Cebu Technological University – Main Campus

M.J. Cuenco Ave., Corner R. Palma St., Cebu City

ES 521
ENGINEERING MANAGEMENT
MODULE

A module prepared in completion for the

Civil Engineering requirements submitted by:

Manuel Christian I. Ruiz

BSCE 5-4

Approved by and submitted To:

Engr. Jeonel S. Lumbab

Instructor

May 2019
 TABLE OF CONTENTS

Chapter Page

1. Introduction to Engineering Management 3

2 . Decision Making 5

3. Functions Management

3.1 Planning 9

3.2 Organizing 12

3.3 Staffing 15

3.4 Directing 19

3.5 Motivating 22

3.6 Leading 27

3.7 Controlling 29

4. Managing Product and Service Operations 33

5. Managing the Marketing Function 38

6. Managing the Finance Function 40

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 Chapter I

Introduction to Engineering Management

What is a Management?

Management (or managing) is the administration of an organization, whether it is a business, a

not-for-profit organization, or government body. Management includes the activities of setting

the strategy of an organization and coordinating the efforts of its employees (or of volunteers) to

accomplish its objectives through the application of available resources, such

as financial, natural, technological, and human resources.

What Is an Engineering Management?

Engineering Management is a specialized form of management that is required to successfully

lead engineering or technical personnel and projects. The term can be used to describe either functional

management or project management.

Engineering managers typically require training and experience in both general management and

the specific engineering disciplines that will be used by the engineering team to be managed.

The successful engineering manager must have the skills necessary to coach, mentor and

motivate technical professionals; skills which are often very different from those required the effectively

manage individuals in other fields.

What is a Manager?

A manager is someone whose primary responsibility is to carry out management process. In

particular, is someone who plans and makes decision, organize, leads, and controls human, financial,

physical and information resources.

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 Successful engineer managers do not happen as a matter of chance, although luck is a

contributory factor. It is very important for the manager to know the various factors leading to successful

management, and these are as follows:

1. Ability – the capacity of a manager to achieve organizational objectives effectively and

efficiently.

2. Motivation to Manage – a successful manager should find a good motivation to manage people

so that they could finish their assigned tasks.

3. Opportunity – successful manager become possible only if those having the ability and

motivation are given the opportunity to manage.

Types Of Managers

There are three types of managers and these are:

1. Senior Managers- are the Board of Directors and the President or the Chief Executive Officer of

an organization. These managers set strategic goals for an organization and take decisions in the

operation of the organization. Senior managers manage and control middle managers who report

to them indirectly or directly. Managers in this level are mostly the executive-level professionals.

2. Middle Managers- are generally branch managers, department managers, section managers, and

regional managers who assist the front-line managers. Middle managers correspond the strategic

goals of the senior managers to the front-line managers.

3. Lower Managers- are front-line team leaders and supervisors, who monitor the jobs of regular

employees and assist with directions to their work.

In Small enterprises, individual managers have multi-tasks. One manager may perform numerous roles or

at times all roles perceived in larger organizations.

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 Chapter II

Decision Making

What is Decision Making

According to Trewatha & Newport, “Decision-making involves the selection of a course of action

from among two or more possible alternatives in order to arrive at a solution for a given problem”.

As evidenced by the foregone definitions, decision making process is a consultative affair done

by a comity of professionals to drive better functioning of any organization. Thereby, it is a continuous

and dynamic activity that pervades all other activities pertaining to the organization. Since it is an

ongoing activity, decision making process plays vital importance in the functioning of an organization.

Since intellectual minds are involved in the process of decision making, it requires solid scientific

knowledge coupled with skills and experience in addition to mental maturity.

Factors Influencing Decision Making

1. Time Pressures:

An important influence on the quality of decisions is how much time the decision maker has in

which to make the decisions. Unfortunately, managers must make most of their decisions in time frames

established by others. Lack of time can force a manager to decide without gathering important facts or

exploring possible solutions thoroughly.

2. Manager’s Values:

Manager’s values have a significant influence on the quality of decisions. Values are the likes,

dislikes, should, ought, judgments and prejudices that determine how we shall act. The value orientations

of management underlie much of their behaviour. The decisions managers make in identifying their

mission, objectives and strategies, and how managers interpret society’s expectations also reflect their

values.

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3. Organizational Policy:

Decisions are limited by the policies that higher managers develop to guide the actions of the

organization. Decisions that clearly violated policies will be rejected automatically. Some managers

argue, of course to change the policy to fit the decision if the decision seems sound.

This is good thinking, except that policies cannot be changed overnight. It is usually an easier and

more practical course to alter the proposed decision.

4. Other Factors:

The decision-making process is not only influenced by the above-stated factors but a host of

others too.

Steps of the Decision Making Process

The following are the seven key steps of the decision making process.

1. Identify the decision. The first step in making the right decision is recognizing the problem or

opportunity and deciding to address it. Determine why this decision will make a difference to

your customers or fellow employees.

2. Gather information. Next, it’s time to gather information so that you can make a decision based

on facts and data. This requires making a value judgment, determining what information is

relevant to the decision at hand, along with how you can get it. Ask yourself what you need to

know in order to make the right decision, then actively seek out anyone who needs to be

involved.

“Managers seek out a range of information to clarify their options once they have identified an

issue that requires a decision. Managers may seek to determine potential causes of a problem, the people

and processes involved in the issue and any constraints placed on the decision-making process,” Chron

Small Business says.

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 3. Identify alternatives. Once you have a clear understanding of the issue, it’s time to identify the

various solutions at your disposal. It’s likely that you have many different options when it comes

to making your decision, so it is important to come up with a range of options. This helps you

determine which course of action is the best way to achieve your objective.
4. Weigh the evidence. In this step, you’ll need to “evaluate for feasibility, acceptability and

desirability” to know which alternative is best, according to management experts Phil Higson

and Anthony Sturgess. Managers need to be able to weigh pros and cons, then select the option

that has the highest chances of success. It may be helpful to seek out a trusted second opinion to

gain a new perspective on the issue at hand.

