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by Teresa Jurgens-Kowal, PE, CPEM, PMP®, NPDP
(Blog #5 EMBOK series)
Economic and financial theory and practice are covered in the Engineering Management Body of Knowledge (EMBOK), Domain 4: Financial Resource Management. This domain covers the typical financial data and information engineering managers should understand. Moreover, much of the content in Domain 4 actually bridges the gap between engineering and management. Senior executives typically make decisions based on money more than how cool the science is.
All engineers should be exposed to the basics of bookkeeping and accounting. The most typical system of bookkeeping is a “double-entry” in which debits (left-hand side of a worksheet) must be in balance with credits (the right-hand side of the worksheet). For chemical engineers, this is much like a material balance for money. (Please see “Talking to Your Bo$$” at AIChE’s ChEnected website).
Thus, for every transaction, the debits and credits must remain in balance. If we spend $1 to acquire a pencil, we would credit, or subtract from, the cash account while we debit, or add to, our materials account. Debits and credits stay in balance always.
Financial people will prepare reports called balance sheets on a periodic basis to demonstrate that assets are in balance with liabilities and owner’s equity. Owner’s equity is the value held in a company after all the liabilities have been paid off. If we had $2 cash and only spent $1 to acquire the aforementioned pencil, we would still have $1 in savings (also known as owner’s equity). If we had $0.50 of debt to pay off first, then there would only be $0.50 of owner’s equity. Companies often make investment and stock buyback decisions based on the value of owner’s equity. Banks will examine the balance sheet in order to make loan decisions, as well.
As described in Section 4.1.4 of the EMBOK (4th ed.), profit is measured by the difference (in a given transaction) between the sales price of a good and the cost to produce and sell it. Production costs have two components: fixed costs which do not change regardless of the quantity of goods produced and variable costs that scale with production. Rent, for example, is a fixed cost because it doesn’t change regardless how many widgets are produced in a factory. Raw materials, on the other hand, are variable costs because as the number of widgets produced increases, we need more raw materials to manufacture them.
Profit, then, is the difference between sales price and the cost of production (fixed and variable).
On the radio and television, we also hear a lot about government agencies (national, state, and local) setting budgets. You might also have a personal budget so that your expenses don’t exceed your income. Engineering organizations also must establish annual budgets so that expenditures don’t exceed inputs. Further, the Board of Directors and CEO are tasked with maintaining the long-term financial health of the company.
The most common way for a business to set a budget is zero-based budgeting. In the zero-based budgeting method, we build expected revenues (inputs) and costs (expenses) from a blank sheet of paper each year. In this way, the management team (or family) will examine the validity of each expense and the assumptions leading to revenue generation. (Note that the US Congress does not use zero-based budgeting and generally assumes an added percentage to each budget item in each year, tending toward less examination of each line item.) Budgets are designed to help engineering managers invest in appropriate growth projects while maintaining profitability in existing operations.
As a part of any budget process, we must assume and calculate information regarding inflation and the time value of money. In essence, the time value of money means that $1 today is worth more than $1 tomorrow. For example, in the US, the Federal Reserve has determined that a 2-3% inflation rate is ideal. Let’s call it 2.5%. This means, that next year, the $100 bill in your pocket will only have the purchasing power of $97.56.
As engineering managers plan, design, and construct projects with long lead times, the time value of money becomes an important consideration. The present value of a project will be more heavily influenced by revenues and expenses that happen in the near-term. When cash flows are further into the future, the impact to present value will be lessened.. Similarly, foreign exchange rates for international projects and income tax rates can both influence the profitability of a capital project. Engineering managers must be fluent in both the science and the economics of projects they are involved in..
Successful engineering managers can bridge the gap between the technical and the financial fields. Some engineers pursue expensive MBAs to learn about finance and economics. However, ASEM members are presented with a mini-MBA in Domain 4 of the EMBOK, building on the information presented earlier on Strategy (Domain 3, http://asem.org/blog/6133262) and Management Theory (Domain 2, http://asem.org/blog/6004937. To be successful, engineers must learn to speak “accounting” to gain support for projects and programs. CPEM and CAEM (http://asem.org/EM-Professional-Cert-Program) certification requires that an engineering manager be familiar with basic accounting so that s/he is skilled in the financial nuances of any engineering decision. After all, companies are in business to make money.
