Summary

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Summary Revision(2)

• Engineering Management
• ELE 22EMT

George Alexander G.Alexander_at_latrobe.edu.au http/
/www.latrobe.edu.au/eemanage
Lecture 12 26 October 2005
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The topics covered were

• The challenge of management
• Pioneering ideas in management
• Understanding internal and external environment
• Social responsibility and ethics in management
• Managerial decision making
• Establishing organisational goals and plans
• Strategic management
• Basic elements of organisation structure
• Human resources management
• Motivation

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The overall planning process
mission
goals
plans
goal attainment (organisational efficiency
and effectiveness)
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The mission statement purpose, why we exist

• Customers
• products or services
• Location
• Technology
• Concern for survival
• Philosophy
• Self-concept
• Concern for public image
• Concern for employees

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THE NATURE OF ORGANISATIONAL GOALS

• Benefits of goals
• Increases performance
• Clarifies expectations
• Facilitates control
• Increases motivation
• Levels of goals
• 1. Operational goals (base)
• 2. Tactical goals (mid)
• 3. Strategic goals (top)

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strategic goals
strategic plans
Top Management organisational-wide perspective
tactical goals
tactical plans
Middle Management department perspective
First-Level Management unit/individual perspective
operational goals
operational plans
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Goal content - needs to be

• Challenging
• Attainable
• Specific measurable
• Time limited
• Relevant

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Goal commitment influenced by

• Supervisory authority
• Peer group pressure
• Public display
• Expectations of success
• Incentives rewards
• Participation in goal setting

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Business Planning Framework

• Where are we now?
• What business are we in?
• Where do we want to go?
• What is necessary to close the gap?
• How do we make it all happen?

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Strategy implementation
Strategy formulation
assess environmental factors
Identify current mission and strategic goals

• Conduct competitive analysis
• strengths
• weakness
• opportunity
• threats

• Develop specific strategies
• corporate
• business
• functional

carry out strategic plans
maintain strategic control
assess organisational factors
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SWOT Analysis
External Factors
Key Opportunities
Key Threats
Internal Factors
Key Strengths
Most Likely
Possible
Key Weaknesses
Possible
Unlikely
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Organisational Assessment
Skills levels (competency profiles)
The organisations strengths and weaknesses
Information systems (up-to-date)?
Organisational culture
Tangible assets (buildings and equipment)
Sales and distribution channels
Liquidity (and other financial dimensions)
Organisational structure (flexibility)
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Environmental Assessment
Competitor Analysis
Industry and Market Analysis
Political Regulatory Analysis
Technological Analysis
The organisation
Social Analysis
Human Resources Analysis
Economic Analysis
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Levels of Strategy

• Corporate-Level Strategy
• the business an organisation will operate
• co-ordination of strategies
• allocation of resources
• Business-Level Strategy
• strategic business units
• focusing on a particular business
• Functional-Level Strategy
• managing functional area to support
  business-level strategy
• the day-to-day management of business

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CORPORATE STRATEGY
Corporate Level
Business Level
Business 1 Strategy
Business 2 Strategy
Business 3 Strategy
Functional Level
Operations Management Strategy
R D Strategy
Financial/ Accounting Strategy
Marketing Strategy
Human Resources Strategy
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Co-ordinating Levels of Strategy

• Co-ordinating strategies across the levels is
  critical to maximising strategic impact
• Business-level strategy is enhanced when
  functional-level strategies support it.
• Corporate-level strategy will have more impact
  when supported by business-level strategies
  complementing each other.
• Thus, the three levels must be co-ordinated as
  part of the Strategic Management.
• Top-Down or Bottom-Up approach ?

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concentration
Vertical integration
Growth
Diversification
Stability
GRAND STRATEGIES
harvest
turnaround
divestiture
Defensive
bankruptcy
liquidation
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Growth Strategy

• Concentration
• Market development
• Product development
• Horizontal integration
• Vertical Integration
• Backward integration, business grows by becoming
  its own supplier
• Forward integration, business growth encompasses
  a role previously fulfilled by a customer

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Growth Strategy - Cont.

