Engineering Management Module 1 PDF

Module 1 Introduction to Engineering Management ©2017 Batangas State University 1  Introduction Today’s technological society is constantly changing, and with the change comes a need for the engineer to...

Module 1 Introduction to Engineering Management ©2017 Batangas State University 1  Introduction Today’s technological society is constantly changing, and with the change comes a need for the engineer to be able to address society’s technological challenges as well as the opportunities for the future. Engineers play a key role that in maintaining technological leadership and a sound economy as the world becomes flatter in today’s global economy. To do this, the engineer needs to remain alert to changing products, processes, technologies, and opportunities, and be prepared for a creative and productive life and position of leadership. To assist the engineer for a productive life and position of leadership, this chapter includes the discussion of the functions of engineer, historical development of engineering management, concepts and the principles of engineering management, the process of management and the nature of managerial work. 2 ©2017 Batangas State University  Learning Objectives Describe the origins of engineering management. Explain the concept and principles of engineering management. Illustrate the role of engineers in engineering management activities. 3 ©2017 Batangas State University  The Functions of Engineer Engineers are expected to perform variety of tasks depending on their specialization and job level. It is important to the engineer that he knows what is expected of him so that he may be able to perform his job effectively and efficiently. His next concern will be able to identify the skills required but which he does not have. As engineers are not trained to directly deal with people, it is expected that their weakness will most often be on people-based skills. This difficulty will be more apparent once they are assigned to occupy management positions. It follows that if the engineer manager would want to do the job well, some exposure to engineering management activities become necessary. 4 ©2017 Batangas State University  The Functions of Engineer ► Producing solutions to many difficulties faced by mankind ▪ Research ▪ Design and Development ▪ Testing ▪ Manufacturing ▪ Construction ▪ Sales ▪ Consulting ▪ Government ▪ Teaching ▪ Management 5 ©2017 Batangas State University  Engineering Management History 6 ©2017 Batangas State University  Concept and the Principles of Engineering Management Engineering means by which people make possible the realization of human dreams by extending their reach in the real world. Engineers are the practitioners of the art of managing the application of science and mathematics. By this description, engineering has a limitless variety of possible disciplines. Management is a “creative problem-solving process of planning, organizing, leading and controlling an organization’s resources to achieve its mission and objectives”. 7 ©2017 Batangas State University  Management ► The work of creating and maintaining environments in which people can accomplish goals efficiently and effectively (Albanese) ► The process of achieving desired results through efficient utilization of human and material resources (Bedeian) ► The process of reaching organizational goals by working with and through people and other organizational resources (Certo) ► A set of activities (including planning and decision making, organizing, leading, and controlling) directed at an organization’s resources (human, financial, physical, and information) with the aim of achieving organizational goals in an efficient and effective manner (Griffin) ► The process by which managers create, direct, maintain, and operate purposive organizations through coordinated, cooperative human effort (McFarland) ► The process of acquiring and combining human, financial, informational, and physical resources to attain the organization’s primary goal of producing a product or service desired by some segment of society (Pringle, Jennings, and Longnecker) 8 ©2017 Batangas State University  Management Levels ► First-line managers o Directly supervise non-managers. o They hold titles such as foreman, supervisor, or section chief. o Responsible for carrying out the plans and objectives of higher management, using the personnel and other resources assigned to them. o Make short-range operating plans governing what will be done tomorrow or next week, assign tasks to their workers, supervise the work that is done, and evaluate the performance of individual workers. 9 ©2017 Batangas State University  Management Levels ► Middle managers o carry titles such as plant manager, division head, chief engineer, or operations manager. o Make plans of intermediate range to achieve the long-range goals set by top management, establish departmental policies, and evaluate the performance of subordinate work units and their managers. o Also integrate and coordinate the short-range decisions and activities of first-line supervisory groups to achieve the long-range goals of the enterprise. 