5. Choose among alternatives. When it’s time to make your decision, be sure that you understand

the risks involved with your chosen route. You may also choose a combination of alternatives

now that you fully grasp all relevant information and potential risks.
6. Take action. Next, you’ll need to create a plan for implementation. This involves identifying

what resources are required and gaining support from employees and stakeholders. Getting others

onboard with your decision is a key component of executing your plan effectively, so be prepared

to address any questions or concerns that may arise.

7. Review your decision. An often-overlooked but important step in the decision making process is

evaluating your decision for effectiveness. Ask yourself what you did well and what can be

improved next time.

“Even the most experienced business owners can learn from their mistakes … be ready to adapt your

plan as necessary, or to switch to another potential solution,” Chron Small Business explains. If you find

your decision didn’t work out the way you planned, you may want to revisit some of the previous steps to

identify a better choice.

Common Challenges of Decision Making

Although following the steps outlined above will help you make more effective decisions, there

are some pitfalls to look out for. Here are common challenges you may face, along with best practices to

help you avoid them.

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 1. Having too much or not enough information. Gathering relevant information is key when

approaching the decision making process, but it’s important to identify how much background

information is truly required. “An overload of information can leave you confused and

misguided, and prevents you from following your intuition,” according to Corporate Wellness

Magazine.

In addition, relying on one single source of information can lead to bias and misinformation, which

can have disastrous effects down the line.

2. Misidentifying the problem. In many cases, the issues surrounding your decision will be

obvious. However, there will be times when the decision is complex and you aren’t sure where

the main issue lies. Conduct thorough research and speak with internal experts who experience

the problem firsthand in order to mitigate this. It will save you time and resources in the long

run, Corporate Wellness Magazine says.

3. Overconfidence in the outcome. Even if you follow the steps of the decision making process,

there is still a chance that the outcome won’t be exactly what you had in mind. That’s why it’s so

important to identify a valid option that is plausible and achievable. Being overconfident in an

unlikely outcome can lead to adverse results.

Decision making is a vital skill in the business workplace, particularly for managers and those in

leadership positions. Following a logical procedure like the one outlined here, along with being aware of

common challenges, can help ensure both thoughtful decision making and positive results.

Chapter III

Functions Of Management

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 Mainly, there are four functions in management. but, we can elaborate the functions into more

sections. A manager need to operate various functions to acquire organizational goal.

3.1 Planning

Planning is a management process. It is the first step of management function. Planning is how to do

a work, when have to do this work, who will do this work and by whom will do this work. Planning

means the process of achieving goals, development and establishment. Planning means deciding how best

to achieve goals, profit and applying best strategies.

Strategic Planning

Strategic planning is an organization’s process of defining its strategy or direction and making

decisions about allocating its resources to pursue this strategy. To determine the direction of the

organization, it is necessary to understand its current position and the possible avenues through which it

can pursue a particular course of action. Generally, strategic planning deals with at least one of three key

questions:

 What do we do?

 For whom do we do it?

 How do we excel?

The key components of strategic planning include an understanding of the firm’s vision, mission,

values, and strategies. (Often a “vision statement” and a ” mission statement ” may encapsulate the vision

and mission. )

1. Vision: This outlines what the organization wants to be or how it wants the world in which it

operates to be (an “idealized” view of the world). It is a long-term view and concentrates on the

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 future. It can be emotive and is a source of inspiration. For example, a charity working with the

poor might have a vision statement that reads “A World without Poverty.”

2. Mission: It defines the fundamental purpose of an organization or an enterprise, succinctly

describing why it exists and what it does to achieve its vision. For example, the charity above

might have a mission statement as “providing jobs for the homeless and unemployed.”

3. Values: These are beliefs that are shared among the stakeholders of an organization. Values drive

an organization’s culture and priorities and provide a framework in which decisions are made. For

example, “knowledge and skills are the keys to success,” or “give a man bread and feed him for a

day, but teach him to farm and feed him for life.” These example values place the priorities of self-

sufficiency over shelter.

4. Strategy: Strategy, narrowly defined, means “the art of the general”—a combination of the ends

(goals) for which the firm is striving and the means (policies) by which it is seeking to get there. A

strategy is sometimes called a roadmap, which is the path chosen to move towards the end vision.

The most important part of implementing the strategy is ensuring the company is going in the right

direction, which is towards the end vision.

Tools and Approaches

There are many approaches to strategic planning, but typically one of the following is used:

 Situation-Target-Proposal: Situation – Evaluate the current situation and how it came about.

Target – Define goals and/or objectives (sometimes called ideal state). Path/Proposal – Map a

possible route to the goals/objectives.

 Draw-See-Think-Plan: Draw – What is the ideal image or the desired end state? See – What is

today’s situation? What is the gap from ideal and why? Think – What specific actions must be

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 taken to close the gap between today’s situation and the ideal state? Plan – What resources are

required to execute the activities?

Types Of Plans

Plans are of different types. They may be classified in terms of functional areas, time horizon, and

frequency of use.

Functional Area Plans

Among the types of functional area plans are the following:

1. Marketing Plan – written document of organization’s marketing activities related to a particular

marketing strategy.

2. Production Plan – written document of the quantity of output of a company must produce in

broad terms and by product family.

3. Financial Plan – a document that finalizes the current financial situation of the firm, analyses

financial needs, and recommends a direction for financial activities.

4. Human Resource Management Plan – a document that indicates the human resource needs of a

company detailed in terms of quantity and quality.

Plans with Time Horizon

Plans with time horizon consist of the following:

1. Short-ranged Plans – plans intended to cover a period of less than one year.

2. Long-ranged Plans – plans covering a time span of more than one year.

Plans According to Frequency of Use

According to frequency of use, plans may be classified as:

1. Standing Plans – plans that are used again and again, and they focus on managerial situations

that recur repeatedly like policies, procedures and rules.

2. Single-use Plans – plans developed to implement courses of action that are relatively unique

and are unlikely to be repeated like budgets, programs and projects.

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3.2 Organizing

Organizing is the second function of management. it follows the planning. Organizing is a

management process that refers to the relationship between people,work and resources that is used to

achieve goals. In organizing system top management first fixes the common objective, way and resources.

In organizing the manager make different kind of department and mixed all the department for better

work.

Benefits of Organizing

While the planning function of managers is essential to reaching business goals, lots of careful

planning can go to waste if managers fail to organize the company’s assets and resources adequately.

