SEG 2470 Fundamentals of Engineering Management

Organising

Definition
Organising is the process of establishing orderly uses for all resources within the management system. A
primary focus of organising includes determining both what individuals will do in an organisation and how
their individual efforts should best be combined to contribute to the attainment of organisational objectives.

Classical organising theory

Classical organising theory is the cumulative insights of early management writer on how organisational
resources can best be used to enhance goal attainment. According to Max Weber, the main components of
an organising effort are detailed procedures and rules, a clearly outlined organisational hierarchy, and,
mainly impersonal relationships among organisation members. He used the term bureaucracy to label the
management system that contains these components. There are four components: (1) structure, (2) division
of labour, (3) span of management, and (4) scalar relationships.
Structure refers to designated relationships among resources of the management system. Its purpose is to
facilitate the use of each resource, individually and collectively, as the management system attempts to
attain its objectives. Organisation structure is represented by means of a graphic representation called an
organisation chart. In reality, two basic types of structure exist within management systems: formal and
informal. Formal structure is defined as the relationships among organisational resources as outlined by
management. Informal structure is defined as the patterns of relationships that develop because of the
informal activities of organisational members. It evolves naturally and tends to be molded by individual
norms, values, or social relationships.
The most common method of instituting formal relationships among resources is by establishing
departments. A department is a unique group of resources established by management to perform some
organisational tasks. The process of establishing departments within the management system is called
departmentalisation. One way to establish departments is based on the type of work functions (activities).
The major categories into which the functions typically are divided are marketing, production, finance, etc.
Organisation structure based on product departmentalises resources according to the products being
manufactured. Structure based primarily on territory departmentalises according to the place where the work
is being done or the geographic market area on which the management system is focusing. Structure based
primarily on the customer establishes departments in response to the organisation’s major customers.
Structure based primarily on manufacturing process departmentalises according to the major phases of the
process used to manufacture products.

Division of labour
The second consideration of any organising effort is how to divide labour. The division of labour is the
assignment of various portions of a particular task among a number of organisation members. Because of
division, workers specialise in a particular task and their skill for performing that task tends to increase.
They typically have one job and one place in which to do it and do not waste time moving from one job to
another. Workers concentrate on performing only one job and they naturally try to make the job easier and
more efficient. Also tasks are made simpler and can be learnt more quickly. On the other hand, division of
labour focus solely on efficiency and economic benefit and overlook the human variable. Work that is
extremely specialised tends to be boring and therefore usually causes productivity to go down.
Co-ordination is the orderly arrangement of group effort to provide unity of action in the pursuit of a
common purpose. It involves encouraging for the completion of individual portions of a task in a
synchronised order that is appropriate for the overall task. Co-ordination can be achieved without close
supervision. Mary Parker Follet suggests that co-ordination can be achieved through direct horizontal
relationships and personal communications.

Span of Management

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 The third consideration of any organising effort is span of management – the number of individuals a
manager supervises. The more individuals a manager supervises, the greater the span of management. As
reported by Harold Koontz, several situational factors influence the appropriateness of the size of an
individual’s span of management: similarity of functions, geographic contiguity, complexity of functions,
co-ordination, and planning.

Factor has tendency to increase Factor has tendency to

Factor span of management when decrease span of management
similarity of functions similar functions different functions
geographic contiguity physically close physically distant
complexity of functions simple tasks complex tasks
coordination little much
planning little much

A definite relationship exists between span of management and the height of an organisation chart.
Normally, the greater the height of the organisation chart, the smaller the span of management. Organisation
charts with little height are usually referred to as flat; those with much height are tall.

Scalar relationships
The fourth consideration of any organising effort is scalar relationships – the chain of command. This is
related to unity of command which means that an individual should have only one boss. However, because
of unity of command, information gathering may get very expensive. To decrease this cost, Henry Fayol has
recommended that in some situations a bridge be used to allow lower level personnel to exchange
information. For the bridge to be effective, we should make information being exchanged known to their
superiors.