10 ©2017 Batangas State University  Management Levels ► Top managers o bear titles such as chairman of the board, president, or executive vice president; the top one of these will normally be designated chief executive officer (CEO). o responsible for defining the character, mission, and objectives of the enterprise. o establish criteria for and review long-range plans. o evaluate the performance of major departments, and evaluate leading management personnel to gauge their readiness for promotion to key executive positions. 11 ©2017 Batangas State University  Skills Required versus Management 12 ©2017 Batangas State University  Engineering Management Activity combining “technical knowledge with the ability to organize and coordinate worker power, materials, machinery and money. 13 ©2017 Batangas State University  Engineering Management The engineering manager is distinguished from other managers because he [or she] possesses both an ability to apply engineering principles and a skill in organizing and directing people and projects. He is uniquely qualified for two types of jobs: the management of technical functions (such as design or production) in almost any enterprise, or the management of broader functions (such as marketing or top management) in a high-technology enterprise. 14 ©2017 Batangas State University  Engineering Management Competition is global, and the ability to compete successfully on this scale is fostered by corporate leaders who can do the following: o Really understand the business. o Understand both the technology that is driving the business today and the technology that will change the business in the future. o Treat research and development as an investment to be nurtured, rather than an expense to be minimized. o Spend more time on strategic thinking about the future as they rise higher in the corporation o Are dedicated to solving a customer’s problem or satisfying a need, which is how I would define true marketing as opposed to sales. o Place a premium on innovation. 15 ©2017 Batangas State University  Process of Management Management is a process consisting of planning, organizing, directing (or leading), and controlling. Management must seek to find out the objectives of the organization, think of ways on how to achieve them, decide on the ways to be adapted and the material resources to be used, determine the human requirements of the total job, assign specific tasks to specific persons, motivate them and make sure that the activities are in the right direction. The five elements of the management process are planning, organizing, coordination, motivation and control. Management is then exercised by planning, finalizing the strategies, making policies, taking managerial decisions for different situations and options, so as to achieve the objectives of the organization. 16 ©2017 Batangas State University  Process of Management A process management sometimes referred to as the process performance measurement and management system. An organization’s senior management is responsible for carrying out its management process. However, this is not always the case for all management processes; for example, sometimes it is the responsibility of the project manager to carry out a project management process. 17 ©2017 Batangas State University  Successful Engineer Manager Ability Capacity of an engineer to achieve organizational objective effectively and efficiently Effectiveness is whether objectives are accomplished. The degree to which objectives are achieved and the extent to which targeted problems are solved Efficiency is the ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste 18 ©2017 Batangas State University  Successful Engineer Manager Motivation to Manage Favorable attitude toward those in positions of authority Desire to engage in games or sports competition with peers Desire to engage in occupation or work related competition with peers Desire to assert oneself and take charge Desire to exercise power and authority over others Desire to behave in a distinctive way Sense of responsibility 19 ©2017 Batangas State University  Successful Engineer Manager Opportunity Obtaining a suitable managerial job Finding a supportive climate once on the job 20 ©2017 Batangas State University  Module 2 Decision Making ©2017 Batangas State University 1  Introduction Decision-making is one of the most important aspects in an organization. Decisions are made in the best interest of the organization and to support organizational growth, however the process of arriving at a decision continues to become more complex. For that matter, decision making and problem solving is taken and used in all engineering management functions, although usually they are considered a part of the planning phase. Making good decisions is something that every engineer manager strives to do since the overall quality of managerial decisions has a major influence on organizational success or failure. In this chapter, students will learn the nature of decision making, how decisions are made every day within organizations and how managers make decisions. 2 ©2017 Batangas State University  Learning Objectives Understand different types of decisions. Explain the process of decision making. Demonstrate problem-solving abilities and rational effective decision making to address organization challenges. 