Some of the benefits of organizing include the following:

 Organization harmonizes employees’ individual goals with the overall objectives of the firm. If

employees are working without regard for the big picture, then the organization loses the cohesion

necessary to work as a unit.

 A good organizational structure is essential for the expansion of business activities. Because

organizational structure improves tracking and accountability, that structure helps businesses

determine the resources it needs to grow. Similarly, organization is essential for product

diversification, such as the development of a new product line.

 Organization aids business efficiency and helps reduce waste. In order to maximize efficiency,

some businesses centralize operations while others arrange operations with customer or regional

demands in mind.

 A strong organizational structure makes “chain of command” clear so employees know whose

directions they should follow. This in turn improves accountability, which is important when

outcomes are measured and analyzed.

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 This is a short list of the benefits managers (and businesses) realize when they take the time to

organize. When it comes to the particular organizational structure a business follows, a variety of factors,

such as size, industry, and manager preference come into play.

Types of Organizational Structure

Organizations can be structured in various ways, with each structure determining the manner in which

the organization operates and performs. An organization’s structure is typically represented by

an organization chart (often called simply an “org chart”)—a diagram showing the interrelationships of its

positions. This chart highlights the chain of command, or the authority relationships among people

working at different levels.

 Divisional Structure

One way of structuring an organization is by division. With this structure, each organizational

function has its own division.

Each division can correspond to products or geographies of the organization. Each division contains all

the necessary resources and functions within it to support that particular product line or geography (for

example, its own finance, IT, and marketing departments). Product and geographic divisional structures

may be characterized as follows:

 Product departmentalization: A divisional structure organized by product departmentalization

means that the various activities related to the product or service are under the authority of one

manager. If the company builds luxury sedans and SUVs, for example, the SUV division will have

its own sales, engineering, and marketing departments, which are separate from the departments

within the luxury sedan division.

 Geographic departmentalization: Geographic departmentalization involves grouping activities

based on geography, such as an Asia/Pacific or Latin American division. Geographic

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 departmentalization is particularly important if tastes and brand responses differ across regions, as

it allows for flexibility in product offerings and marketing strategies (an approach known as

localization).

 Functional Structure

In a functional structure, a common configuration, an organization is divided into smaller groups by

areas of specialty (such as IT, finance, operations, and marketing). Some refer to these functional areas as

“silos”—entities that are vertical and disconnected from one another. Accordingly, the company’s top

management team typically consists of several functional heads (such as the chief financial officer and the

chief operating officer). Communication generally occurs within each functional department and is

transmitted across departments through the department heads.

One disadvantage of this structure is that the different functional groups may not communicate with

one another, which can potentially decrease flexibility and innovation within the business. Functional

structures may also be susceptible to tunnel vision, with each function seeing the organization only from

within the frame of its own operation. Recent efforts to counteract these tendencies include using teams

that cross traditional departmental lines and promoting cross-functional communication.

 Matrix Structure

The matrix structure is a type of organizational structure in which individuals are grouped by two

different operational perspectives at the same time; this structure has both advantages and disadvantages

but is generally best employed by companies large enough to justify the increased complexity.

A disadvantage of the matrix structure is the increased complexity in the chain of command when

employees are assigned to both functional and project managers. This arrangement can result in a higher

manager-to-worker ratio, which, in turn, can increase costs or lead to conflicting employee loyalties. It

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can also create a gridlock in decision making if a manager on one end of the matrix disagrees with

another manager. Blurred authority in a matrix structure can hamper decision making and conflict

resolution.

3.3 Staffing

After the organizing, the function of management is staffing. Employee are the most important

resource of any organization. The right staff is very important for a company because he can change and

ensure the organization future success. Staffing is like a function or term that refers recruitment, selection,

acquiring, training, appraising employees.

Functions of Staffing

1. The first and foremost function of staffing is to obtain qualified personnel for different jobs

position in the organization.

2. In staffing, the right person is recruited for the right jobs, therefore it leads to maximum

productivity and higher performance.

3. It helps in promoting the optimum utilization of human resource through various aspects.

4. Job satisfaction and morale of the workers increases through the recruitment of the right person.

5. Staffing helps to ensure better utilization of human resources.

6. It ensures the continuity and growth of the organization, through development managers.

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Importance of Staffing

Efficient Performance of Other Functions

For the efficient performance of other functions of management, staffing is its key. Since, if an

organization does not have the competent personnel, then it cannot perform the functions of management like

planning, organizing and control functions properly.

Effective Use of Technology and Other Resources

What is staffing and technology’s connection? Well, it is the human factor that is instrumental in the

effective utilization of the latest technology, capital, material, etc. the management can ensure the right kinds

of personnel by performing the staffing function.

Optimum Utilization of Human Resources

The wage bill of big concerns is quite high. Also, a huge amount is spent on recruitment, selection,

training, and development of employees. To get the optimum output, the staffing function should be

performed in an efficient manner.

Development of Human Capital

Another function of staffing is concerned with human capital requirements. Since the management is

required to determine in advance the manpower requirements. Therefore, it has also to train and develop the

existing personnel for career advancement. This will meet the requirements of the company in the future.

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The Motivation of Human Resources

In an organization, the behaviour of individuals is influenced by various factors which are involved

such as education level, needs, socio-cultural factors, etc. Therefore, the human aspects of the organization

have become very important and so that the workers can also be motivated by financial and non-financial

incentives in order to perform their functions properly in achieving the objectives.

Building Higher Morale

The right type of climate should be created for the workers to contribute to the achievement of the

organizational objectives. Therefore, by performing the staffing function effectively and efficiently, the

management is able to describe the significance and importance which it attaches to the personnel working in

the enterprise.

Characteristics of Staffing

People-Centered

Staffing can broadly view as people-centered function and therefore it is relevant for all types of organization.

It is concerned with categories of personnel from top to bottom of the organization.

 Blue collar workers (i.e., those working on the machines and engaged in loading, unloading etc.)

and white collar workers (i.e., clerical employees).

 Managerial and Non Managerial personal.