Responsibility
Responsibility is the obligation to perform assigned activities. It is the self-assumed commitment to
handle a job to the best of one’s ability. The source of responsibility lies within the individual. A summary
of an individual’s job activities within an organisation is usually in a formal statement called a job
description – a listing of specific activities that must be performed. A sound organising strategy involves
specifying job activities for each individual within the organisation.
The functional similarity method is a method for dividing job activities in the organisation. It involves
(1) management examines management objectives, (2) management designates appropriate activities that
must be performed to reach those objectives, (3) management designs specific jobs by grouping similar
activities, and (4) management makes specific individuals responsible for performing those jobs.
Three additional guides can be used to supplement the functional similarity method. Overlapping
responsibility exists when more than one individual is responsible for the same activity. A responsibility gap
exists when certain tasks are not included in the responsibility area of any individual. The method should
also avoid creating activities that do not contribute to the goal attainment.
The managers at Motorola realised that they needed to streamline their organisational structure to
minimise overlapping responsibilities and responsibility gaps, to lower their labour costs, and to become
more competitive. The first step in Motorola’s process was to ask division managers to draw a more
productive organisation chart showing relationships from their level all the way down to the worker level.
The drawing of this new organisation chart caused managers to make judgements about whether the number
of levels of management and spans of control that existed were appropriate for the organisation.
Organisation charts for all divisions were combined to develop Motorola’s new chart. The new streamlining
efforts resulted in higher product quality and a more productive organisation. A major reason why
organisational productivity increased was that management became aware of and eliminated overlapping
responsibilities within the company. Management estimated that the new organisation structure resulted in a
savings of over US$4.3 million annually.

Authority

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 Authority is the right to perform or command. It allows its holders to act in certain designated ways and
to directly influence the actions of others through orders. It also allows its holders to allocate organisation’s
resources in order to achieve the objectives of the organisation.
Chester Barnard writes that in reality the source of authority is determined not by decree from the
formal organisation but by whether or not authority is accepted by those existing under it. Hence, authority
exists and will exact obedience only if it is accepted. Barnard maintains that authority will be accepted only
if the individual (1) can understand the order being communicated, (2) believes the order is consistent with
the purpose of the organisation, (3) sees the order as compatible with personal interests, and (4) is mentally
and physically able to comply with the order.
Types of authority
There are three types of authority: line, staff, and functional. Line authority reflects existing superior
and subordinate relationships. It is the right to make decisions, and to give orders in the production, sales,
finance areas. Individuals directly responsible for these areas within the organisation are delegated line
authority to assist them in performing their obligated activities.
Staff authority is the right to advise or assist those who possess line authority and other staff personnel.
Staff authority exists to enable those responsible for improving the effectiveness of line personnel to
perform their required tasks. Examples of organisation members with staff authority are members of
accounting and human resource departments.
Generally speaking, the larger the organisation, the greater the need and ability to pay for staff
personnel. Small organisations may hire part-time consultants for their own needs. Staff personnel do not
make decisions. They advise line personnel on the decision. In other words, they play three roles: the
advisory or counselling role, the service role, and the control role.
Most practitioners admit that a noticeable amount of conflict usually centres around line-staff
relationships. From the viewpoint of line personnel, conflict is created between line and staff personnel
because staff personnel tend to assume line authority, do not give sound advice, steal credit for success, do
not keep line personnel informed, and do not see the whole picture. From the viewpoint of staff personnel,
conflict is created because line personnel do not make proper use of staff personnel, resist new ideas, and do
not give staff personnel enough authority.
Functional authority is the right to give orders within a segment of the organisation in which this right is
normally non-existent. It generally covers only specific task areas and is operational only for designated
amount of time. The advantages and disadvantages of line, staff, and functional authority are summarised in
the following table.

Advantages Disadvantages
Line Authority
Maintain simplicity Neglects specialists in planning
Makes clear division of authority Overwork key people
Encourages speedy action Depends on retention of a few key people

Staff Authority
Enables specialists to give expert advice Confuses organisation if functions are not clear
Free line executive of detailed analysis Reduces power of experts to put recommendations into action
Affords young specialists a mean of training Tends toward centralisation of organisation

Functional Authority
Relieves line executives of routine specialised decisions Makes relationships more complex
Provides framework for applying expert knowledge Makes limits of authority of each specialist a difficult co-
ordination problem
Relieves pressure of need for large numbers of well rounded Tends toward centralisation of organisation
executives

Accountability
Accountability is the management philosophy whereby individuals are held liable, or accountable, for
how well they use their authority and live up to their responsibility of performing predetermined activities.
The concept of accountability implies that if predetermined activities are not performed, some type of
penalty or punishment is justifiably forthcoming.