3 ©2017 Batangas State University  Nature of Decision Making Decision making may be defined as “the process of identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation”. Decision-making, according to Nickels and others, “is the heart of all the management functions”. According to the Oxford Advanced Learner’s Dictionary the term decision making means - the process of deciding about something important, especially in a group of people or in an organization. 4 ©2017 Batangas State University  Nature of Decision Making Managerial decision making is the process of making a conscious choice between two or more rational alternatives in order to select the one that will produce the most desirable consequences (benefits) relative to unwanted consequences (costs). If there is only one alternative, there is nothing to decide. Thereby, it is a continuous and dynamic activity that pervades all other activities pertaining to the organization. Since it is an ongoing activity, the decision making process plays vital importance in the functioning of an organization.. 5 ©2017 Batangas State University  Nature of Decision Making ► it requires solid scientific knowledge coupled with skills and experience in addition to mental maturity. ► regarded as a check and balance system that keeps the organization growing both in vertical and linear directions. ► decision making process seeks a goal. When one problem is solved another arises and so on, such that the decision making process, as said earlier, is continuous and dynamic. 6 ©2017 Batangas State University  Types of Problems and Decisions Engineer Managers will encounter different types of problems and decisions as they do their jobs. Depending on the nature of the problem, the engineer manager can use different types of decisions. ► Well-Structured Problems and Programmed Decisions. ► Poorly Structured Problems and Nonprogrammed Decisions. 7 ©2017 Batangas State University  Types of Problems and Decisions Well-Structured Problems and Programmed Decisions. ▪ Problems are straight forward ▪ The goal of the decision maker is clear, the problem is familiar, and information about the problem is easily defined and complete. ▪ Decisions are programmed to the extent that they are repetitive and routine and to the extent that a definite approach has been worked out for handling them. ▪ Its solution is usually self-evident or at least reduced to very few alternatives that are familiar and that have proved successful in the past. ▪ Also known as routine decisions involve standard decision procedures, and entail a minimum of uncertainty. 8 ©2017 Batangas State University  Types of Problems and Decisions Well-Structured Problems and Programmed Decisions. Example: customer's wanting to return a purchase to a retail store a supplier's being late with an important delivery a news team's responding to an unexpected and fast-breaking event a college's handling of a student wanting to drop a class. 9 ©2017 Batangas State University  Types of Problems and Decisions Well-Structured Problems and Programmed Decisions. Various types of programmed decisions are a. Organizational decisions. Decisions taken in interest of the organization. b. Operational decisions. Decisions are taken as a matter of routine. It relates to daily operations and aims to achieve short-term objectives of the firm. Operational decisions are taken by middle and lower- level managers within the framework of policies and procedures and allow limited use of discretion by managers. c. Research decisions. Decisions which involve regular survey of the market are research decisions and decisions made under situations of crisis or emergency are crisis — intuitive decisions. d. Opportunity decisions. These decisions reflect foresightedness. Managers forecast opportunities to promote organizational growth. The decision to grow and diversify (i.e. market penetration and market development) is an opportunity decision. 10 ©2017 Batangas State University  Types of Problems and Decisions Poorly Structured Problems and Nonprogrammed Decisions. ▪ Problems that are new or unusual and for which information is ambiguous or incomplete. ▪ Decisions are taken in unstructured situations which reflect novel, ill-defined and complex problems. ▪ The problems are non-recurring or exceptional in nature. ▪ require extensive brainstorming ▪ Managers use skills and subjective judgment to solve the problems through scientific analysis and logical reasoning. 11 ©2017 Batangas State University  Types of Problems and Decisions Poorly Structured Problems and Nonprogrammed Decisions. ▪ When problems are poorly structured, managers must rely on nonprogrammed decision making in order to develop unique solutions. ▪ Nonprogrammed decisions also called as nonroutine decisions are unique and nonrecurring, often involving incomplete knowledge, high uncertainty, and the use of subjective judgment or even intuition, where no alternative can be proved to be the best possible solution to the particular problem. ▪ Such decisions become more and more common the higher one goes in management and the longer the future period influenced by the decision is. ▪ When a manager confronts a poorly structured problem, or one that is unique, there is no cut and-dried solution, thus, it requires a custom-made response through nonprogrammed decision making. 