 Professionals (eg.- Chartered Accountant, Company Secretary)

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Responsibility of Manager

Staffing is the basic function of management which involves that the manager is continuously engaged in

performing the staffing function. They are actively associated with the recruitment, selection, training, and

appraisal of his subordinates. Therefore the activities are performed by the chief executive, departmental

managers and foremen in relation to their subordinates.

Human Skills

Staffing function is mainly concerned with different types of training and development of human resource

and therefore the managers should use human relation skill in providing guidance and training to the

subordinates. If the staffing function is performed properly, then the human relations in the organization will

be cordial and mutually performed in an organized manner.

Continuous Function

Staffing function is to be performed continuously which is equally important for a new and well-established

organization. Since in a newly established organization, there has to be recruitment, selection, and training of

personnel. As we compare that, the organization which is already a running organization, then at that place

every manager is engaged in various staffing activities.

Therefore, he is responsible for managing all the workers in order to get work done for the accomplishment

of the overall objectives of an organization.

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3.4 Directing

Directing is a process in which the managers instruct, guide and overview the performance of the

workers of a company to achieve goals. Directing is a very hard and heart task of management process. it

the function of Staffing. Planning, organizing, staffing have not any place if direction function does not

play its role properly.Directing is a continuous process that run its function at top level and flows to the

bottom with organizational hierarchy.

Direction has got following characteristics:

1. Pervasive Function - Directing is required at all levels of organization. Every manager provides

guidance and inspiration to his subordinates.

2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of

organization.

3. Human Factor - Directing function is related to subordinates and therefore it is related to human

factor. Since human factor is complex and behaviour is unpredictable, direction function becomes

important.

4. Creative Activity - Direction function helps in converting plans into performance. Without this

function, people become inactive and physical resources are meaningless.

5. Executive Function - Direction function is carried out by all managers and executives at all

levels throughout the working of an enterprise, a subordinate receives instructions from his

superior only.

6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human

behaviour is unpredictable by nature and conditioning the people’s behaviour towards the goals of

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 the enterprise is what the executive does in this function. Therefore, it is termed as having

delicacy in it to tackle human behaviour.

Importance of Directing

1. It Initiates Actions - Directions is the function which is the starting point of the work

performance of subordinates. It is from this function the action takes place, subordinates

understand their jobs and do according to the instructions laid. Whatever are plans laid, can be

implemented only once the actual work starts. It is there that direction becomes beneficial.

2. It Ingrates Efforts - Through direction, the superiors are able to guide, inspire and instruct the

subordinates to work. For this, efforts of every individual towards accomplishment of goals are

required. It is through direction the efforts of every department can be related and integrated with

others. This can be done through persuasive leadership and effective communication. Integration

of efforts bring effectiveness and stability in a concern.

3. Means of Motivation - Direction function helps in achievement of goals. A manager makes use

of the element of motivation here to improve the performances of subordinates. This can be done

by providing incentives or compensation, whether monetary or non - monetary, which serves as a

“Morale booster” to the subordinates Motivation is also helpful for the subordinates to give the

best of their abilities which ultimately helps in growth.

4. It Provides Stability - Stability and balance in concern becomes very important for long term

sun survival in the market. This can be brought upon by the managers with the help of four tools

or elements of direction function - judicious blend of persuasive leadership, effective

communication, strict supervision and efficient motivation. Stability is very important since that

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 is an index of growth of an enterprise. Therefore a manager can use of all the four traits in him so

that performance standards can be maintained.

5. Coping up with the changes - It is a human behaviour that human beings show resistance to

change. Adaptability with changing environment helps in sustaining planned growth and

becoming a market leader. It is directing function which is of use to meet with changes in

environment, both internal as external. Effective communication helps in coping up with the

changes. It is the role of manager here to communicate the nature and contents of changes very

clearly to the subordinates. This helps in clarifications, easy adaptions and smooth running of an

enterprise. For example, if a concern shifts from handlooms to powerlooms, an important change

in technique of production takes place. The resulting factors are less of manpower and more of

machinery. This can be resisted by the subordinates. The manager here can explain that the

change was in the benefit of the subordinates. Through more mechanization, production increases

and thereby the profits. Indirectly, the subordinates are benefited out of that in form of higher

remuneration.

6. Efficient Utilization of Resources - Direction finance helps in clarifying the role of every

subordinate towards his work. The resources can be utilized properly only when less of wastages,

duplication of efforts, overlapping of performances, etc. doesn’t take place. Through direction,

the role of subordinates become clear as manager makes use of his supervisory, the guidance, the

instructions and motivation skill to inspire the subordinates. This helps in maximum possible

utilization of resources of men, machine, materials and money which helps in reducing costs and

increasing profits.

What is a supervisor?

Supervisor has got an important role to play in factory management. Supervision means overseeing

the subordinates at work at the factory level. The supervisor is a part of the management team and he

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holds the designation of first line managers. He is a person who has to perform many functions which

helps in achieving productivity. Therefore, supervisor can be called as the only manager who has an

important role at execution level.

A supervisor plays multiplinary role at one time like -

1. As a Planner - A supervisor has to plan the daily work schedules in the factory. At the same time

he has to divide the work to various workers according to their abilities.

2. As a Manager - It is righty said that a supervisor is a part of the management team of an

enterprise. He is, in fact, an operative manager.

3. As a Guide and Leader - A factory supervisor leads the workers by guiding them the way of

perform their daily tasks. In fact, he plays a role of an inspirer by telling them.

4. As a Mediator - A Supervisor is called a linking pin between management and workers. He is the

spokesperson of management as well as worker.

5. As an Inspector - An important role of supervisor is to enforce discipline in the factory. For this,

the work includes checking progress of work against the time schedule, recording the work

performances at regular intervals and reporting the deviations if any from those. He can also

frame rules and regulations which have to be followed by workers during their work.

6. As a Counselor - A supervisor plays the role of a counselor to the worker’s problem. He has to

perform this role in order to build good relations and co-operation from workers. This can be

done not only by listening to the grievances but also handling the grievances and satisfying the

workers.

3.5 Motivating

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 Planning has been established and organization has begun now the motivation is necessary to carry

out the whole work. In management motivation refers ways in which managers promote the productivity

in their employees. Motivating is a manager's job to motivate employees to do their jobs well and fell to

perform well with happiness.

