Combining Management and Engineering for Uncertain Times

Larry Chasteen, Ph. D.

Assistant Management Professor Stephen F Austin University

Abstract – The IEEE Engineering Management Society recently

celebrated its fiftieth Birthday. The roots of the society began with Professor Al Rubenstein at MIT in 1950 and then spread to Northwestern University. However, engineering management began much earlier. In 1911, Frederick Taylor published The Principles of Scientific Management. The studies conducted before and soon after the book’s publication established Taylor as the father of modern management with engineers as its leaders.

However, during the 1980’s and 1990’s, mergers and acquisitions led by managers with finance and accounting backgrounds took center stage. This often resulted in bankruptcy and falling stock prices since there was really no competitive advantage created from many of these mergers and acquisitions.

Today, business leaders are again emerging from an engineering background due to the complexity of today’s technology and products. It is much easier to teach an engineering major some business that to teach business majors the basics of engineering. Most engineers make good managers of large projects since they have been brought up using the total system viewpoint.

This paper will review the history of management and how it has been related to engineering. Understanding the basics of management is a crucial skill for engineers today. It can also be their source of competitive advantage in today’s work place.

I. INTRODUCTION

The knowledge of management history can help one

understand contemporary management theory and practice. It shows how the evolution of management concepts reflects the changing needs of organizations and society as a whole. Organized activities and management has existed for thousands of years. The Egyptian Pyramids and the Great Wall of China are classic examples. These were projects of tremendous scope, employing tens of thousands of people. The Pyramids are a particularly interesting example. The construction of a single Pyramid occupied thousands of people for several decades. Who told each worker what he or she was supposed to do? Who ensured that there would be enough stones at the site to keep workers busy? The answer was management.

Five hundred years ago, Michelangelo was actually running a medium-sized business. Thirteen people helped him paint the Sistine Chapel ceiling. About 20 helped carve the marble tombs in the Medici Chapel in Florence. He supervised a crew of at least 200 to build the Laurentian Library in Florence. Michelangelo personally selected his workers, trained them, and assigned them to teams, and kept detailed employment records. He recorded the names, days worked, and wages of all employees, every week. Organized activities and managers

have been with organizations since before the Industrial Revolution.

It has been only in the past several hundred years, particularly in the twentieth century, that management has undergone systematic investigation, acquired a common body of knowledge, and become a formal discipline. Adam Smith was the first contributors to the field of management. Adam Smith’s name is typically cited in economics courses for his contributions to classical economic doctrine. The Wealth of Nations, published in 1776, included a brilliant argument on the economic advantages that organizations and society would reap from the division of labor. He concluded that division of labor increased productivity by increasing each worker’s skill and dexterity, by saving time lost in changing tasks, and by the use of labor-saving inventions and machinery.

The Industrial Revolution also influenced management practices. It originated in the late eighteenth century in Great Britain. It crossed the Atlantic to America by the end of the Civil War. Machines made it economical to manufacture goods in factories. The advent of machine power, mass production, reduced transportation costs from the rapid expansion of the railroads also fostered the development of big organizations.

John Rockefeller put together the Standard Oil monopoly.

Andrew Carnegie gained control of two-thirds of the steel industry. Similar entrepreneurs were creating other large businesses that would require formalized management practices. It was not until the early 1900s that the first major step toward developing a formal theory to guide managers in running their organizations was taken.

II. The Roots of Modern Management

A group of practitioners and writers sought to formulate rational principles that would make organizations more efficient. This was called the classical approach to management because these principles set the theoretical foundation for a discipline called management. The classical approach can be broken into two subcategories: - Scientific management theory - General administrative theorists

In 1911, Frederick Taylor published The Principles of

Scientific Management. The studies conducted after the book’s

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publication established Taylor as the father of scientific management. Frederick Taylor was a mechanical engineer with a Quaker/Puritan background and was appalled at the inefficiency of workers at the Bethlehem Steel company. Taylor believed that worker output was only about 1/3 of what was possible. Therefore, he set out to correct the situation by applying the scientific method to jobs on the shop floor. Taylor sought to create a mental revolution among both the workers and management by creating clear guidelines for improved efficiency.

The management gurus that followed Taylor such as Frank

Gilbreth and Henry Gantt also had engineering backgrounds. A construction contractor, Frank Gilbreth gave up his contracting career in 1912 to study scientific management after hearing Taylor speak at a professional meeting. With wife Lillian, a psychologist, he studied work arrangements to eliminate wasteful hand and body motions. The Gilbreths also experimented with the design and use of the proper tools and equipment for optimizing work performance.

