how to organise and control the work process.

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Industrial Development in US- 19th Century

Emigrants from England set up textile mills, railroads, steel mills Charles Babbage ( 1792-1871) Published a study of that describes the use of machinery and the organisation of human resources for production purpose. He advanced the idea of division of labour, factory size determination, profit-sharing, schemes, methods of observing manufacturing and time-study methods. Formation of several association to promote exchange of best practices in engineering and management. 1893 American Society of Engineering Education 1880 - American Society of Mechanical Engineers
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F.W. Taylor (1856-1915) Scientific Management

1911 studied work methods and shop management He decomposed a job of mechanical nature into set of elementary motions, discarded unnecessary motions, and examined the remaining motions (stopwatch studies) to find the most efficient method and sequence of motion element.

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Taylor believed that if the amount of time and effort that each worker expends to produce a unit of output can be reduced by increasing specialisation and division of labor, the production process will become more efficient.
He put forward the idea that workers are motivated mainly by pay.

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His Theory of Scientific Management argued the following: Workers do not naturally enjoy work and so need close supervision and control Therefore managers should break down production into a series of small tasks Workers should then be given appropriate training and tools so they can work as efficiently as possible on one set task. Workers are then paid according to the number of items they produce in a set period of time, i.e. piece-rate pay. As a result, workers are encouraged to work hard and maximize their productivity.

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Taylors Principles
1. Study the way workers perform their tasks, gather all informational job knowledge that workers possess, and experiment with ways of improving how tasks are performed

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2. Codify the new methods of performing tasks into written rules and standard operating procedures.
3. Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures. 4. Establish a fair or acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level.
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Taylor focused on production aspects without paying attention the workers. According to Taylor, work is divided into planning/training (a management responsibility) and rote execution (by the uneducated worker of the day).

Taylor
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This scientific management became nationally known, but the selective implementation of the principles created more harm than good Workers felt that as their performance increased, managers required them to do more work for the same pay. Increases in performance meant fewer jobs and greater threat of layoffs Monotonous and repetitive Dissatisfaction

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This led to an increase in strikes and other forms of industrial action by dissatisfied workers.

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Ford used Taylors principle

Achieving the right mix of worker-task specialisation Linking people and tasks by the speed of the production line Taylors methods were widely adopted as businesses saw the benefits of increased productivity levels and lower unit costs. The most notable advocate was Henry Ford who used them to design the first ever production line, making Ford cars. This was the start of the era of mass production.
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Franklin Motor Company

Redesigned the work process using the scientific management principles. Production increased from 100 cars a month to 45 cars a day.

The Gilbreths Study of Human Factors Frank Gilbreth (1868-1924)

He was a bricklayer, a building contractor, and a management engineer. He was a member of the ASME, the Taylor Society (precursor to the SAM), and a lecturer at Purdue University.

Lilian Gilbreth (1878-1972)

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Time and Motion Study

1. Break and analyse every individual action necessary to perform a particular task into each of its component actions 2. Find better ways to perform each component action 3. Reorganise each component action so that it is more efficient: less cost of time and effort Their goal was to maximise the efficiency with which each individual task performed.
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Study of Fatigue
How physical characteristics of the workplace contribute to job stress Effects of lighting Effects of heating Effects of color of walls Design of tools and machines

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Administrative Management Theory

Henri Fayol- Principles of Management
Divided the industrial undertakings to six groups: technical, commercial, financial, security, accounting and administrative. Developed 14 general principles of administration

Administrative Management
The study of how to create an organisational structure that leads to high efficiency (least effort) & effectiveness (creates value).

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14 Principles of Management
1. Division of Labour 2. Authority & Responsibility 3. Unity of Command 4. Line of Authority 5. Centralisation 6. Unity of Direction 7. Equity 8. Order 9. Initiative 10. Discipline 11.Remuneration of Personnel 12.Stability of tenure of Personnel 13.Subordination of Individual Interests to the Common Interest 14.Esprit de Corps

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1. Division of Labour
Job specialisation and the division of labour should increase efficiency. Pointed out the downside of too much specialisation; so workers should be given more duties to perform.

2. Authority and Responsibility

Managers have the right to give orders and the power to exhort subordinates for obedience.
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3. Unity of Command
An employee should receive orders from only one superior.

4. Line of Authority
The length of the chain of command that extends from the top to the bottom of an organisation should be limited.

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5. Centralisation
Authority should not be concentrated at the top of the chain of command.

6. Unity of Direction
Those operations within the organisation that have the same objective should be directed by only one manager using one plan. E.g. personnel department in a company should not have two directors each with a different hiring policy.
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7. Equity
Managers should be both friendly and fair to their subordinates.

8. Order
Materials and people should be in the right place at the right time. People should be in the jobs that they are most suited to.

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9. Initiative
Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result.

10. Discipline
Members in an organisation need to respect the rules and agreement that govern the organisation.
To Fayol, discipline results from good leadership, fair agreements and judiciously enforced penalties for infractions. 1-36

11. Remuneration of Personnel

Compensation for work done should be fair to both employees and employers.

12. Stability of Tenure of Personnel

A high employee turnover rate undermines the efficient functioning of an organisation.