Internal and External Motivation

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 Salary is often enough to keep employees working for an organization, but it’s not always

necessarily enough to push them to fulfill their full potential. Herzberg’s theory emphasizes that while

salary is enough to avoid dissatisfaction, it is not necessarily enough to propel employees to increase their

productivity and achievement. In fact, the output of employees whose motivation comes solely from

salary and benefits tends to decline over time. To increase employees’ efficiency and work quality,

managers must turn to understanding and responding to individuals’ internal and external motivations.

External motives include work environment (e.g., cramped cubicle vs. airy, open office); internal

motivations include thoughts and emotions (e.g., boredom with performing the same task over and over

vs. excitement at being given a wide variety of project types).

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Internal and external motives: There are four sources of motivation. The three internal motives are

needs, cognitions, and emotions. The fourth source consists of external motives.

Perspectives on Motivation

From a managerial perspective, very few ideas are more important than the dynamics of

motivation. Understanding what moves employees toward efficiency and fulfillment is at the core of any

manager’s responsibilities. Motivation in the workplace is primarily concerned with improving

employees’ focus, often through pursuing positive incentives and avoiding negative ones.

Theories of motivation are of course rooted in psychology. An individual must direct their attention

toward a task, generate the necessary effort to achieve that task, and persist in working toward it despite

potential distractions.

 Needs-Oriented Theories

At its most basic, motivation can be defined as the fulfillment of various human needs. These needs can

encompass a range of human desires, from basic, tangible needs of survival to complex, emotional needs

surrounding an individual’s psychological well-being.

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  Hierarchy of Needs

The most well-known example of a needs-oriented theory of motivation is Maslow’s Hierarchy of Needs.

Maslow postulated that needs should be fulfilled in a particular scaffolded order, with food, water, and

shelter in the bottom, most fundamental two tiers and intangible needs such as fulfillment, self-esteem,

and a sense of belonging in the upper three tiers. While this framework makes a certain amount of logical

sense, critics have noted that there have been minimal data that suggest employees strive to satisfy needs

in the workplace in accordance with this hierarchical framework. But the fundamental idea behind

Maslow’s model is that individuals have various tangible and intangible desires that can be leveraged in

the use of motivational incentives.

 Need for Achievement Theory

Atkinson and McClelland proposed the Need for Achievement Theory, which highlights three particular

needs in the context of the workplace: achievement, authority, and affiliation. Atkinson and McClelland

hypothesized that every individual has a need for all three of these intangible segments of fulfillment but

that most individuals lean more toward one of the three. For example, a salesman with a quota to fulfill

would be best paired with an achievement-oriented manager, as such a goal-oriented approach toward, for

example, a specific number of sales would be highly motivating.

 Cognition-Oriented Theories

Cognition-oriented theories generally revolve around expectations and deriving equitable compensation

for a given effort or outcome. There are two main cognition-oriented theories: equity theory and

expectancy theory.

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  Equity Theory

Equity Theory is based on the basic concept of exchange. It values the culmination of employee

experience, skills, and performance against their respective compensation and advancement opportunities.

 Expectancy Theory

Expectancy Theory is similarly derived, but it states this relationship through an equation: Motivation =

Expectation (Σ Instrumentality × Valence ). Instrumentality simply refers to the belief that a level of

performance will result in a level of outcome; valence refers to the value of that outcome.

Essentially, Expectation Theory and Equity Theory demonstrate the value of rewarding an employee’s

investment of time and effort with appropriate compensation.

 Behavior-Oriented Theories

The underlying concept of behavioral approaches to motivation is rooted in theories of “conditioning,”

particularly the work of psychologist B.F. Skinner. Behaviorism stipulates that an employer should

promote positive behavior and deter negative behavior, generally through a basic rewards system.

Variable compensation, as found in many sales jobs, is a prime example of this concept. When an

employee makes a sale, the employer provides a certain portion of income to the employee that executed

that sale. This positive reinforcement serves as a behavior modifier, motivating the employee to repeat

this behavior and make more sales.

 Job-Oriented Theories

Job-oriented theories adhere to the view that employees are motivated to complete tasks effectively

because of an innate desire to be fulfilled or to contribute and that compensation and other forms of

incentives are less important to them.

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  Two-Factor Theory

Frederick Herzberg’s Two-Factor Theory is the most well known of the job-oriented theories, despite the

fact that it has not been supported by empirical evidence. Herzberg states that salary, benefits, status, and

other tangible benefits for employees can only reduce dissatisfaction and that intangibles—such as

autonomy, natural interest, recognition, and the responsibility of the work itself—are the true basis of

motivation.

 Work Engagement Theory

Other theories, such as Work Engagement Theory, similarly propose that intellectually fulfilling and

emotionally immersive work is the foundation of a motivated workforce.

3.6 Leading

The third basic managerial function is leading. The skills of influencing people for a particular

purpose or reason is called leading. Leading is considered to be the most important and challenging of all

managerial activities.Leading is influencing or prompting the member of the organization to work

together with the interest of the organization.Creating a positive attitude towards the work and goals in

among the members of the organization is called leading. It is required as it helps to serve the objective of

effectiveness and efficiency by changing the behavior of the employees.Leading involves a number of

deferment processes and activates.

Bases of Power

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 The power possessed by leaders may be classified according to various bases. They are as

follows:

1. Legitimate Power – A person who occupies a higher position has legitimate power over

persons in lower positions within the organization.

2. Reward Power – When a person has the ability to give rewards to anybody who follows

orders or requests, he is said to have reward power.

3. Coercive Power – When a person compels another to comply with orders through threats or

punishment, he is said to possess coercive power. Punishment may take the form of

demotion, dismissal, withholding of promotion, etc.

4. Referent Power – When a person can get compliance from another because the latter would

want to be identified with the former, that person is said to have referent power.

5. Expert Power – Experts provide specialized information regarding their specific lines of

expertise. This influence, called expert power, is possessed by people with great skills in

technology.

Leadership Skills

Leaders need to have various skills to be effective. They are:

1. Technical Skills – These are skills a leader must possess to enable him to understand and

make decisions about work processes, activities, and technology.

2. Human Skills – These skills refer to the ability of a leader to deal with people, both inside and

outside the organization.

3. Conceptual Skills – These skills refer to the ability to think in abstract terms, to see how parts

for together to form the whole.