12 ©2017 Batangas State University  Decision Making Process Rational decision-making describes a series of steps that decision makers should consider if their goal is to maximize the quality of their outcomes. In other words, if an engineer manager wants to make sure to make the best choice, going through the formal steps of rational decision-making may make sense. 13 ©2017 Batangas State University  Decision Making Process 1. Identify the problem or Diagnose the Problem. Decisions are made to solve problems. As a first step to decision-making, therefore, managers identify the problem. Problem is any deviation from a set of expectations. Managers find causes of the problem by collecting facts and information that have resulted in the problem. For example, if the sales target is 10,000 units per month but actual sales are 6,000 units, managers sense some problem in the company. The problem is identified with the marketing department of the company. Managers use their judgment, imagination and experience to identify the problem as wrong identification will lead to wrong decisions. 14 ©2017 Batangas State University  Decision Making Process 2. Analyze the environment. The objective of environmental analysis is the identification of constraints which may be spelled out as either internal or external limitations. Managers scan the internal and external environment to see whether or not organizational operations conform to environmental standards. The internal environment refers to organizational activities within the company that surrounds decision making. While the external environment refers to variables that are outside the organization and not typically within the short-run control of top management. 15 ©2017 Batangas State University  Decision Making Process 3. Articulate problem or opportunity. Information provides input for generating solutions. Information may be quantitative or qualitative. It should be reliable, adequate and timely so that right action can be taken at the right time. 16 ©2017 Batangas State University  Decision Making Process 4. Develop viable alternatives. In this step, the engineer manager prepares a list of alternative solutions, then determines the viability of each solution. Alternatives means developing two or more ways of solving the problem. Managers develop many solutions to choose the best, creative and most applicable alternative to solve the problem. 17 ©2017 Batangas State University  Decision Making Process 5. Evaluate Alternatives. This is important since the next step is about making a choice. Proper evaluation makes choosing the right solution less difficult. All the alternatives are weighed for their strengths and weaknesses. Further, the alternatives will be evaluated depending on the nature of the problem, objectives of the company and the nature of alternatives presented. 18 ©2017 Batangas State University  Decision Making Process 6. Make a choice. After the alternatives have been evaluated, the decision maker must now be ready to make a choice. Choice-making refers to the process of selecting among alternatives representing potential solutions to a problem. To make the selection process easier, the alternatives can be ranked from best to worst on the basis of some factors like benefit, cost, or risk. 19 ©2017 Batangas State University  Decision Making Process 7. Implement Decision. Implementation refers to carrying out the decision so that the objectives sought will be achieved. At this stage, the resources must be made available so that decision may be properly implemented. 20 ©2017 Batangas State University  Decision Making Process 8. Evaluate and adapt decision results. In implementing the decision, the results expected may or may not happen. It is therefore important for the engineer manager to use control and feedback mechanisms to ensure results and to provide information for future decisions. 21 ©2017 Batangas State University  Decision Making Conditions Decisions may also be classified as being made under conditions of certainty, risk, or uncertainty, depending on the degree with which the future environment determining the outcome of these decisions is known. These three categories are compared: 22 ©2017 Batangas State University  Decision Making Conditions Certainty The ideal situation for making decisions is one of certainty, that is, a situation in which a manager can make accurate decisions because the outcome of every alternative is known. Decision making under certainty implies that we are certain of the future state of nature. For example, when a state treasurer is deciding on which bank to deposit excess state funds, he knows exactly how much interest is being offered by each bank and will be earned on the funds. He is certain about the outcomes of each alternative. As you might expect this condition isn't characteristic of most managerial decision situations. It's more idealistic than realistic. 