Engineering Economics Lecture 1 PDF

Engineering Economics Part 1 Plant Management Lec 1 Instructor : Engr. Almas Abrar Management An effort to manage all the devices of the organization to achieve desired goals. PO3C 6Ms EE The Origin of Management Theory Every country undergoes industrialization. It occur...

Engineering Economics Part 1 Plant Management Lec 1 Instructor : Engr. Almas Abrar Management An effort to manage all the devices of the organization to achieve desired goals. PO3C 6Ms EE The Origin of Management Theory Every country undergoes industrialization. It occurred in the United Kingdom in the mid-19th century. The industrial revolution sparked great debate about management theory. It’s a key turning point in the history of management. The industrial revolution led to the creation of several different concepts of management. Many came about in the years that followed. Though these concepts evolve, they’re still relevant in the modern age.  Scientific Management Theory Frederick W. Taylor a mechanical engineer, was the earliest proponents of management theory who authored The Principles of Scientific Management in 1909. The systematic study of the relationships between people and tasks for the purpose of redesigning the work process for higher efficiency. This theory argued the simplification of jobs, to enhance productivity and that managers and employees must work together. Frederick Winslow Taylor – Scientific Management Theory  Fair pay for a fair day’s work. Taylor also created four principles of 1 2 4 3 management as part of his work. These are: Split Assi Opti Mo ting gnin miz of g of nito task task atio rin s s n g Administrative Management Theory  Having started his career at a French mining company at the age of 19, Fayol rose up the ranks. In time, he became the company’s director, managing over 1,000 people.  “Administration Industrielle et Générale” “14 Principles of Management”.  Fayol developed his 14 principles while working in his directorship. As a result, they came from the direct experience of a man who had been there and done it all.  Henri Fayol – Administrative Management Theory  Fayol’s principles focused less on science. Instead, he looked at how to create an efficient company structure.  Increasing productivity by emphasizing organizational structure and human behavior.  Fayol also believed that all employees should only have one direct manager.  Fayol’s book became one of the key leadership tools in the history of management. Even today, his 14 principles of management agree with most modern organization's aims. 14 Principles of Henry Fayol Bureaucratic Management Theory  Max Weber, a German scientist, defines bureaucracy as a highly structured, formalized, and also an impersonal organization.  Two elements of the theory  Hierarchy of leadership.  Firm rules, procedures, and regulations to maintain control. Rise of technology could lead to a toxic workplace culture. He differs from many management theorists because of this focus on the negatives. Bureaucratic Management Theory Weber’s bureaucratic theory argues for the following: Detailed record-keeping at all levels of an organization Organizations must only hire employees who are fit for the job in question. All organisations should have clear hierarchies. The standardisation of common procedures. Employees must have clear job roles so they maintain their focus. Human Relations Management Theory Money was the main influencer of employee performance. For five years, Mayo studied employees at Chicago’s Western Electric Hawthorne Works. He placed his focus on workplace conditions, and how they affected productivity. His study found that relationships work as a key motivator for employees. Professor Elton Mayo – Human Relations Management Theory The humanistic way of managing people in an organization. It holds the belief that valuing employees' feelings, emotions, needs, and attitudes, prompting teamwork, employee participation, non-directive supervision, good relationships between managers and workers, etc. When working as part of a team, people become more productive. Professor Elton Mayo – Human Relations Management Theory  The following are the four combinations of Mayo theory and the effect of each on team dynamics: 1. Groups with low norms and low cohesiveness are ineffective; they have no impact, since none of the members are motivated to excel, according to Mayo's theory. 2. Groups with low norms and high cohesiveness have a negative impact, since fellow members encourage negative behavior (e.g., gangs). 3. Groups with high norms and low cohesiveness have some degree of positive impact through individual member accomplishments. 4. Groups with high norms and high cohesiveness have the greatest positive impact, Mayo's theory predicts, since group members encourage one another to excel. Elton Mayo Matrix General System Theory A biologist, Ludwig von Bertalanffy wasn’t a management theorist.  