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Delegation
Delegation is the actual process of assigning job activities and corresponding authority to specific
individuals within the organisation. Delegation process involves assigning specific duties to the individual.
In all cases, the manager must be sure that the subordinate has a clear understanding of what these duties
entail. The second step grants appropriate authority to the subordinate. The last step is to create the
obligation for the subordinate to perform the duties assigned.
Centralisation is the situation in which a minimal number of job activities and a minimal amount of
authority are delegated to subordinates. Decentralisation is the situation in which a significant number of job
activities and a maximal amount of authority are delegated to subordinates. The degree of decentralisation
depends on a number of factors:
 What is the present size of the organisation?
 Where are the organisation’s customers located?
 How homogeneous is the product line of the organisation?
 Where are organisation suppliers?
 Is there a need for quick decisions in the organisation?
 Is creativity a desirable feature of the organisation?

Managing Human Resources

Defining appropriate human resources

Appropriate human resources are the individuals in the organisation who make a valuable contribution
to management system goal attainment. Although the process of providing human resources for the
organisation is involved and somewhat subjective, the following discussion offers insights on how to
increase the success of this process. There are four steps involved: (1) recruitment, (2) selection, (3)
training, and (4) performance appraisal.

Recruitment
Recruitment is the initial attraction and screening of the total supply of prospective human resources
available to fill a position. Its purpose is to narrow a large field of prospective employees to a relatively
small group of individuals from which someone eventually will be hired.
A recruiter must first understand the position to be filled so the broad range of potential employees can
be narrowed intelligently. Job analysis is a technique commonly used to gain an understanding of what a
task entails and the type of individual who should be hired to perform the task. Basically, job analysis is
aimed at determining a job description (the activities a job entails) and a job specification (the
characteristics of the individual who should be hired for the job).
An example of a job description includes job title, location, job summary, duties, machines, tools,
equipment, material and forms used, supervision given or received, working conditions, hazards, etc. An
example of a job specification includes education, experience, training, judgement, initiative, physical
effort, physical skills, responsibilities, communication skills, emotional characteristics, unusual sensory
demands, etc.
Overall, sources of human resources available to fill a position can be categorised in two ways: (1)
sources inside the organisation, and (2) sources outside the organisation.
Most internal movements are usually promotions. Promotion from within typically has the advantages of
building morale, encouraging employees to work harder in hopes of being promoted, and helping
individuals decide to stay with a particular organisation because of future promotions.
A human resource inventory is an accumulation of information concerning the characteristics of the
organisation members; this information focuses on the past performance of organisation members as well as
on how they might be trained and best used in the future. This inventory should indicate which individuals
in the organisation would be appropriate for filling a position if it became available.
Walter S. Wikstrom suggested three types of records that can be combined to maintain a useful human
resource inventory in an organisation. A management inventory card is a form used in compiling a human
resource inventory – containing an organisational history of an individual and an explanation of how the
individual might be used in the future. This card contains information such as Name, Age, Date of

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Employment, Present Position, Years on the Present Position, Present Performance, Strength, Weaknesses,
Efforts to Improve, Could Move to, Training Needed.
A position replacement form is a form used in compiling a human resource inventory – summarising
information about organisation members who could fill a position should it open. This form focuses on
maintaining position-centred information, rather than the people-centred information on the management
inventory card. The card includes Positions, Performance, Incumbent, Salary, May Move, Replacement 1’s
Name, Salary, Age, Present Position, Employed, Training Need, When Available. A management
manpower replacement chart is a form used in compiling a human resource inventory – people-oriented and
presenting a total composite view of individuals whom management considers significant to human resource
planning.
If a position cannot be filled by someone presently in the organisation, numerous sources of prospective
human resources are available outside the organisation: competitors, employment agencies, readers of
certain publications, and educational institutions.

Selection
The second major step involved in managing human resources for the organisation is selection –
choosing an individual to hire from all those who have been recruited. Tool used in the selection process are
testing, assessment centres. Testing is examining human resources for qualities relevant for organisational
use; they include aptitude tests, achievement tests, vocational interest tests, and personality tests. An
assessment centre is a program in which participants engage in and are evaluated on a number of individual
and group exercise constructed to simulate important activities at the organisational levels to which these
participants aspire. These exercises might include such activities as participating in leaderless discussions,
giving oral presentations, or leading a group in solving some assigned problem.

Training
Training is the process of developing qualities in human resources that ultimately will enable them to be
more productive and thus to contribute more to organisational goal attainment. The purpose of training is to
increase the productivity of individuals in their jobs by influencing their behaviour. The training of
individuals is essentially a four-step process: (1) determining training needs, (2) designing the training
program, (3) administering the training program, (4) evaluating the training program.