23 ©2017 Batangas State University  Decision Making Conditions One common technique for decision making under certainty is called linear programming. In this method, a desired benefit (such as profit) can be expressed as a mathematical function (the value model or objective function) of several variables. The solution is the set of values for the independent variables (decision variables) that serves to maximize the benefit (or, in many problems, to minimize the cost), subject to certain limits (constraints). Steps include: 1.) State the problem, 2.) decision variables, 3.) Objective function and 4.) Constraints. 24 ©2017 Batangas State University  Decision Making Conditions 25 ©2017 Batangas State University  Decision Making Conditions Risk A far more common situation is one of risk, those conditions in which the decision maker is able to estimate the likelihood of certain alternatives or outcomes. The ability to assign probabilities to outcomes may be the result of personal experiences or secondary information. Under the conditions of risk, managers have historical data that allow them to assign probabilities to different alternatives. 26 ©2017 Batangas State University  Decision Making Conditions 27 ©2017 Batangas State University  Decision Making Conditions Uncertainty Sometimes a decision maker cannot assess the probability of occurrence for the various states of nature. In such condition of uncertainty, the decision maker can choose among several possible approaches for making the decision. The choice of alternative is influenced by the limited amount of information available to the decision maker. Another factor that influences choices under conditions of uncertainty is the psychological orientation of the decision maker. Different approaches to decision making under uncertainty include the following: ► Optimistic manager –maximax choice (maximizing the maximum possible payoff) ► Pessimistic manager –maximin choice (maximizing the minimum possible payoff) ► Decision maker –principle of insufficient reason; all states of nature are equally likely (highest average) ► Minimax approach –opportunity loss (regret) 28 ©2017 Batangas State University  Decision Making Conditions 29 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Decision making is a very important and complex process. In order to aid decision makers, make the right choice, different tools and techniques are used to improve the overall quality of decision making. In some instances, it may be a combination of a couple of different strategies that help managers achieve the best results. Following are some of the commonly used techniques: 30 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Decision Trees. Decision Trees are tools that help choose between several courses of action or alternatives. They are represented as tree-shaped diagram used to determine a course of action or show a statistical probability. Each branch of the decision tree represents a possible decision or occurrence. The tree structure shows how one choice leads to the next, and the use of branches indicates that each option is mutually exclusive. A decision tree can be used by a manager to graphically represent which actions could be taken and how these actions relate to future events. 31 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Delphi Technique ► Group process using written responses ► Series of questionnaires ► Process ends when consensus is reached ► Responses may be anonymous 32 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Nominal Group Technique 1.Write down ideas 2.Data gathering 3.Discussions / clarifications 4.Voting for favorite ideas 33 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Payback Analysis ► Generally used in financial management ► Break even point analysis ► Objective : choose alternative with quickest payback of initial cost 34 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Marginal Analysis ► Weighs benefits of an input or activity against the costs ► Emphasis on ROI 35 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions 36 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Decision Matrix. When dealing with multiple choices and variables, a decision matrix can bring clarity to the disarray. A decision matrix is similar to a pros/cons list, but it allows decision maker to place a level of importance on each factor. That way, decision maker can more accurately weigh the different options against each other. The following are the steps to create decision matrix: 1. List decision alternatives as rows 2. List relevant factors as columns 3. Establish a consistent scale to assess the value of each combination of alternatives and factors 4. Determine how important each factor is towards making your final decision and assign weights accordingly 5. Multiply your original ratings by the weighted rankings 6. Add up the factors under each decision alternative 7. The option that scores the highest wins 37 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions 38 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions Pareto Analysis. It is a statistical technique in decision making that is used for the selection of a limited number of tasks that produce significant overall effect. It uses the Pareto Principle (also known as the 80/20 rule) the idea that by doing 20% of the work you can generate 80% of the benefit of doing the whole job. Or in terms of quality improvement, a large majority of