His general theory related more to biology than management. Even so, his work in the 1940s proved instrumental in the history of management. He argued that all systems are the sums of their parts. General System Theory Organizations contain several departments. Beyond this, he also argued that each element in a system reacts to its environment. Though a biological theory at first, general system theory applies to so much more. In fact, it’s at the root of many modern managerial theories. X & Y Management Theory  In 1960, Douglas McGregor published “The Human Side of Enterprise”.  Presented two types of management: Theory X and Theory Y.  Two aspects of human behavior at work.  McGregor argued that Theory Y is the better choice of the two. Modern management bears his claims out as well. Though authoritarianism still exists, most don’t see it as the way to develop a healthy organisation. Theory Y forms the basis of most modern management theories X & Y Management Theory Theory Y built more directly from Mayo’s studies. Such managers take a much more positive approach to their people. They believe that teamwork leads to better results. Furthermore, Theory Y managers encourage professional development and give employees more responsibilities. They want to see initiative, which builds a positive workplace culture. X & Y Management Theory  Conclusion - The Final Word Here are the key takeaways: Modern management involves looking for more efficient processes. Teamwork plays a crucial role in employee motivation. All parts of an organization must work in harmony to achieve the collective goal. Remember that a great manager can DOUBLE the capacity of their people. Functions of Management Many management experts have discussed the functions of management. But there is no unanimity among them about the classification of managerial functions. The chief reason for this lack of unanimity is that the different management experts discussed the management functions by studying different organizations and from different angles. We give here the classifications given by some of the writers. Functions of Management Henry R.C. G.R. Koontz and Gulick and Fayol Davis Terry O’Donnell Urwiik Plannin Plann Plannin Plannin Planning Organizi g, g g, Organiz ing Organi Organiz ng Staffing ing Motiv ing Directin Comma zing, Staffing g nding ating, Activati , Coordina Coordin Contr ng, Directin ting Reportin ating g, Controll olling Control Controll g Budgetin ing , ling ing. g. Function # 1. Planning:  Planning is concerned with the determination of the objectives to be achieved and the course of action to be followed to achieve them.  How the work will be performed and where and how it has to be performed.  Decision-making as to what is to be done, how it is to be done, when it is to be done and by whom it is to done.  Planning helps in achieving the objectives efficiently and effectively.  Planning involves selecting of objectives and strategies, policies and programmes and procedures for achieving them. Function # 1. Planning: For any business activity, planning is a prerequisite for doing anything and also to ensure the proper utilization of the resources of the business concern to achieve the desired goals. Plans can be classified into standing plans and single-use plans. Standing plans include objectives, policies, procedures, methods and rules and single-use plans include budgets, programmes, strategies and projects. Function # 1. Planning: The process of planning consists of: Establishing objectives Making forecasts Formulating policies, procedures and rules Drawing programmes, schedules, budgets, etc. Planning follows a typical 4-W and 1-H formula: What ought to be done? Who shall do it? Where, action is necessary?  Why should we do it? How should we do it? Function # 2. Organizing:  According to Fayol, “to organise a business is to provide it with everything useful to its functioning — raw materials, tools, capital and personnel.”  Thus, organising involves bringing together the manpower and material resources for the achievement, of objectives laid down by the enterprise.  Organising involves the following process:  Determining and defining the activities involved in achieving the objectives laid down by the management;  Grouping the activities in a logical pattern;  Assigning the activities to specific positions and people; and  Delegating authority to their positions and people so as to enable them to perform the activities assigned to them. Function # 2. Organising: Organising function helps in increasing the efficiency of the enterprise. Further, by avoiding repetition and duplication of activities, it reduces the operation cost of the enterprise. But organising function can be useful to the enterprise only when there are clear and verifiable objectives and clear understanding of the activities needed to achieve the objectives and clear definition of the authority assigned to the managers at every level. Function # 2. Organising: The process of organizing involves: i. Identifying the activities necessary to achieve the objectives ii. Grouping the activities into manageable units iii. Assigning duties or tasks to appropriate individuals iv. Delegating necessary authority to individuals and fixing responsibilities for results v. Defining authority — responsibility relationships among individuals Function # 3. Staffing  Every enterprise is very much concerned with the quality of its people, especially its managers. The staffing function is concerned with this aspect of management. According to Harold Koontz and Cyril O’ Donell, “the managerial function of staffing involves manning the organisational structure through proper and effective selection, appraisal and development of personnel to fill the roles designed into the structure.”  