Topics to be covered

Introduction to management
Functions of management
Planning
Organizing
Directing
Controlling
Managerial roles and skills
Basics of Productivity

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Introduction to Management
What is Management?
A set of activities (including planning and decision making,
organising, leading and control) directed at an organisations
resources (human, financial, physical and informational) with the
aim of achieving organisational goals in an efficient and effective
manner.
The creation of conditions that allow the effective use of resources
(human, financial, material, equipment, technical and etc.) to
achieve a specified goal.
Organizational resources (5M): Men (human beings), Money,
Machines, Materials and Methods.

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 Major Premises
Technology and business savvy (know-how) represents a very
powerful combination of great demand in society.

Market environment is rapidly evolving (changing marketplace

complexities, web-based technologies, globalization):
Leaders with understanding of technology and management
perspectives are needed.

Engineers with proper management and leadership training have great

opportunities to add value.

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Management Challenges
Market place changes rapidly (Web-based technologies,
globalization, customer demand) affecting how progressive
companies will be organized.

Engineering managers to lead by supervising complex teams,

innovating with vision for the future, designing global products, and
organizing supply chains.

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Management Challenges

Inside Outside

Present Future

Local Global

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Challenges - Inside
Implement projects/programs;

Manage people, technologies, and resources to add value;

Develop new product features to enhance company

competitiveness;

Define, control and reduce costs to improve profitability;

Initiate technology projects to sustain company position.

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Challenges - Outside
Keep abreast (in touch) of emerging technologies and apply them
to strengthen companys core competencies;
Apply web-based tools to enhance operations and foster customer
relations;
Identify best practices to improve engineering operations and
surpass them;
Create supply chain networks to derive speed, quality and cost
benefits.

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 Challenges - Present
Do things right to keep company operating smoothly;

Use Balanced Scorecard to monitor non-financial and financial

performance;

Control costs and eliminate wastes to attain profitability in the

short-run.

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 Challenges - Future
Seek e-transformation opportunities to create company
profitability in the long-run;

Introduce new generation products timely;

Create vision for the future related to technologies;

Define what should be done for technology-based success in the

future.

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 Challenges - Local
Utilize resources to best achieve companys objectives;

Take ethical and lawful actions while taking into account local
conditions;

Maintain and nurture local professional networks;

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Challenges - Global
Apply location-based resources to realize global economies of
scale and scope for achieving cost and technology advantages;

Develop global professional networks;

Acquire a global mindset;

Exercise leadership roles in international settings.

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Management concerns

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2
Management concerns
Efficiency: is getting the most output from the least amount of
inputs in order to minimize resource costs.

Doing things right

Effectiveness: is completing activities so that organizational

goals are attained.

Doing the right things

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Functions of Management

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Planning
Planning is determining the objectives and formulating the
methods to achieve them.

Forecasting, setting objectives, action planning, administering

policies, establishing procedure.

A job well planned is half done.

During planning one needs to ask oneself the following:

What am I trying to accomplish i.e. what is my objective?
What resources do I have?
What are the methods and means to achieve the objectives?
Is this the optimal path or method?
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Steps in Planning
1. Determining the goals or objectives for the entire
organization.
2. Making assumptions on various elements of the
environment.
3. Decide the planning period.
4. Examine alternative courses of actions.
5. Evaluating the alternatives.
6. Make derivative plans.

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Organizing
Selecting organizational structure, delegating, establishing
working relationship.

Division of Work.

Assign Tasks: Departmentalization.

Link Departments: Hierarchy Development

Decide how much Authority to Designate/ Authority,

Responsibility and Delegation.

Decide the Levels at which Decisions are to be made.

Decide how to Achieve Coordination. 17

Staffing
Selecting and training individuals for specific job functions,
and charging them with the associated responsibilities.

Determining the number of employed personnel in an

organization or program, Also called workforce.

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Directing/Leading
A function that includes motivating employees, directing others,
selecting the most effective communication channel, and resolving
conflict.