problems (80%) are produced by a few key causes (20%). This is also known as the vital few and the trivial many. 39 ©2017 Batangas State University  Tools and Techniques for Making Better Decisions 40 ©2017 Batangas State University  Don’t let your emotions make your decisions. ©2017 Batangas State University 41 ENGG 406 ENGINEERING MANAGEMENT CHAPTER 3: PLANNING / COORDINATING TECHNICAL ACTIVITIES Engr. Archangel Michael Bool Lecturer  CHAPTER OBJECTIVES ► Define the meaning of planning ► Determine the planning roles of Engineering Managers ► Assess the planning activities 2  PLANNING ► Selecting the best course of action in anticipation of future trends so that the desired result may be achieved ► the management function that involves anticipating future trends and determining the best strategies and tactics to achieve organizational objectives ► the selection and sequential ordering of tasks required to achieve an organizational goal ► deciding what will be done, who will do it, where, when, and how it will be done,” and the standards to which it will be done 3  TYPES OF PLANNING ► Strategic Planning ► Operational Planning 4  PLANNING ROLES OF ENG’G MANAGERS ► Analyzing hard data ► Offering alternative interpretations of the data available ► Raining insightful questions to challenge conventional assumptions ► Communicating the resulting outputs of planning to help effectuate buy-in from 5 others  PLANNING TASKS ► Time Management ► Projects and Programs ► Corporate know-how 6 ► Other Proactive tasks  PLANNING TASKS ► Proactive Tasks ▪ Utilizing new technologies to simplify and enhance the products and services of the company. ▪ Creating business networks and searching for partners to form mutually beneficial alliances. ▪ Offering new or enhanced services to customers (e.g., self-service, an information on-demand system, and an Internet-based inquiry center). 7  PLANNING TASKS ► Proactive Tasks (continued) ▪ Initiating new programs to promote healthy customer relationships. ▪ Developing novel products/services with distinguishable attributes (e.g., product customization to serve customers better, cheaper, and faster). ▪ Reengineering and simplifying specific operational processes to increase efficiency. ▪ Outsourcing specific tasks to augment cost-effectiveness 8 and to reduce time to market  PLANNING TOOLS ► Market research ► SWOT Analysis ► Financial What-IF Analysis and Modeling ► Scenario Planning ► Performance Benchmarks 9  PLANNING TOOLS ► Scenario Planning ▪ Define the scope ▪ Identify the major stakeholders ▪ Identify basic trends ▪ Identify key uncertainties ▪ Construct initial scenario themes ▪ Check for consistency and plausibility ▪ Develop learning scenarios ▪ Identify research needs ▪ Develop qualitative models ▪ Evolve toward decision scenarios 10  PLANNING TOOLS ► Performance Benchmarks ▪ Customer related measures ▪ Process related measures ▪ Financial measures ▪ Employee related measures ▪ Competition-related measures 11  TECHNOLOGY FORECASTING ► Technology forecasting is of critical importance to those companies whose products are composed of high-technology components. Companies must constantly examine, monitor, and apply emerging technologies to enhance business performance. 12  PRODUCT LIFE-CYCLE The term product life cycle refers to the length of time a product is introduced to consumers into the market until it's removed from the shelves. The life cycle of a product is broken into four stages—introduction, growth, maturity, and decline. 13  PLANNING ACTIVITIES - FORECASTING Estimate and predict future conditions and events Define potential obstacles and opportunities 1. Identify : Critical factors with significant effect on profitability 2. Determine : forecasting horizon (short term, intermediate term, long term) 3. Select : the forecasting method to use 14  PLANNING ACTIVITIES – ACTION PLANNING The process of establishing specific objectives, action steps, and a schedule and budget related to a predetermined program, task, or project 1. Analyze critical needs 2. Define specific objectives 3. Define standards 4. Define key action steps 5. Create a schedule 6. 15 Develop a budget  PLANNING ACTIVITIES – ISSUING POLICIES Corporate rules and regulations are used to prescribe acceptable practices employee hiring and termination, equal employment opportunity (EEO) policies, annual performance appraisals, savings plans, benefits, medical insurance, pension plans, sick leave, safety, 16 contact with representatives of competitors  STRATEGIES FOR MANAGING TECHNOLOGY Who should do the planning Assumptions Resistance to change Benefit versus Cost Small but Sure Steps Contingency Planning Commitment 17 ENGG 406 : ENGINEERING MANAGEMENT CHAPTER 4 : ORGANIZING Engr. Archangel Michael Bool Lecturer  LEARNING OBJECTIVES 1. Explain different organizational structures 2. Select appropriate type of organizational structure for managing business successfully in a global context. 