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13. Subordination of Individual Interests to the Common Interest

Interests of employees should not take precedence over the interests of the organisation as a whole.

14. Esprit de Corps

Promoting team spirit gives the organisation a sense of unity.
To Fayol, even small factors help develop the spirit. E.g. use verbal communication instead of formal, written communication whenever possible.
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Theory of Bureaucracy
Max Weber (1864-1920)
Developed the principles of bureaucracy-a formal system of organisation and administration designed to ensure efficiency and effectiveness.

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System of written rules and SOPs that specify how Employees should behave

Clearly specified System of task and Role relationships

A bureaucracy Should have

Clearly specified Hierarchy of authority

Selection and evaluation System that rewards Employees fairly and Equitably.
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Five Principles:
1. A Managers formal authority derives from the position he or she holds in the organisation

2. People should occupy positions because of their performance, not because of their social standing or personal contacts.

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3. The extent of each positions formal authority and task responsibilities and its relationship to other positions in an organisation, should be clearly specified. 4. Authority can be exercised effectively in an organisation when positions are arranged hierarchically, so employees know whom to report to and who reports to them.

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5. Managers must create a well-defined system of rules, standard operating procedures and norms so that they can effectively control behaviour within an organisation.

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Rules
Formal written instructions that specify actions to be taken under different circumstances to achieve specific goals.

Rule: At the end of the day employees are to leave their machines in good order.

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Standard Operating Procedures (SOP)

Specific sets of written instructions about how to perform a certain aspect of a task. SOP: Specifies exactly how they should do so, which machine parts should be oiled or replaced.

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Norms
Norms are unwritten, informal codes of conduct that prescribe how people should act in particular situations.

E.g.: An organisational norm in a restaurant might be that waiters should help each other if time permits.

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Human Factors
Behavioral Management Theory The Work of Mary Parker Follet The Hawthorn Studies and Human Relations Theory X and Y

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Behavioral Management
The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organisational goals.

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Mary Parker Follet

Mary Parker Follett advocated for a human relations emphasis. Her work contrasted with the "scientific management" of Frederick W. Taylor. Mary Parker Follett stressed the interactions of management and workers.

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 Follett was one of the first to integrate the idea of organisational conflict into management theory, and is sometimes considered the "mother of conflict resolution.

She coined the words "power-over" and "power-with" to differentiate coercive power from participative decision-making.

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 She was of the view that authority should go with knowledge. Advocated involvement of workers in job analysis and work development process. Managers of different departments should communicate with each other directly. Cross-functioning

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The Hawthorne Studies

Study effect of illumination on productivity Found the increased production was due to management interest Hawthorne effect is the finding that a managers behaviour or leadership approach can affect workers level of performance.

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Theory X and Theory Y

Douglas McGregor proposed that two sets of assumptions about how work attitudes and behaviors not only dominate the way managers think but also affect how they behave in organisations. He named these two assumptions: Theory X and Theory Y.
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Theory X
Assumptions: Average worker is lazy Dislikes work Will try to do as little as possible Have little ambition and avoid responsibility

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Managers Who Accept Theory X

To keep performance high, workers must be supervised closely and their behaviors be controlled by means of the carrot and stickrewards and punishments.

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 Design and shape work setting to maximise control over workers behaviors. Minimise the workers control over the pace of work. Focus is on development of rules, SOPs and a well-defined system of reward and punishment to control behavior. Managers see little point in giving autonomy to solve their own problems. Managers see their role as closely monitoring workers.
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Theory Y
Assumptions: Workers are not inherently lazy Do not naturally dislike work If given the opportunity, will do what is good for the organisation.

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 Characteristics of the work setting determine whether workers consider work to be a source of satisfaction or punishment. Managers do not need to closely control workers behavior. They exercise self-control Decentralise authority Accountable for their jobs Managers role is not to control but to provide support and advice and to evaluate them on their ability

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Skills for Managers/Leaders

What it takes for engineers to be selected as managers? Do all engineers want to be managers?

Leadership Skills

Administrative Skills

Technical Skills
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Work of an Engineer As Technical Contributor

Understand objectives of tasks specified Develop action plan for implementation Define standards (performance metrics) Select methodology/techniques Implement task with proper effort Generate results and secure value Report findings (impact, lessons)
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Tips for Engineers

Demonstrate Technical Competence & Innovative capabilities Brush Up Communications skills (ask, listen, write and talk) Show unfailing reliability to induce trust and confidence Be Proactive in seeking challenging tasks Exhibit readiness for assuming larger responsibilities (take courses, practice skills, gain experience)

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Typical Engineering Activities

Design/development of products/processes Project engineering/management Value engineering and analysis Technology development and R&D (laboratory, field) Production/manufacturing and construction Customer service

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Engineering Managers
Four Dimensional Work
Work with boss Peers, Staff people With self (Manage own time)

Engineering Manager Work with subordinates

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Engineering Management Functions

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Engineering Management Functions

Planning (forecasting, setting objectives, action planning, administering policies, establishing procedure) Organising (selecting organisational structure, delegating, establishing working relationship) Leading (deciding, communicating, motivating, selecting/developing people) Controlling (setting performance standards, evaluating/documenting/correcting performance)

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