• Diversification
• Conglomerate diversification when an organisation
  diversifies into areas unrelated to its current
  business
• Concentric diversification when an organisation
  diversifies into related, but distinct, business
• Growth strategies can be implemented by
• Internal growth
• An acquisition
• A merger

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Design Process

• The purpose and goals of the organisation must be
  very clear.
• The design process of organisation structure
  consists of four elements
• Assignment of tasks and responsibilities for the
  individual job positions,
• Grouping the individual positions into units and
  departments,
• Determining various mechanisms for the vertical
  co-ordination, and
• Determining various mechanisms for the horizontal
  co-ordination

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Chairperson, M.D., and C.E.O.
Secretarys Office
GM Marketing
General Counsel
GM Operations
GM H.R.
GM Finance
Communication
Insurance Operations
H.R. Develop
Internal Audit
Market Support
Actuarial
Health Unit
Investment
Field Mgmt Region 1
IMS
Training
Real Estate
Field Mgmt Region 2
Financial Analysis
Tax
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Matrix Management

• All resources and skills are equally shared
  across the organisation
• Suits a project oriented organisation
• Can be very efficient way of utilising resources
• Provides variety of projects, and hence can be
  stimulating and satisfying for employees
• It may result in overloading of some members

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Project 3
Project 4
Project 1
Project 2
System Engineer
Project Engineer
Tech
Installer
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Job Design

• As different job types require different skills
  and activities it is necessary to determine the
  areas of work specialisation.
• Job design involves the specification of tasks
  associated with a particular job.
• Work specification includes a collection of jobs
  necessary for achieving organisational goals.
• A well done job design is important for the
  efficient performance of the organisation and
  motivation of its members.

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Job Design Trends

• Move from efficiency-driven highly defined,
  repetitive, (boring) jobs to -
• More varied approaches to job design featuring -
  
• Job rotation
• Multi-skilling
• Job enrichment
• Greater autonomy especially for groups of
  workers

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Policies Procedures

• Formalisation is the degree to which written
  policies, rules, procedures, job descriptions,
  and other documents specify what actions are (or
  are not) to be taken under a given set of
  circumstances.
• Most organisations need some degree of
  formalisation so that fundamental decisions do
  not have to be made more than once and so
  inequities will be less likely to occur.

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• Being too highly formalised can lead to
  cumbersome operations, slowness in reacting to
  change, and low levels of creativity and
  innovation.
• It becomes then a question of balance as to how
  much formality is necessary, and should apply.
• International quality standards ISO9001,9002
  (and common sense) demand that formal procedures
  etc. do reflect actual practice.

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Span of Management

• Span of management, or span of control, is the
  number of subordinates reporting directly to a
  specific manager.
• Managers should have neither too many nor too few
  subordinates.
• Then, what is a good balance of the span of
  management?

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Wider Span of Management

• Research indicates spans of management can be
  wider under certain circumstances
• Subordinates' work is such that little
  interaction with others is required.
• Managers and/or their subordinates are highly
  competent.
• The work of subordinates is similar.
• Problems are infrequent.

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• Subordinates are located in close physical
  proximity to one another.
• Managers have few non-supervisory duties to
  perform.
• Managers have additional help such as secretaries
  or assistants.
• The work is challenging enough to motivate
  subordinates to do a good job.
• (From GAs experience, a critical factor is the
  individual managers ability to delegate. Refer
  P282 of text Guidelines for effective
  delegating).

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Hierarchical Levels

• Organisational effectiveness is influenced by the
  number of its hierarchical levels.
• Problems with very tall organisations
• high administrative overhead,
• slow communication and decision making,
• more difficult to pinpoint responsibility for
  various tasks, and
• encouragement of formation of dull, routine jobs.

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Human Resources Management
Human resource management (HRM) is the management
of various activities designed to enhance the
effectiveness of an organisations workforce in
achieving organisational goals.
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Regulatory and environmental context
Organisational Context
HR Functions
Identifying HR needs
Attracting human resources
Maintaining human resources
Terminating the relationship
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The Changing Regulatory Framework

• Since the early 1990s, major shift to enterprise
  or individual agreements (AWAs)
• The government is now planning significant
  changes
• One national IR system legislative power is
  currently shared by the state and federal
  governments.
• Simplify the workplace agreement-making process.
• Less emphasis on collective bargaining (unions on
  behalf of workers) and more reliance on
  individual negotiations.
• Establishment of Australia Fair Pay Commission
• Workers in firms with fewer than 100 employees
  lose unfair dismissal protection.

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HRM Functions

• Human resource planning assesses the human
  resource needs associated with strategic
  management and helps identify staffing needs.
• Staffing includes attracting and selecting
  individuals for appropriate positions.
• Training and performance evaluation are means of
  ensuring that employees can contribute to the
  organisation.