Performance Appraisal
Performance appraisal is the process of reviewing past productive activity to evaluate the contribution
individuals have made toward attaining management system objectives. There are several methods
commonly used: rating scale, employee comparisons, free form essay, critical form essay. The reasons for
using performance appraisal are:
 They provide systematic judgements to support salary increases, promotions, transfer, demotions,
and terminations.
 They are a means of telling subordinates how they are doing and of suggesting needed changes in
behaviour, attitudes, skills, or job knowledge; they let subordinates know they stand with the boss.
 They also are being used increasingly as a basis for the coaching, and counselling of individuals by
superiors.

Organisational change and stress

Fundamental of changing an organisation

Changing an organisation is the process of modifying an existing organisation. The purpose of
organisational modifications is to increase organisational effectiveness. Most managers agree that if an
organisation is to be successful, it must change continually in response to significant developments, such as
customer needs, techno-logical breakthroughs, and government regulations. They also encourage employees
to continually search for areas in which beneficial organisational change can be made. For example, General
Motors has provided employees with a “think list” to encourage them to develop ideas for organisational
change and to remind them that change is important to the continued success of GM.
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Factors to consider when changing an organisation
Factors to consider when changing an organisation include (1) the change agent, (2) determining what
should be change, (3) the kind of change to make, (4) individuals affected by the change, and (5) evaluation
of change.
A change agent is an individual inside or outside the organisation who tries to modify an existing
organisational situation. The change agent might be a self-designated manager within the organisation or
possibly an outside consultant hired for his/her expertise.
It has been generally accepted for many years that organisational effectiveness is the result primarily of
organisational activities centring around three main classes of factors: (1) people, (2) structure, and (3)
technology. People factors are attitudes, leadership skills, communication skills, and all other characteristics
of the human resources within the organisation. Structural factors are organisational controls such as
policies and procedures. Technological factors are any types of equipment or processes that assist
orgnisation members in the performance of their jobs.

The kind of change to made

There are three kind of change: (1) technological change, (2) structural change, and (3) people change.
Technological change emphasises modifying the level of technology within a management system.
Structural change emphasises increasing organisational effectiveness by changing controls that influence
organisation members during the performance of their jobs. The changes can take several forms: (1)
clarifying and defining jobs; (2) modifying organisational structure to fit the communication needs of the
organisation; and (3) decentralising the organisation to reduce the cost of co-ordination, increase the
controllability of sub-units, increase motivation, and gain greater flexibility.
A matrix organisation is a more traditional organisation that is modified primarily for the purpose of
completing some kind of special projects. In essence, a matrix organisation is an organisation design in
which individuals from various functional departments are assigned to a project manager who is responsible
for accomplishing some specific task. Sometime it is also referred to as a project organisation. Often a
project organisation and a traditional organisation coexists.
There are several advantages and disadvantages to making structural changes such as those reflected by
the matrix organisation. Among the major advantages are that such structural changes generally results in
better control of a project, better customer relations, short project development time, and low project costs.
However, the structure changes also create more complex internal operations, which commonly cause
conflict, encourage inconsistency in the application of company policy, and result in a more difficult
situation to manage.
People change emphasises increasing organisational effectiveness by changing certain aspects of
organisational effectiveness by changing certain aspects of organisation members. The focus of this kind of
change is on such factors as employees’ attitudes, and leadership skills. The process of people change can be
referred to as organisation development (OD).
OD is the process that emphasises changing an organisation by changing organisation members and
bases these changes on an overview of structure, technology, and other organisational ingredients. There are
two types of components to be considered during OD efforts: overt and covert components. Overt
components are easily detectable such as organisational structure, job titles and descriptions, formal
authority networks, span of control and hierarchical levels, organisation’s strategic and objectives, etc.
Covert factors are usually more difficult to assess: such as personal views of organisation and individual
competency, patterns of interpersonal groups and divisional relationships, emotional feelings, needs and
desire, etc.
One commonly used OD technique for changing people in organisations is called grid OD. The
managerial grid is a basic model describing various managerial styles; it is used as the foundation for grid
OD. The managerial grid is based on the premise that various managerial styles can be described by means
of two primary attitudes of the manager: concern for people and concern for production. Within this model,
each attitude is placed on an axis which is scaled 1 through 9, and is used to generate five managerial styles.
The central theme of this managerial grid is that (9,9) management is the ideal managerial styles.
Managers using this style have high concern for both people and production. Managers using any other style
have lesser degrees of concern for people or production and are thought to reduce organisational success
accordingly.
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 The OD program has six main training phases for all managers in the organisation. The first two phases
focus on acquainting managers with the managerial grid concept and assisting them in determining which
managerial style they most commonly use. The last four phases concentrate on encouraging managers to
adopt the (9,9) management style and showing them how to use this style within their specific job situation.