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Difference between Managing and Leading

Managing Leading

Doing things right Doing the right things

Urgency Importance

Speed Direction

Bottom Line Top Line

Efficiency Effectiveness

Methods Purpose

Practices Principles

In the System On the System

3.7 Controlling

Controlling is the last step in the management functions process. This process is simply steps of

manager to determine whether organizational goals have been met. Controlling is a continuous and

forward looking process which is the standard of measurement of a company or organization. There is a

close link in planning and controlling in management function process.

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 A manager requires to do prediction, taking decision, determining controlling area etc various type of

functions along with regular functions which are discussed above. In one word, all the tasks are

completed by the manager to achieve goal are the functions of management.

Features of Controlling Function

Following are the characteristics of controlling function of management:

1. Controlling is an end function- A function which comes once the performances are made in

confirmities with plans.

2. Controlling is a pervasive function- which means it is performed by managers at all levels and

in all type of concerns.

3. Controlling is forward looking- because effective control is not possible without past being

controlled. Controlling always look to future so that follow-up can be made whenever required.

4. Controlling is a dynamic process- since controlling requires taking reviewal methods, changes

have to be made wherever possible.

5. Controlling is related with planning- Planning and Controlling are two inseperable functions of

management. Without planning, controlling is a meaningless exercise and without controlling,

planning is useless. Planning presupposes controlling and controlling succeeds planning.

Process of Controlling

1. Establishment of standards- Standards are the plans or the targets which have to be achieved in

the course of business function. They can also be called as the criterions for judging the

performance. Standards generally are classified into two-

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 a. Measurable or tangible - Those standards which can be measured and expressed are

called as measurable standards. They can be in form of cost, output, expenditure, time,

profit, etc.

b. Non-measurable or intangible- There are standards which cannot be measured monetarily.

For example- performance of a manager, deviation of workers, their attitudes towards a

concern. These are called as intangible standards.

Controlling becomes easy through establishment of these standards because controlling is

exercised on the basis of these standards.

2. Measurement of performance- The second major step in controlling is to measure the

performance. Finding out deviations becomes easy through measuring the actual performance.

Performance levels are sometimes easy to measure and sometimes difficult. Measurement of

tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative

measurement becomes difficult when performance of manager has to be measured. Performance

of a manager cannot be measured in quantities. It can be measured only by-

a. Attitude of the workers,

b. Their morale to work,

c. The development in the attitudes regarding the physical environment, and

d. Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports.

3. Comparison of actual and standard performance- Comparison of actual performance with the

planned targets is very important. Deviation can be defined as the gap between actual

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 performance and the planned targets. The manager has to find out two things here- extent of

deviation and cause of deviation. Extent of deviation means that the manager has to find out

whether the deviation is positive or negative or whether the actual performance is in conformity

with the planned performance. The managers have to exercise control by exception. He has to

find out those deviations which are critical and important for business. Minor deviations have to

be ignored. Major deviations like replacement of machinery, appointment of workers, quality of

raw material, rate of profits, etc. should be looked upon consciously. Therefore it is said, “ If a

manager controls everything, he ends up controlling nothing.” For example, if stationery charges

increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if monthly

production decreases continuously, it is called as major deviation.

Once the deviation is identified, a manager has to think about various cause which has led to

deviation. The causes can be-

a. Erroneous planning,

b. Co-ordination loosens,

c. Implementation of plans is defective, and

d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known, the manager has

to detect those errors and take remedial measures for it. There are two alternatives here-

a. Taking corrective measures for deviations which have occurred; and

b. After taking the corrective measures, if the actual performance is not in conformity with

plans, the manager can revise the targets. It is here the controlling process comes to an

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 end. Follow up is an important step because it is only through taking corrective measures,

a manager can exercise controlling.

Relationship between planning and controlling

1. Planning preceeds controlling and controlling succeeds planning.

2. Planning and controlling are inseperable functions of management.

3. Activities are put on rails by planning and they are kept at right place through controlling.

4. The process of planning and controlling works on Systems Approach which is as follows :

Planning → Results → Corrective Action

5. Planning and controlling are integral parts of an organization as both are important for smooth

running of an enterprise.

6. Planning and controlling reinforce each other. Each drives the other function of management.

In the present dynamic environment which affects the organization, the strong relationship between

the two is very critical and important. In the present day environment, it is quite likely that planning fails

due to some unforeseen events. There controlling comes to the rescue. Once controlling is done

effectively, it give us stimulus to make better plans. Therfore, planning and controlling are inseperate

functions of a business enterprise.

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 Chapter IV

Managing Product And Service Operations

Organizations are designed mainly to produce products or services. If these organizations

mustsurvive and grow, the operations function must be undertaken in the most economical

mannerpossible. As most companies are expected to make profits, any activity, including

those foroperations must be managed to contribute to the accomplishment of such objectives.

What i s Operation?

Operations refer to “any process that accepts inputs and uses resources to change thoseinputs in

useful ways. The transformation process converts the input final goods or services.Examples of final goods

and services are as follows:

1.Industrial chemicals like methylene chloride, borax powder, phosphoric acid, etc., whichare

produced by chemical manufacturing firms:

2.Services like those for the construction of ports, high-rise buildings, roads, bridges,

etc.,which are produced by constructions firms;

3.Electrical products like transformers, circuit breakers, switch gears, power

capacitors,etc., which are produced by electrical manufacturing firms;

4.Electronic products like oscilloscope, microwave test systems, transistors, cable tester, etc.,

which are produced by electronics manufacturing firms;

5. Mechanical devices like forklifts, trucks, loaders, etc., which are produced by

manufacturing firms;

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 6. Engineering consultancy services like those for construction

m a n a g e m e n t a n d supervision, project management services, etc., which are produced by

engineering consultancy firms.

What Is Operations Management ?

An operation is an activity that needs to be managed by competent persons. Aldag and Stearns

accurately defined operations management as “the process of planning , organizing, andcontrolling

operations to reach objectives efficiently and effectively.”2As the terms “ planning”,“organizing”, and

“controlling” have already been discussed in the previous chapters, elaborations on the terms

“efficiency” and “effectiveness” will be made.