3. Describe the use and value of team 2  LEGAL FORMS OF ORGANIZATION Sole Limited Liability Partnership Corporations Cooperatives Proprietorship Company Owned by Association of Owners have Legal entity Special type one person two or more limited owned by of Owner is free partners personal shareholders organization to take all liability for the owned by decisions debts members or customers 3  ORGANIZING Organizing is the establishment of effective authority relationships among selected work, persons and work places in order for the group to work together efficiently. Or the process of dividing work into sections and departments. 4  PATTERNS OF DEPARTMENTATION Hierarchical organization is an organizational structure where every entity in the organization, except one, is subordinate to a single other entity. This arrangement is a form of a hierarchy President YOU Operations Finance HR E1 E2 E3 Manager Manager Manager Basic Organization Functional Departmentation 5  PATTERNS OF DEPARTMENTATION President VP VP President VP Sales Operations Finance VP VP VP Sales NL Area Finance Operations SL Area Skin Care Hair Care Division Division NCR Product Departmentation VISMIN Geographical Departmentation 6  PATTERNS OF DEPARTMENTATION 7  TYPES OF ORGANIZATIONAL STRUCTURE 1. Functional organization – this is a form of departmentalization in which everyone engaged in one functional activity, such as engineering or marketing, is grouped into one unit. 2. Product or market organization – this refers to the organization of a company by divisions that bring together all those involved with a certain type of product or customer. 3. Matrix organization – an organizational structure in which each employee reports to both a functional or division manager and to a project or group manager. 8  FUNCTIONAL ORGANIZATION Functional organizations have certain advantages. 1. The groupings of employees who perform a common task permit economies of scale and efficient resource use. 2. Since the chain of command converges at the top of the organization, decision making is centralized, providing a unified direction from the top. 3. Communication and coordination among employees within each department are excellent. 4. The structure promotes high-quality technical problem-solving. 5. The organization is provided with in depth skill specialization and development. 6. Employees are provided with career progress within functional departments. 9  FUNCTIONAL ORGANIZATION The disadvantages of the functional organization are the following: 1. Communication and coordination between the departments are often poor. 2. Decisions involving more than one department pile up at the top management level and are often delayed. 3. Work specialization and division of labor, which are stressed in a functional organization, produce routine, non-motivating employee tasks. 4. It is difficult to identify which section or group is responsible for certain problems. 5. There is limited view of organizational goals by employees 6. There is limited general management training for employees. 10  PRODUCT OR MARKET ORGANIZATION The advantages of a product or market organization are as follows: 1. The organization is flexible and responsive to change. 2. The organization provides a high concern for customer’s needs. 3. The organization provides excellent coordination across functional departments. 4. There is easy pinpointing of responsibility for product problems. 5. There is emphasis on overall product and division goals. 6. The opportunity for the development of general management skills is provided. 11  PRODUCT OR MARKET ORGANIZATION The disadvantages of the product or market organization are as follows. 1. There is a high possibility of duplication of resources across divisions. 2. There is less technical depth and specialization in divisions. 3. There is poor coordination across divisions. 4. There is less top management control. 5. There is competition for corporate resources. 12  MATRIX ORGANIZATION The matrix organization is afforded with the following advantages: 1. There is more efficient use of resources than the divisional structure. 2. There is flexibility and adaptability to changing environment. 3. The development of both general and functional management skills are present. 4. There is interdisciplinary cooperation and any expertise is available to all divisions. 5. There are enlarged tasks for employees which motivate them better 13  MATRIX ORGANIZATION The matrix organization has some disadvantages, however. 1. There is frustration and confusion from dual chain of command. 2. There is high conflict between divisional and functional interests. 3. There are many meetings and more discussion than action. 4. There is a need for human relations training for key employees and managers. 5. There is a tendency for power dominance by one side of the matrix. 14  SPAN OF CONTROL Span of control, also called span of management, is the term used in business management, particularly human resource management. The term refers to the number of subordinates or direct reports a supervisor is responsible for. 15  SPAN OF CONTROL 16  SPAN OF CONTROL - CONSIDERATIONS Subordinate training Nature of jobs supervised Rate of change of activities and personnel Clarity of instruction and delegation Staff assistance 17  SPAN OF CONTROL Which is better, narrow or wide span of control? 