Ability to command people.

Attracting people to the organization.

Marshaling and allocation of resources

Creating good working conditions

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Controlling
Controlling is a three-step process of measuring progress toward
an objective, evaluating what remains to be done, and taking the
necessary corrective action to achieve or exceed the objectives.
Measuring: determining through formal and informal reports the

degree to which progress toward objectives is being made.

Evaluating: determining cause of and possible ways to act on

significant deviations from planned performance.

Correcting: taking control action to correct an unfavorable trend or

to take advantage of an unusually favorable trend.

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Steps in Controlling
1. Establish Standards of Performance.

2. Measure Actual Performance.

3. Compare Performance to Standards.

4. Take Corrective Action.

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Levels of Managers
First-line Managers: often called supervisors stand at the base of the
managerial hierarchy.

Middle Managers: heads of various departments and organize human

and other resources to achieve organizational goals.

Top Managers: set organizational goals, strategies to implement them

and make decisions.

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Managerial Skills
A manager is someone skilled in knowing how to analyze and
improve the ability of an organization to survive and grow in a
complex and changing world.

Management knowledge and skills (operational, strategic,

financial/accounting, interpersonal skills/communications, etc.)

Technical skills

Human skills

Conceptual skills

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Technical Skills
Technical skill involves understanding and demonstrating
proficiency in a particular workplace activity.

A persons knowledge and ability to make effective use of any

process or technique constitutes his technical skills.

For e.g. Engineer, accountant, data entry operator, lawyer, doctor

etc.

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Human Skills
An individuals ability to cooperate with other members of the
organization and work effectively in teams.

Communication.

For e.g. Interpersonal relationships, solving peoples problem and

acceptance of other employees.

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Conceptual Skills
Ability of an individual to analyze complex situations and to
rationally process and interpret available information.

For eg: Idea generation and analytical process of information.

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Basics of Productivity
Productivity is a common measure of how well resources are
being used or a measure of the efficient use of resources usually
expressed as the ratio of output to input.
Productivity, the relative efficiency of economic activitythat is,
the amount of products or services produced compared to the
amount of goods and labor used to produce them.

Outputs
Productivity =
Inputs

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Basics of Productivity
Labor Productivity
Quantity (or value) of output / labor hrs

Quantity (or value) of output / shift

Machine Productivity
Quantity (or value) of output / machine hrs

Energy Productivity
Quantity (or value of output) / kwh

Capital Productivity
Quantity (or value) of output / value of input

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Measures of Productivity
Partial Output Output Output Output
measures Labor Machine Capital Energy

Multifactor Output Output

measures Labor + Machine Labor + Capital + Energy

Total Goods or Services Produced

measure All inputs used to produce them

If we produce only one product, the numerator can be either the total units of
product or total $ value of the product.

If we produce several products, the numerator is the total $ value

of all products.
Usually, the numerator is the total $ value of all outputs.
The denominator is total $ value of all inputs.
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Measures of Productivity
Example 1 Which productivity measures can be calculated?

7040 Units Produced What is the multifactor productivity?

Sold for $1.10/unit

Single productivity measures like labor, material and
capital can be determined.
Cost of labor : $1,000
Combination of the inputs can be determined as
multifactor productivity.
Cost of materials: $520
out put
Cost of overhead: $2000 MFP =
laborcost + materialscost + overhead cost

(7040 units)($1.10)
=
$1000 + $520 + $2000

= 2.20

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Measures of Productivity
Example 2
5,500 Units Produced Labor productivity:
Sold for $35/unit 5,500 units/500 hours = 11 units/hour
500 labor hours are used
Or we can arrive at a unitless figure:
Cost of labor: $25/hr
(5,500 units*$35/unit)/(500 hours *
Cost of raw material: $5,000
Cost of overhead: 2 x labor cost $25/hr) =15.4
What is the labor productivity?
What is the multifactor productivity?