Efficiency is related to “the cost of doing something, or the resource

utilizationinvolved.” When a person performs a job at lesser cost than when another person performs

thesame job, he is more efficient than the other person.

Effectiveness refers to goal accomplishment. When one is able to reach his objectives, say

produced 10,000 units in one month, he is said to be effective.Operations management must be

performed in coordination with the other functionslike those for marketing and finance. Although the

specific activities of the operations divisionsof firms slightly differ from one another, the basic

function remains the same, i.e., to produceproducts or services.

Operations And The Manager

The manager is expected to produce some output at whatever management level he is. If he is

assigned as the manufacturing manager/supervisor, his function is “to determine and define the

equipment, tools, and processes required to convert the design of the desired product into reality in

an efficient manner.” The engineer in charge of operations in a construction firm is responsible for the

actual construction of whatever bridge or road his company has agreed to put up. He is required to do it

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using the least-expensive and the easiest methods. The engineer, as operations manager is one with

several years of experience in the operations division and possesses an academic background in

engineering.

Types Of Transformation Processses

 Manufacturing Processes

Manufacturing Processes are those that refer to the making of products by hand or with

machinery.

1. Job shop. A job shop is one whose production is “based on sales and orders for a variety of

smalllots.”

2. Batch flow. The batch flow process is where lots of generally own designed products are

manufactured.

3. Worker-paced line flow. An assembly line refers to a production layout arranged in a

sequence to accommodate processing of large volumes of standardized products or services.

4. Machine-paced line flow. This type of production process produces mostly standard products

with machines playing a significant role.

5. Batch/continuous flow hybrid. This method of processing is a combination of the batch and

continuous flow.

 Service Processes

1. Service factory. Service processes are those that refer to the provision of services to persons

by hand or with machinery

 Service Factory. A service factory offers a limited mix of services which results to some

economies of scale in operations.

 Service Shop. A service shop provides a diverse mix of services.

2. Mass service. A mass service company provides services to a large number of people

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 simultaneously

3. Professional service. These are companies that provide specialized services to other firms or

individuals

Important Parts Of Productive Systems

Productive systems consist of six important activities as follows:

1. Product design

2. Production planning and scheduling

3. Purchasing and materials management

4. Inventory control

5. Work flow layout

6. Quality control

Production Design

Product design refers to “the process of creating a set of product specifications appropriate to the

demands of the situation.”

Production Planning and Scheduling

Production planning may be defined as “forecasting the future sales of a given product,

translating this forecast into the demand it generates for various production facilities, and arranging for

the procurement of these facilities.”

Scheduling is the “phase of production control involved in developing timetables that specify how long

each operation in the production process takes.”

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Purchasing and Materials Management

The management of purchasing and materials must be undertaken with a high degree of

efficiency and effectiveness especially in firms engaged in high volume production.

Materials management refers to “the approach that seeks efficiency of operation through the integration of

all the material acquisition, movement, and storage

activities in the firm.

Inventory Control

Inventory control is the process of establishing and maintaining appropriate levels of reserve

stocks of goods.

Work-Flow Layout

Work-flow layout is the process of determining the physical arrangement of the production

system.

Quality Control

Quality control refers to the measurement of products or services against standards set by the

company.

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 Chapter V

Managing The Marketing Function

Engineer managers are engaged in the production of tangible or intangible goods. Some of these

engineer managers are directly responsible for marketing the company’s products and services. If he is

promoted as general manager, both the production and marketing functions become his overall concern.

At whatever management level the engineer manager works, he must be concerned with convincing

others to patronize his outputs. If he is the general manager of construction firm, he must convince people

with construction needs to avail of the services of the company. If he is the staff officer of a top executive, he

must convince his boss to continuously rely on him regarding the staff services he provides.

What Is The Marketing Concept?

Marketing is a group of activities designed to facilitate and expedite the selling of goods and

services.The marketing concept states that the engineer must try to satisfy the needs of his clients by means of a

set of coordinated activities. When clients are satisfied with what the company offers, they continually provide

business.

The Engineer And The Four P’s Of Marketing

The engineering organization will be able to meet the requirements of its clients (or customers)

depending on how it uses the four P's of marketing which are as follows:

1. The Product (or service) - In the marketing sense, the term "product" includes the tangible

(or intangible) item and its capacity to satisfy a specific need. When a customer buys a car, he is

actually buying the comfortable ride he anticipates to derive from the car. This is not to mention

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the psychological benefits attached to the ownership of a car. The services provided by the

engineer manager will be evaluated by the client on the basis of whether or not his or her exact

needs are met. When a competitor comes into the picture and sells the same type of service, the

pressure to improve the quality of services sold will be felt. When improvement is not possible,

"extras" or "bonuses" are given to clients. An example is the construction company that provides

“free estimates" on whatever inquiries on construction are received.

2. The Price - Price refers to "the money or other considerations exchanged for the purchase or

use of the product, idea, or service." Some companies use price as a competitive tool or as a

means to convince the customer to buy. When products are similar in quality and other

characteristics, price will be a strong factor on whether or not a sale will be made. This does not

hold true, however, in the selling of services and ideas. This is because of the uniqueness of every

service rendered or every idea generated.

3. The Place - If every factor is equal, customers would prefer to buy from firms easily

accessible to them. If time is of the essence, the nearest firm will be patronized. It is very

important for companies to locate in places where they can be easily reached by their customers.

Not every place is the right location for any company.

4. The Promotion - When engineer managers have products or services to sell, they will have to

convince buyers to buy from them. Before the buyer makes the purchasing decision, however, he

must first be informed, persuaded, and influenced. The activity referred to, in this case, is called

promotion.

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 Chapter 6

Managing The Finance Function

What is the finance function?

The finance function is an important management responsibility that deals with the “procurement

and administration of funds with the view of achieving the objectives of business”. It is also one of the

three basic management functions

The Determination of Fund Requirements

Any organization, including the engineering firm, will need funds for the following specific

requirements:

1. to finance daily operations

2. to finance the firm’s credit services

3. to finance the purchase of inventory

4. to finance the purchase of major assets.