18  ORGANIZATIONAL CULTURE Organizational culture includes an organization’s expectations, experiences, philosophy, as well as the values that guide member behavior, and is expressed in member self-image, inner workings, interactions with the outside world, and future expectations. Culture is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid. Culture also includes the organization’s vision, values, norms, systems, symbols, language, assumptions, beliefs, and habits (Needle, 2004). Simply stated, organizational culture is “the way things are done around here” (Deal & Kennedy, 2000). 19  GUIDELINES TO CULTURE CHANGE Formulate a clear strategic vision. This vision gives the intention and direction for the future culture change. Display top-management commitment. The top of the organization must favor the culture change in order to actually implement the change in the rest of the organization. Model culture change at the highest level. The behavior of the management needs to symbolize the kinds of values and behaviors that should be realized in the rest of the company. Change agents are keys to the success of this cultural change process and important communicators of new values 20  GUIDELINES TO CULTURE CHANGE Modify the organization to support organizational change. This includes identifying what current systems, policies, procedures and rules need to be changed so alignment with the new values and desired culture can be achieved. Select and socialize newcomers and terminate deviants. Encouraging employee motivation and loyalty to the company will create a healthy culture. Training should be provided to all employees to help them understand the new processes, expectations, and systems. Develop ethical and legal sensitivity. This step can identify obstacles of change and resistant employees, and acknowledge and reward employee improvement, encouraging continued change and involvement. 21  ENGG 406 : ENGINEERING MANAGEMENT CHAPTER 5 : STAFFING Engr. Archangel Michael Bool Lecturer  STAFFING Staffing is a significant function of the management which involves manning the organization structure through proper and effective selection, appraisal and development of the personnel to fill the roles assigned in the workforce in order to make positive impacts on the effectiveness of the organization. ‘putting people to jobs’ 2  STAFFING PROCESS Human Introduction Training and Performance Employment Resource Recruitment Selection and Development Appraisal Decisions Separation Planning Orientation 3  HUMAN RESOURCE PLANNING Also called as Manpower Planning is the process of forecasting the future human resource requirements of the organization and determining as to how the existing human resource capacity of the organization can be utilized to fulfill these requirements. 4  HUMAN RESOURCE PLANNING Analyzing the Creating Developing Design Evaluation current future manpower Employment Training and manpower Programs inventory. Programs Control. forecasts 5  RECRUITMENT “Recruitment is the process of searching prospective employees and stimulating them to apply for the jobs in the organization.” 6  SOURCES OF RECRUITMENT Internal Sources External Sources Promotion Newspaper advertising Succession Planning Recruitment Firms or Agencies Referral from employees From colleges or universities Direct Recruitment Competitors  SELECTION Selection refers to the process of choosing the most suitable person for the current position or for future position from within the organization or from outside the organization. 8  SELECTION PROCEDURE Final Selection Interviewing Checking References on Administering Investigation of Tests Previous History Preliminary Interview Sending the Blank Receiving application and form screening the application 9  INDUCTION AND ORIENTATION 10  TRAINING AND DEVELOPMENT Training refers to the “learning that is provided in order to improve performance on the present job”. Training leads to overall personal development. Training is required to be given to new employees as well as existing employees. 11  PERFORMANCE APPRAISAL Performance appraisal is the judgment of an employee’s performance in a job. It is also called a merit rating. 12  PERFORMANCE MEASURES : METHODS Ranking Method Rating Scale Method Grading Method Essay Method Management by Objectives (MBO) Assessment Centers Checklist Method Work Standard Method 360 – Degree Appraisal 13  EMPLOYEMNT DECISIONS 1. Monetary Reward – this is given to employees whose performance is at par or above standard requirements. 2. Promotion – this refers to a movement by a person into a position of higher pay and greater responsibilities and which is given to a reward for competence and ambition. 3. Transfer – this is the movement of the person to a different job at the same or similar level of responsibility in the organization. 4. Demotion – this is a movement from one position to another which has less pay or responsibility attached to it. This is also a form of punishment. 14  EMPLOYEE SEPARATION It is the last step in the process of staffing. It means separating the employees from their job. Employee separation is a sensitive issue for any organization. Separation is either a voluntary or involuntary termination of an employee. 15  EMPLOYEE SEPARATION Employee Separation Voluntary Involuntary Voluntary Transfer by Resignation Dismissal Termination Suspension Retrenchment Retirement Layoff Transfer Retirement request 16