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• Compensation involves rewards that will attract,
  motivate, and retain employees.
• Workforce perceptions of the organisation and its
  treatment of employees must be managed.

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Job Analysis

• Job analysis is the systematic collection and
  recording of information concerning
• the purpose of a job,
• its major duties,
• the conditions under which it is performed,
• the contact with others that performance of the
  job requires, and
• the knowledge, skills, and abilities needed for
  performing the job effectively.

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• A job analysis may be based on information
  obtained through direct observation, interviews,
  diaries or questionnaires.
• A job description is a statement of the duties,
  working conditions, and other significant
  requirements associated with a particular job.
• A job specification is a statement of the skills,
  abilities, education and previous work experience
  that are required to perform a particular job.

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Job Specification

• Outcomes Job descriptions and job specifications
  impacts upon
• Recruitment selection
• Performance appraisal
• Remuneration
• Training development
• Job design redesign

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RECRUITMENT
Maximising the pool of applicants at minimum
cost
3 objectives
Attracting suitably qualified skilled
applicants
Ensuring compliance by organisation with
government regulations
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Methods of Recruitment

• Internal promotion
• Advertisements
• Employee referrals
• Employment agencies
• Executive recruitment (head hunters)
• Campus interviews
• Contractors
• Internet job
• career sites

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Remuneration Benefits

• Remuneration benefits ..financial payments to
  employees in return for work
• Whether under award, enterprise or individual
  agreement, has legal basis. Subject to regulation
• Tied to job analysis, value of work discerned
• Possibly linked to training development
• Need for regular review
• Need for internal external relativity

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Performance appraisal 360 degree feedback
Mould employee behaviour to company norms
Build consistency of employee actions
organisation goals
Performance appraisal
Improve HR planning, training succession
Improve quality of salary reviews
Provide record for dismissal, demotion,
grievance, appeal
360o feedback - non-hierarchical method
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Performance
Performance
Motivation
Environmental Conditions
Ability

X
X
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The Motivation Process

• Needs
• hierarchy of needs theory
• ERG theory
• two-factor theory
• acquired-needs theory

• Cognitive Activities
• expectancy theory
• equity theory
• goal setting theory

behaviours

• Rewards/reinforcement
• reinforcement theory
• social learning theory

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Maslows Hierarchy of Needs
challenging projects, opportunity for innovation
and creativity, training
self-actualisation needs
important projects, recognition, prestigious
office location
esteem needs
good co-workers, peers, superiors, customers
belongingness needs
job security, benefits (like life insurance),
safety regulations
safety needs
basic pay, work space, heat, water, company
cafeteria
physiological needs
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Herzbergs Two-Factor Theory

• Motivators
• achievement
• responsibility
• work itself
• recognition
• growth and advancement

• Hygiene factors
• pay
• work conditions
• supervisors
• company policies
• fringe benefits

Motivators help to promote satisfaction
Hygiene factors help to prevent dissatisfaction
High dissatisfaction
High satisfaction
Neutral point
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ERG TheoryClayton Alderfer
Existence needs Physiological (food,
water) Pay Benefits Working conditions
Relatedness needs Relationships with
family, work and professional groups
Growth needs Creativity Innovation Productivity
Satisfaction-progression principle Frustration-re
gression principle
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Acquired-needs Theory
Developed by David McClelland - cites the need
for achievement, power, and affiliation as major
motives in work
Need for achievement - drive to excel Need for
power - influence others behaviour Need for
affiliation - desire for friendly and close
interpersonal relationships
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Reinforcement Theory

• Positive - uses pleasant, rewarding consequences
  to encourage desired behaviour. Use of shaping
• Negative - (unpleasant) stimuli so an individual
  will engage in the desired behaviour to stop the
  stimuli
• Extinction - stopping previously available
  positive outcomes from a behaviour to decrease
  the behaviour
• Punishment - providing negative consequences to
  decrease or discourage a behaviour

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Types of Reinforcement Situations - Skinner
Negative Reinforcement
Positive Reinforcement
increases behaviour
Effect on behaviour
Punishment
Extinction
decreases behaviour
Encourages maturity
Encourages immaturity
Effect on maturity
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References

• Bartol, K.M., Martin, D.C., Tein, M., Matthews,
  G., Management A Pacific Rim Focus,
  McGraw-Hill, 2002.
• The material presented in this lecture is a
  review of lectures 6, 7, 8, 9 and 10

Thanks for your attention