(5,500 ) ($35)
=
(500. ) $25/. + ($5000) + 2 (500. ) $25/.

MFP = 4.52
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Measures of Productivity
Example 3

Assume that you have just determined that service employees have used a
total of 2400 hours of labor this week to process 560 insurance forms. Last
week the same crew used only 2000 hours of labor to process 480 forms.

Which productivity measure should be used?

Answer: Could be classified as a Partial Measure (labor productivity).

Is productivity increasing or decreasing?

Answer: Last weeks productivity = 480/2000 = 0.24, and this weeks

productivity is = 560/2400 = 0.23.

So, productivity has decreased slightly.

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Importance of productivity
To beat competition
Guide to management

Indicator of Progress

Maximum utilization of scarce resources

Ways of increasing productivity

Increasing output and input largely
Increase output while keeping input the same

Increase output very much while increase input a little

Keep the output unchanged while decreasing inputs 33

Factors affecting productivity
Standardization Methods

Technology Design of the workspace

Scrap rates Capacity utilization

Layout
Labor turnover, layoffs,
Scheduling
new workers
Equipment breakdowns
Bottlenecks
Part and material shortages
Inadequate investment in
training & education of the
employees

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Key Steps for Improving Productivity

Develop productivity measures for all operations

Determine critical (bottleneck) operations

Develop methods for productivity improvements

Establish reasonable goals

Get management support (make it clear that management

supports and encourages productivity improvements.)

Measure and publicize improvements

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Exercise 1
1. A company that makes shopping carts for supermarkets recently
purchased new equipment, which reduced the labor content needed to
produce the carts. Information concerning the old system (before adding
the new equipment) and the new system (after adding the new machines)
includes:
Old System New System
Output/hr 80 84
Workers 5 4
Wage $/hr 10 10
Machine $/hr 40 50
a) Compute labor productivity for both the Old System and the New
System.
b) Compute total factor productivity for both the Old System and the
New System.
c) Suppose production with old equipment was 30 units of cart A at a
price of $100 per cart, and 50 units of cart B at a price of $120. Also
suppose that production with new equipment is 50 units of cart A, at
a price of $100 per cart, and 30 units of cart B at a price of $120.
Compare total-factor productivity for the old and the new systems.
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 Exercise 2
2. A company has introduced a process improvement that reduces the
processing time for each unit and increases output by 25% with less
material but one additional worker.
Under the old process, five workers could produce 60 units per hour.
Labor costs are $12/hour, and material input was $16/unit.
For the new process, material input is now $10/unit and overhead is
charged at 1.6 times direct labor cost. Finished units sell for $31 each.
a) Compute single factor productivity of labor in the old system.
(Compute it in four possible ways.)
b) Compute all factor productivity for both old and new systems.
Factor Old System New System
Output 60 60(1.25) = 75
# of workers 5 6
Worker cost $12/hr $12/hr
Material $16/unit $10/unit
Overhead 1.6(labor cost) 1.6(labor cost)
Price 31 31
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 Exercise 3
3. A milk factory seeks advice from an external consulting company
concerning its business and production processes. The final consulting report
describes several steps to increase productivity including implementation of
cutting-edge processing techniques through more powerful filtering systems.
Existing System Proposed System
Workers 12 9
Milk Output/hour 1,000 gallons 1,400 gallons
Wage Rate/hour $12 $12
Filtration Cost/hour $120 $170

a) Calculate the labor productivity for the existing as well as the proposed
system.
b) Find the Total-Factor Productivity for both systems.
c) Assume that current processing includes 700 gallons of Grade-A milk
sold at $2.40/gallon and 300 gallons of Grade-B milk at $1.90/gallon.
Furthermore, assume that under the proposed system, processing will
include 600 gallons of Grade-A milk at $2.40/gallon and 400 gallons of
Grade-B milk at $1.90/gallon. Compare all-factor productivity for both
the existing and the new system.
d) Is the proposed system acceptable? Why? 38