Get your copy of the EMBOK here. There are also great tools on economics and finance in the EM handbook here. Past articles in this series include:
The Business Savvy Engineer - http://asem.org/blog/5704908
The Business-Savvy Engineer’s Introduction to Engineering Management - http://asem.org/blog/5880804
Leadership & Organizational Management for the Business Savvy Engineer - http://asem.org/blog/6004937
Teresa Jurgens-Kowal, PE, CPEM, PMP®, NPDP, is a passionate lifelong learner. She enjoys helping individuals and companies improve their innovation programs and loves scrapbooking. You can learn more about Teresa and innovation by connecting on LinkedIn.
(This data reflects new and renewing Certifications and Memberships from the first quarter of 2018 / January 1- March 31.)
ASEM is proud to announce our newest CAEMs: Mehmet Efe Guzel (USA) and Andrew Toland (MI-USA)!
ASEM is proud to announce our newest CPEMs: Khalid A. Al-Jabr (Saudi Arabia), John Braswell (USA), Francis Chua (CA-USA), Golshan Coleiny (MA-USA), Jean Essila, (MI-USA), Samy Mohamed (USA), David Paulus (AR-USA), Shahryar Sorooshian (USA), Marcus Stewart (DC-USA), Bill Turnbull (USA), Travis Webb (OK-USA) and Tony Williams (USA)!
The following are ASEM's latest re-certified CPEMs: Yin-Chih Lin (China), John Nicholson (USA), Simon Philbin (UK), Daniel Rowbotham (Canada) and Brian Smith (MS-USA)!
Are you interested in certification? The ASEM website has all the details, here: http://asem.org/EM-Professional-Cert-Program
ASEM welcomes our new and renewing Academic Partners:
Univ of Colorado-Boulder AP Admin - CO (USA)
Evan Brunner - NY (USA)
Thomas Cruz - NJ (USA)
Caneel Dixon - NY (USA)
Kristen Egan - CO (USA)
Carl Johnson - GA (USA)
Jack Kesti - PA (USA)
Sara Klena - NY (USA)
James Kubisch - NY (USA)
Ryan Leemans - NY (USA)
Ryan O'Connell - SD (USA)
Daniel Provaznik - NY (USA)
John Richards - NY (USA)
Kathryn Silecchia - FL (USA)
Chloe Smith - NY (USA)
Justin Thomas - NY (USA)
Hayden Trainor - NY (USA)
Benjamin Vasta - NY (USA)
Charles Wagner - NY (USA)
Timothy Young - VA (USA)
There is more information about becoming an Academic Partner at the ASEM website, here: http://asem.org/AcademicPartnership
ASEM welcomes our new and renewing Student Members:
Ahmed Alibage - OR (USA)
Arlexis Branson - MI (USA)
Kyler Castro - MI (USA)
Jean Essila - MI (USA)
Basem Abdullrahman Fallatah - OH (USA)
Jose Febres - MD (USA)
Jedidiah Hall - SD (USA)
Stacy Kam - FL (USA)
Rafaa Khalifa - OR (USA)
Richard Mutule Kilonzo - NC (USA)
Jennix Kuriakose Joyson - Australia
Patrick Kush - MN (USA)
M. Oussama Laraichi - OR (USA)
Cliffton Lines - FL (USA)
Bradford Logan - VA (USA)
Lauren McIntire - MA (USA)
Atena Nosrati - CA (USA)
Bial Patel - MI (USA)
Marissa Poth-Miller - MI (USA)
Cyril Mark Taylor - VA (USA)
Thembani Togwe - KS (USA)
Ryan Van Leuven - ID (USA)
Pei Zhang - OR (USA)
Are you a student and seeking ASEM membership? There is more information at the website, here: http://asem.org/Student-Membership
ASEM welcomes our new and renewing Retiring and Professional Members:
Kate Abel - NJ (USA)
Ashokkumar Alalasundaram - Singapore
José Marcelo Almeida Prado Cestari - Brazil
Neslihan Alp - TN (USA)
Efosa Brown Amayo - Nigeria