An associate of Taylor at Midvale and Bethlehem Steel was a young engineer, Henry L. Gantt. Gantt sought to increase worker efficiency through scientific investigation. He devised an incentive system that gave workers a bonus for completing their jobs in less time than the allowed standard. He is most noted for creating a graphic bar chart, the Gantt chart, which is now used by managers as a scheduling device for planning and controlling work.

Two Europeans were responsible for the start of the General Administrative View: Henri Fayol and Max Weber. Fayol designated management as a universal set of activities: planning, organizing, leading, and controlling. Fayol’s attention was directed at the activities of all managers, and he wrote from personal experience, having been the managing director of a large French coal mining firm.

Max Weber was a German sociologist. Writing in the early part of the twentieth century, Weber developed a theory of authority structures and described organizational activity on the basis of authority relations. He described an ideal type of organization, the bureaucracy. It was characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships.

III. Other Management Approaches

Several other management approaches evolved during the early part of the 20th century as products got more complex as shown in Fig. 1.

A. Behavior Approach

The behavior approach was the first approach developed during the early part of the 20th century. Managers can only get things done by working with people. Three individuals that

stand out as advocates of the behavior approach were Mary Parker Follett, Chester Barnard, and Elton Mayo.

Fig. 1. Evolution of management thought

Follett was a social philosopher whose ideas had clear

implications for management practices. She thought organizations should be based on a group ethic rather than on individualism. The manager’s main job was to harmonize and coordinate the group efforts which lead to the notion of “power with” versus “power over” employees.

Chester Barnard was another transitional figure like Follett and was the president of New Jersey Bell Telephone Company. He had read Weber, but unlike Weber, Barnard saw organizations as social systems that require human cooperation. He expressed his views in his book The Functions of the Executive, published in 1938. A major part of an organization’s success, as Barnard saw it, depended on obtaining the cooperation of its employees and their acceptance of authority.

The most important contribution of the behavior approach to management was the Hawthorne studies. These studies were undertaken at the Western Electric Hawthorne Plant in Cicero, Illinois. These studies were to examine the effect of different illumination levels on worker productivity, but got unexpected results. In 1927, the Western Electric engineers asked Harvard professor Elton Mayo to join the study as a consultant to help explain the “strange” results.

The results of one experiment indicated that the incentive plan had less effect on workers’ output than did group pressure. Social norms were concluded to be the key determinants of individual work behavior. Mayo’s conclusions led to a completely new emphasis on the human factor in organizations. B. Human relation approach

Another approach was the human relations movement. Members of this movement uniformly believed that a satisfied

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worker was a productive worker. Dale Carnegie, Abraham Maslow, and Douglas McGregor were the leaders associated with this movement.

Dale Carnegie is often overlooked in management theory, but his ideas and teachings had an enormous effect on management practice. His book, How to Win Friends and Influence People, was read by many managers from the 1930s to the 1950s.

Abraham Maslow, a humanistic psychologist, is best known

for his hierarchy of five basic needs: physiological, safety, social, esteem, and self-actualization. Maslow argued that each step in the hierarchy must be satisfied before the next can be activated and that once a need was substantially satisfied, it no longer motivated behavior.

Douglas McGregor is best known for his formulation of two sets of assumptions—Theory X and Theory Y. Theory X presents an essentially negative view of people. It assumes they have little ambition, dislike work, want to avoid responsibility, and need to be closely supervised to work effectively. Theory Y offers a more positive view. It assumes people can exercise self-direction, accept responsibility, and consider work to be as natural as rest or play. C. Quantitative Approach

This approach to management (operations research or management science) evolved out of the development of mathematical and statistical solutions to military problems during World War II. The British, confronted with the problem of maximum effectiveness from their limited aircraft capability, had their mathematicians devise an optimum allocation model. The U.S. used similar methods.

After the war, many of the quantitative techniques were moved into the business sector. One group of military officers, labeled the “Whiz Kids,” joined Ford Motor Company in the mid-1940s and immediately began using statistical methods to improve decision making. Two of the most famous: Robert McNamara and Charles “Tex” Thornton.

McNamara rose to the presidency of Ford and then became U.S. Secretary of Defense. He concluded his career as head of the World Bank. Tex Thornton founded the billion-dollar conglomerate Litton Industries, again relying on quantitative techniques to make acquisition and allocation decisions. D. Systems Approach

The systems approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Societies are systems, and, so too, are computers, automobiles, organizations, and animal and human bodies. There are two basic types of systems: closed systems and open systems. Closed systems are not influenced

by and do not interact with their environment. An open systems approach recognizes the dynamic interaction of the system with its environment. An organization (and its management) is a system that interacts with and depends upon its environment.