Financing Daily Operations

The day-to-day operations of the engineering firm will require funds to take care of expenses as they

come. Money must be made available for the payment of the following:

1. Wages and Salaries

2. Rent

3. Taxes

4. Power and Light

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 5. Marketing Expenses

6. Administrative Expenses

Financing The Firm’s Credit Services

It is oftentimes unavoidable for firms to extend credit to customers. If the engineering firm

manufactures products, sales terms vary from cash to 90-day credit extensions to customers. Construction

firms will have to finance the construction of government projects that will be paid many months later.

Financing The Purchase Inventory

The maintenance of adequate inventory is crucial to many firms. Raw materials, supplies, and parts

are needed to be kept in storage so they will be available when needed. Many firms cannot cope with delays in

the availability of the required material inputs in the production process, so these must be kept ready whenever

required.

Financing The Purchase Of Major Asset

Companies, at times, need to purchase major assets. When top management decides on expansion,

there will be a need to make investments in capital assets like land, plant, and equipment.

The Sources Of Funds

To finance its various activities, the engineering firm will have to make use of its cash inflows coming

from various sources, namely:

1. Cash sales

2. Collection of accounts receivables

3. Loans and credits4. Sale of assets

5. Ownership contribution

6. Advances from customers

 Short-Term Sources Of Funds

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 Loans and credits may be classified as short-term. Medium-term, or long-term. Short-term sources

of funds are those with repayment schedules of less than one year. Collaterals are sometimes required by

short-term creditors.

 Advantages of short-term credits.

1. They are easier to obtain.
2. Short-term financing is often less costly.
3. Short-term financing offers flexibility to the borrower.
 Disadvantages of short-term credits.
1. Short-term credits mature more frequently.
2. Short-term debts may, at times, be more costly than long term debts

Supplies Of Short-Term Funds.

Short-term financing is provided by the following:

1. Trade creditors

2. Commercial banks

3. Commercial paper houses

4. Finance companies

5. Factors and

6. Insurance companies

 Long-Term Source of Funds

There are instance when the engineering firm will have to tap the long-term sources of funds. An

example is when expenditures for capital assets become necessary. After the amount required is

determined, a decision has to be made on the type of source to be used.

Long-term source of funds are classified as follows:

1. Long-term debts

2. Common stocks, and

3. Retained earnings

Long-term debts are sub-classified into term loans and bonds.

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 Term Loans. A term loan is “commercial or industrial loan from a commercial bank, commonly

used for plant and equipment, working capital, or debt repayment”. Term loans have maturities of 2 to 3

years.

The advantages of term loans as long-term source of funds are as follows:

1. Funds can be generated more quickly than other long-term sources.

2. They are flexible, i.e., they can be easily tailored to the needs of the borrower.

3. The cost of assurance is low compared to other long-term sources.

Bonds. A bond is a certificate of indebtedness issued by a corporation to a lender. It is a marketable

security that the firm sells to raise funds. Since the ownership of bonds can be transferred to another

person, investors are attracted to buy them. It is a formal contract to repay borrowed money with interest

at fixed intervals. Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the lender

(creditor), and the coupon is the interest.

Retained Earnings. Retained earnings (RE) is the amount of net income left over for the business after it

has paid out dividends to its shareholders. A business generates earnings that can be positive (profits) or

negative (losses).

Common Stock. Common stock is a security that represents ownership in a corporation. Holders of

common stock exercise control by electing a board of directors and voting on corporate policy. Common

stockholders are at the bottom of the priority ladder in terms of ownership structure; in the event

of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred

shareholders and other debtholders are paid in full.

The Best Source Of Financing

 Flexibility

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 Some fund sources impose certain restrictions on the activities of the borrowers. An example of a

restriction is the prohibition on the issuance of additional debt instruments by the borrower. As some

funds sources are less restrictive, the flexibility factor must be considered.

Short term sources offer more flexibility than long term sources. This is so because after settling

the debt, short term borrowers are given this opportunity only after a longer period of waiting.

Flexibility must be consider in choosing the source of finance because, flexibility of the funds are

needed to make sure that the funds are generated on the exact time that they need it.

 Risk

Refers to the chance that the company will be affected adversely when a particular source of

financing is chosen. Generally, short term debt subjects the borrowing firm to more risk than does

financing with long term debt. This happen because of two reasons;

1. Short term debts may not be renewed with the same terms as the previous one, if they can be

renewed at all.

2. Since repayments are done more often, the risk of defaulting is greater.

 Income

When the firm borrows, it must generate enough income to cover cost of borrowing and still be

left with sufficient returns for the owners.

 Control

When new owners are taken in because of the need for additional capital, the current group of

owners may lose control of the firm’s management. If the current owners do not want this to happen, they

must consider other means of financing.

 Timing

The financial market has its ups and downs. This means that there are times when certain means

of financing provide better benefits than other times. The manager must, therefore, choose the best time

for borrowing or selling.

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  Other Factors

There are other factors considered in determining the best source of financing. They are the ff.:

1. Collateral values: are there assets available as collateral?

2. Flotation costs: how much will it cost to issue bonds or stocks?

3. Speed: how fast the funds required to be raised?

4. Exposure: to what extent will the firm be exposed to other parti

The Firm’s Financial Health

In general, the objectives of engineering firms are as follows:

1. To make profits for the owners;

2. To satisfy creditors with the repayment of loans plus interest;

3. To maintain the viability of the firm so that customers will be assured of a continuous supply of

products or services, employees will be assured of employment, suppliers will be assured of a markets,

etc.

The foregoing objectives have better chances of achievement if the engineering firm is financially

healthy and has the capacity to be on a long-term basis.

Indicators Of Financial Health

The financial health of an engineering firm may be determined with the use of four basic financial

statements. These are as follows:

1. Balance sheet: also referred to as statement of financial position or condition, reports on a

company's assets, liabilities and Ownership equity at a given point in time.

2. Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a

company's income, expenses, and profits over a period of time. Profit & Loss account provide

47
information on the operation of the enterprise. These include sale and the various expenses incurred

during the processing state.

3. Cash flow statement or Statement of changes in financial position: reports on a company's cash

flow activities, particularly its operating, investing and financing activities.

4. Statement of retained earnings: explains the changes in a company‟s retained earnings over the

reporting period.

To be able to determine the financial health of a firm, the appropriate financial analysis must be

undertaken

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