Thus, the staffing functions involve:  Proper selection of candidates for positions;  Proper compensation  Proper training and development so as to enable them to discharge their organisational functions effectively; and  Proper evaluation of personnel. Function # 3. Staffing Staffing function is performed by every manager of the enterprise as he is actively associated with the recruitment, selection, training and appraisal of his subordinates. For example, the Board of Directors of the enterprise undertakes the staffing function by selecting and appraising the Chief Executive who, in turn, performs these functions in relation to his subordinates like divisional heads or departmental heads of the enterprise. Similarly, departmental heads or their subordinates also perform the staffing function. Function # 3. Staffing Staffing consists of the following activities: Manpower planning, i.e., determining the number and quality of employees required in organization –  Recruitment, selection and placement Training and development Appraisal, promotion and transfer  Employee remuneration, etc. Function # 3. Staffing Staffing function is a difficult managerial function because it is concerned with the selection of persons who are properly qualified and mentally well-adjusted to the situations. Directing is one of the important functions of management and is the art and process of getting things done. While other functions like planning, organising and staffing are merely preparations for doing the work, the directing function actually starts the work.  Function # 4. Directing  Directing denotes motivating, leading, guiding and communicating with subordinates on an ongoing basis in order to accomplish pre-set goals.  Employees are kept informed of all necessary matters by circulars, instructions, manuals, newsletters, notice-boards, meetings, participative mechanisms, etc., in order to enable the employees to accomplish the organizational goals.  The process of directing involves the following:  Issuing orders and instructions regarding the work to be performed.  Guiding, counseling, mentoring and educating the employees.  Supervising the work of employees on a regular basis.  Maintaining discipline among employees and rewarding those who perform their jobs efficiently.  Motivating the employees and inspiring subordinates to follow the orders and instructions.  Providing effective leadership to employees. Function # 4. Directing Directing is concerned with actuating the members of the organisation to work efficiently and effectively for the attainment of organisation goals. Directing involves the manager telling the subordinates how they have to perform jobs assigned to them. It is concerned with guiding, supervising and motivating the subordinates for achieving the enterprise objectives. According to Joseph Massie, “Directing concerns the total manner in which a manager influences the action of his subordinates. It is the final action of a manager in getting others to act after all preparations have been completed.” Function # 4. Directing  Directing consists of the following four sub- functions: a. Communication or issuing of orders and instructions to subordinates. A manager has to instruct the subordinates what to do, how to do it and when to do it. b. Guiding, energising and leading the subordinates to perform the work systematically and also building up among workers confidence and zeal in the work to be performed. c. Inspiring the subordinates to do work with interest and enthusiasm for the accomplishment of the enterprise’s objectives. d. Exercising supervision over the subordinates to ensure that the work done by them is in conformity with the objectives that are determined  Function # 5. Controlling: Controlling is related to all other management functions. It is concerned with seeing whether the activities have been or being performed in conformity with the plans.  According to Haimann, “Control is the process of checking to determine whether or not, proper progress is being made towards the objectives and goals and acting if necessary to correct any deviation.”  Koontz and O’Donnell have defined controlling “as the measurement and correction of the performance of activities of subordinates in order to make sure that enterprise’s objectives and the plans devised to attain them are being accomplished.” Function  # 5. Controlling: Thus, controlling involves the following sub- functions:  Determination of standards for measuring work performance.  Measurement of actual performance.  Comparing actual performance with the standards.  Finding variances between the two and reasons for variances.  Taking corrective actions to ensure attainment of objectives.  For control to be effective and fruitful, it must be based on a plan; there must be measurement of actual performance to ascertain deviations and to take action to remedy the deviations. Management Process | Functions of Manage ment process - YouTube