Management, however, can not be based solely on these system principles. The contingency approach (sometimes called the situational approach) has been used to upgrade the system principles of management and to integrate them into management theory. A contingency approach to the study of management was the next logical evolution.

IV. Engineering Management

The Engineering Management Society recently celebrated its fiftieth Birthday. The roots of EMS began with Professor Al Rubenstein at MIT in 1950 and then spread to Northwestern University. Volume I of the IEEE Transactions on EM was published in 1954. The Project Manager, by Paul Gaddis, was the first journal article on engineering management and was published in the HBR in 1959. This article described the role of individuals in advanced technology industries who acted as focal points to manage resources.

Engineering management expanded in the 1960’s. Professor John Mee developed the matrix organization. The USAF developed a series of manuals in 1964. Professors Cleland and King published the first EM textbook in 1968 - Systems Analysis and Project Management. The DOD set guidelines for all defense contracts based on the AFSC manuals. NASA developed similar guidelines. Reference [1] documents the continued expansion of Engineering Management.

Thus, as can be seen that from the very earliest days,

engineering and management have been tightly entwined. This entwinement blossomed during the 1960’s and 1970’s with large engineering projects and matrix organizations [2]. However, during the 1980’s and 1990’s, mergers and acquisitions led by managers with finance and accounting backgrounds took center stage. This often resulted in bankruptcy and falling stock prices since there was really no competitive advantage created from many of these mergers and acquisitions [3].

However, today’s business leaders are again emerging from

an engineering background due to the complexity of today’s technology and products [4]. It is much easier to teach an engineering major some business that to teach business majors the basics of engineering. Most engineers make good managers of large projects since they have been brought up using the total system viewpoint [5].

V. Golden Age for Engineers

Unexpected events such as deregulation, global competition,

downsizing and the end of the cold war have caused a

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reexamination of how we specify, design and build systems [6]. Cost, cycle time reduction, and shareholder value have become the watchwords, and more is demanded of the system [7]. Engineering, when done properly, provides an approach to maximize business and customer value through people, processes, and organizational concepts [8, 9].

Reference [10] discusses how the marketplace has changed

and how these changes will place engineers at the center stage for strategic leadership of industries at every level of technological complexity. Confining an engineer career to only doing engineering equates to doing only what you are told by management. Most engineers, however, want added influence over their professional environment, along with a greater ability to contribute to planning and the continued success of their firms.

If engineers do not participate in strategy, leadership, and

management, who does? Also, do engineers have the required training to take a leadership role [11]? At every level of management in technology businesses, there are examples of problems when engineers don’t participate or participate beyond their training. Problems result when engineers are promoted to levels of responsibility beyond their preparation [12]. However, an even more serious problem arises when the higher levels of a corporation lack the necessary technical competence. Either way, strategic and tactical decisions frequently lack the necessary integrated consideration of input from all related disciplines.

There is a more fundamental reason why engineers should

take part in the strategic decisions in firms. In today’s complex and uncertain environment, more and more business decisions require an engineering approach to the decision making process [13]. The flows of material and intellectual knowledge, both within an organization and throughout the supply chain, are faster, more complex, and operate at much closer margins [14]. Supply chains are looking more like classic feedback loops. Manufacturing, business, and commerce systems have become “engineered environments” [15].

Reference [16] discusses the fundamentals of system

engineering and its relationship to management. System engineering is a discipline that has existed over thirty years. As products and services have become more complex, an overall “systems-view” of the product or service is required. System engineering can be defined as a process oriented discipline of problem solving and design that considers all the components of a system in translating user needs into requirements and then to an operational system where the entire lifecycle of the system is considered. A key aspect of system engineering is the concept of the “system” being a collection of functional components that perform an overall purpose.

These system engineering principles can be applied to

management. In management, customer needs must be considered. Cost and schedules must be planned. Interfaces

must be considered. Uncertainty must be addressed. The components are very similar as shown in Fig. 2. Individuals trained in system engineering will have the overall viewpoint required for managerial planning and thinking.

Copyright © 2004 Prentice Hall, Inc. All rights reserved.

Systems Definition Process

Select Best Design

DocumentBR&O/CR&O/SR&O/SDD

Technical Process

Business Process

Customer/Market Process

Design Options

OptionsAnalysis

Trade Criteria

TechnicalReqm’ts

Fig. 2. Systems Management

VI. Engineering/Business Training

There is the ongoing debate whether it is easier to teach business skills to engineering majors or engineering skills to business majors [17]. The consensus seems to be it is easier for engineers to learn business - engineering is too difficult to learn as a follow-on discipline. The number of instances where engineers have developed financial, organizational, and strategic talent far outweighs the incidences where financial managers developed solid engineering ability.