Wayne Andrews - VA (USA)
Marco Antonio Archanjo - Brazil
Bill Bailey - GA (USA)
Timothy Barnett - AL (USA)
Eric Borquist - LA (USA)
Tom Bowlin - MO (USA)
Stanley Bullington - MS (USA)
Keith Burleson - AL (USA)
Hugh Cole - CA (USA)
Carlos Roberto Cordova Morales - Peru
T Steven Cotter - VA (USA)
Charles Daniels - VA (USA)
Jill DeLong - MN (USA)
Fernando Deschamps - Brazil
Gene Dixon - NC (USA)
Toni Doolen - OR (USA)
Mark Dotson - TN (USA)
Julie Drzymalski - PA (USA)
Vincent Dutter - WI (USA)
Ona Egbue - SC (USA)
Osama Elsafadi - TX (USA)
Gerald Emison - MS (USA)
Misagh Faezipour - TN (USA)
Sylvia Ferry - AL (USA)
Andreas Garstenauer - VA (USA)
Fernando Gonzalez Aleu - Mexico
Abhijit Gosavi - MO (USA)
Marc Haddad - Lebanon
Holly Handley - VA (USA)
Morgan Henrie - AK (USA)
Andrew Herbst - Canada
Michael Holman - FL (USA)
Deborah Howell - NY (USA)
Amr Ibrahim - Egypt
Keith Jeffcoat - NJ (USA)
Paul Kauffmann - VA (USA)
David Kern - VA (USA)
Bruce Kisell - Canada
Constantine Koursaris - FL (USA)
Geert Letens - Belgium
Sandy Lieske - ID (USA)
Yosef Manik - Indonesia
James Marion - GA (USA)
Robert Matteoni - MO (USA)
Daniel McCarville - AZ (USA)
Debashis Mishra - India
Heather Nachtmann - AR (USA)
Ganapathy Natarajan - OR (USA)
Kim LaScola Needy - AR (USA)
Ashley Nelson - TX (USA)
Asim Nisar - Pakistan
Akin Olufowoshe - TX (USA)
Wayne P. - WI (USA)
Ed Pohl - AR (USA)
Alejandro Polanco - Chile
Taiwo Taopheeq Popoola - Nigeria
Kehinde Popoola - Nigeria
Clement Potoki - MD (USA)
Imad "Danny" Qubain - FL (USA)
Michael Repomenta - Philippines
Lorenzo Juan Romero Diaz - Peru
Pedro Patricio Sabilala - Philippines
Mark Anthony Santiago - Philippines
Devis Saputra - Indonesia
James Schreiner - NY (USA)
Jiong Shen - PA (USA)
Tricia Simo Kush - MN (USA)
Yesim Sireli - NC (USA)
Brian Smith - MS (USA)
Alice Squires - VA (USA)
Robert Stevens - TX (USA)
James Strong - AL (USA)
Joseph Talik - FL (USA)
Walter Tamosaitis - WA (USA)
Andrew Toland - MI (USA)
Jalal Ud Din - Pakistan
Resit Unal - VA (USA)
Eileen Van Aken - VA (USA)
Michiel van der Hoeven - Chile
Ken Vaughn - IL (USA)
Jerry Westbrook - TN (USA)
Joseph Wilck - NC (USA)
Woodrow Winchester - PA (USA)
Charles Winder - TX (USA)
Ibrahim Yitmen - Sweden
Are you interested in becoming a Professional Member? You guessed it; there is more information at the ASEM website, here: http://asem.org/Professional-Membership
Executive summary authored by and presented with permission from Bruce Vojak, Managing Director at Breakthrough Innovation Advisors, LLC
One of just a handful of options available to executive leadership when their company or its products reach life cycle maturity, Breakthrough Innovation is the proven path of renewal, the opportunity to survive and thrive in a significant way. Yet, Breakthrough Innovation is only half of the innovation equation. A complete portfolio includes investment in both Incremental Innovation (which optimizes within the existing paradigm) and Breakthrough Innovation (which changes the paradigm within which competition occurs). When implemented effectively, Incremental and Breakthrough Innovation work together to enable the company to both survive in the near term and thrive over time.