Individuals affected by the change

To increase the chances of employee support, managers should be aware of the usual employee
resistance to change, and how this resistance can be reduced.
Resistance to change within an organisation is as common as the need for change. After managers
decide on making some organisational change, they typically meet with employee resistance aimed at
preventing the change from occurring. This resistance generally exists because organisation members fear
some personal loss, such as a reduction in personal prestige, a disturbance of established social and working
relationships, and personal failure because of an inability to carry out new job responsibilities.
Resistance may be reduced by means of the following guidelines:
 Avoid surprises – Give them time. People need time to evaluate a proposed change before
management implements it. Whenever possible, individuals who will be affected by a change should
be kept informed of the kind of change being considered and the probability that the change will be
adopted.
 Promote real understanding – Provide them with information. When fear of personal loss related to a
proposed change is reduced, opposition to the change is reduced.
 Set the stage for change – Adopt a positive attitude toward change. In essence, management should
demonstrate its appreciation for change as one of the basic prerequisites for a successful
organisation.
 Make tentative change – Make it temporary. This approach establishes a trial period during which
organisation members spend some time working under a proposed change before voicing support or
non-support of it. Tentative change is based on the assumption that a trial period during which
organisation members live under a change is the best way of reducing feared personal loss.
Kurt Lewin, a German social scientist, pioneered the study of field theory. Behavioural change is caused
by three distinct but related conditions experienced by an individual: (1) unfreezing, (2) changing, and (3)
refreezing. The first condition, unfreezing, is the state in which individuals become ready to acquire or learn
new behaviours – they experience the ineffectiveness of their present mode of behaviour and are ready to
attempt to learn new behaviour that will make them more effective.
Changing is the situation in which individuals, now unfrozen, begin experimenting with new
behaviours. They try the new behaviours that they hope will increase their effectiveness. It is best affected if
it involves both identification and internalisation. Identification is the process in which individuals
performing new behaviours pattern themselves after someone who already has expertise in those
behaviours. Internalisation is the process in which individuals performing new behaviours attempt to use
those behaviours as part of their normal behavioural pattern.
Refreezing is the situation in which individuals see that the new behaviour they have experimented with
during “changing” is now part of themselves. They have developed attitudes consistent with performing the
new behaviour and see that behaviour as part of their normal mode of operations.

Evaluation of change
The purpose of evaluation is not only to gain insights into how the change itself might be modified to
further increase organisational effectiveness but also to determine whether the steps taken to make the
change can be modified to increase organisational effectiveness the next time they are used.
This evaluation is difficult because data from individual change programs may be unreliable. Evaluation
of change often involves watching for symptoms that indicate that further change is necessary.

Change and Stress

Stress is the bodily strain that an individual experiences as a result of coping with some environmental
factor. Stress can have damaging psychological and physiological effects on employees’ health and on
employees’ contributions to the effectiveness of the organisation. Stress is a major cause of employee
absenteeism and turnover. Stress experienced by an employee can affect the safety of other workers or even
the public. In summary, stress represents a significant cost to organisations.
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 To manage stress, managers must (1) understand how stress influences worker performance, (2) identify
where unhealthy stress exists in organisations, and (3) help employees handle stress.
Managers must first understand the relationship between the amount of stress felt by a worker and the
worker’s performance. Extremely high and low levels of stress tend to have negative effects on
performance. Some level of stress is advantageous for performance.
Managers should identify where stress exists in organisations and determine whether the stress is at an
appropriate level. It is difficult to identify the people in the organisation who are experiencing detrimentally
high levels of stress. These symptom may help identify them: constant fatigue, low energy, moodiness,
increased aggression, excessive use of alcohol, temper outbursts, compulsive eating, high level of anxiety,
chronic worrying.
A stressor is an environmental demand that causes people to feel stress. In general, stress is not reduced
significantly until the stressors causing it have been coped with satisfactorily or withdrawn from the
environment. Three general strategies organisations often use to prevent the development of unwanted
stressors in organisations:
 create an organisational climate that is supportive of individuals;
 make jobs more interesting; and
 design and operate career counseling programs.

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