Reference [18] discusses the University of New Mexico’s

expanding practice of teaching entrepreneurship to engineers. With today’s dynamic environment, more engineers are feeling the need to “strike out” on their own and start a business with a small group of colleagues. One or two basic entrepreneur courses can give the engineer a foundation in business and also provide case studies of success and failure. Reference [19] states that the entrepreneurship courses receive some of the highest alumni feedback of any courses.

Reference [20] reports on similar entrepreneurship courses at

Southern Methodist University (SMU). Their plan is to move students “beyond engineering” so as to produce not only competent engineers but visionary leaders and innovative entrepreneurs. SMU plans to give students not only technical skills but also the communications, business, and organizational skills to become business leaders.

Reference [21] states that the University of New Orleans

provides similar training in its engineering management program. Their program includes an MBA and a MS in Engineering Management. Reference [22] also reports on the increasing interest to give engineering management

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assignments earlier in an engineer’s career and that the ABET 2000 now requires engineering management skills in the undergraduate curriculum.

VII. Conclusion

From the very beginning, modern management theory was

developed by people with an engineering background. However, during the 1980’s and 1990’s, mergers and acquisitions by managers with finance and accounting backgrounds took center stage. This often resulted in bankruptcy or falling stock prices since there was really no competitive advantage created from many of these mergers and acquisitions.

Due to the complexity of today’s technology and the

uncertainty of the environment, engineers will be required to take a larger part in a firm’s strategic planning if the firm desires to be successful. Projects are so different that basic engineering skills will be required to adequately understand the strategy implications. Engineers have been trained to look at all sides of the issues and analyze risks (system engineering). This process is a combination of detailed planning and emergent planning.

Engineering schools are also beginning to provide basic

business and entrepreneurship training. As engineers take more of the lead in technology companies, their systems background will be more in tune with the new planning style called strategic thinking. Most engineers make good managers of large projects since they have been brought up using the total system viewpoint. Combining an engineer’s technical background with business training will provide a competitive advantage for technology firms in the 2000’s.

REFERENCES

[1] W. Lanness, “What is Engineering Management,” IEEE Transactions on Engineering Management, vol. 48(1), 2001, pp. 107-110.

[2] R. Leifer, C. McDermott, G. O’Conner, L. Peters, M. Rice, and R. Veryzer, Radical Innovation. Boston: Harvard Business School Press, 2000.

[3] M. Porter, Competitive Strategy. New York: Harper and Row, 1980. [4] M. Jelinek and C. Schonhaven, The Innovation Marathon. Oxford:

Blackwell, 1990. [5] L. Chasteen, Cluster Formation and Growth Dynamics. Unpublished

doctoral dissertation, Dallas: University of Texas at Dallas, 2003. [6] R. Florida and M. Kenney, “Venture Capital and High Technology

Entrepreneurship,” Journal of Business Venturing, Vol. 3, 1988, pp. 301-319.

[7] H. Mintzberg, The Rise and Fall of Strategic Planning. New York: Free Press, 1994.

[8] C. Christensen, Innovators Dilemma. Boston: Harvard Business School Press, 1997.

[9] S. Birley, “Networks in the Entrepreneurship Process,” Journal of Business Venturing, Vol. 1, 1985, pp. 107-117.

[10] D. Wells, “Golden Age for Engineers”, Success in the New Millennium, New Jersey: IEEE Press, 2000.

[11] T. Peters, RE-imagine: Business Excellence in a Disruptive Age. London: DK Publishing, 2003.

[12] G. Pinchot, Intrapreneuring. New York: Harper and Row, 1985. [13] C. Christensen, Innovators Solution. Boston: Harvard Business School

Press, 2004. [14] J. Joiner, “Project Management program at Texas Instruments,”

presentation to the Dallas IEEE Section, November, 2003. [15] Wells, 2000, op. cit. [16] W. Shaw, “An Introduction to System Engineering”, Success in the New

Millennium, New Jersey: IEEE Press, 2000. [17] Wells, 2000, op. cit. [18] W. Gross, “How to Teach Entrepreneurship to Engineering students,”

Proceedings of the 2000 EMS Conference, New Jersey: IEEE Press, 2000.

[19] Ibid. [20] S. Szygenda, “Beyond Engineering,” SMU Magazine, Spring, 2000 pp.

16-19. [21] Lanness, 2001, op. cit. [22] Ibid.

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