Having decided to invest in Breakthrough Innovation, executive leadership must develop sufficient insight to do so wisely. Unfortunately, the most commonly held views on innovation, that it is either random or recipe, are flawed at their core and do not deliver on the promise of renewal. Instead, Breakthrough Innovation is the very human act of discovery – an act requiring a company to acquire and establish new perspectives, insights, cultural values, and business practices in order to achieve and sustain it. Only those who hold such a perspective possess the potential to succeed at Breakthrough Innovation.
Finally, having understood the way of Breakthrough Innovation success, executive leadership must commit sufficiently to ensure that success. While such commitment comes in many, varied forms, it includes but is not limited to hiring the right people, providing them with resources and time, and sustaining an innovation‐friendly culture. It also requires resisting the temptation to pull these resources onto the problem of the day to extend maturity, a problem that all too often dilutes and renders useless what originally was intended as investment intended to renew the company.
While such insight and investment is rare, those who rise to these expectations and challenges serve all, successfully leading their organization beyond everyone’s dreams.
The entirety of this article continues at AN-EXECUTIVE-BRIEFING-ON-BREAKTHROUGH-INNOVATION
Used with permission from John Walston, Co-Founder of ResourcefulManager
Let’s set the record straight.
Everyone who is a great leader isn’t necessarily a great manager. And great managers aren’t necessarily great leaders.
So when it comes to the Leaders vs. Managers debate, where do you land?
Here’s a list of 17 traits that separate the two. Go down the list and check off which ones match you. Most of us have some qualities of each. For example, do you have 10 Leader traits and 7 Manager traits? Or the reverse? Are you happy with the answer?
Make sure to tell us in the comments section and read more insightful articles at the Resourceful Manager website: https://www.resourcefulmanager.com/leaders-vs-managers/
ResourcefulManager Illustration by Michael Credle | Research by Lisa McKale
© Copyright 2016 ResourcefulManager
The 2017 data is in, and job announcements are up substantially for U.S. manufacturing.
Reshoring and foreign job announcements (FDI) surged in 2017 to over 170,000 U.S. manufacturing jobs. This is strong evidence that work can and will be successfully brought back—and is especially relevant in a time of intense debate over tariffs and the trade deficit.
All told, job announcements were up 52% from 2016, and a whopping 2,800% from 2010. Announcements lead to hiring typically within 6 to 24 months.
There is substantial potential for many more jobs to come back, if the right policies are implemented going forward.
Implications for the Economy and Manufacturing
President Donald Trump has announced tariffs on solar panels, appliances, steel, aluminum and a broad range of Chinese products. His aim is to eliminate the $700 billion/year non-petroleum goods trade deficit, thus increasing U.S. manufacturing by about 40%--about five million jobs.
Many observers question these actions based on likely retaliation and higher U.S. consumer prices. Others question the feasibility and wisdom of trying to increase manufacturing’s share of the economy by bringing back to the U.S. the industry that we have lost over the last 40 years.
We observe from our 2017 data on reshoring, combined with other Reshoring Initiative reports, that:
In addition to federal policy, states and cities need to play a role:
Companies can profit from the data below—here are some things to keep in mind:
Read the entire article at Reshoring-Rise-What-it-Means-for-the-Trade-Debate?
Engineering managers are called to lead and to inspire. Yet, many of us struggle to understand what motivates our staff and how to improve engagement and creativity. What can we do – as leaders – to build success in ourselves, our teams, and our employees?
Carol Dweck’s book, “Mindset,” provides great insight to the perspectives that each of us brings to work, school, and relationships. A Stanford psychologist, Dr. Dweck’s decades of research on learning and talent help us to encourage those we influence to achieve their utmost. At the heart of her research is how we think about abilities.
People with a fixed mindset assume that intelligence is limited and talent reigns over effort. These people will find blame with others when they experience failure because they view failure as a reflection of their own self. For example, the great tennis player, John McEnroe believed only in natural talent and could not stand the thought of losing (pg. 100). When he lost a match, McEnroe blamed the weather or any other “little thing” (pg. 102). He didn’t pursue self-reflection or analysis to seek improvement. People with a fixed mindset rely upon a pre-determined pool of “unique” talents to “win”.
Alternatively, people with a growth mindset seek interesting challenges and view failures as learning opportunities. They believe that qualities and capabilities can be cultivated through greater effort, improved strategies, and help from others (pg. 7). In one of Dweck’s studies with young children, those with the fixed mindset attempted new puzzles only when they did well the first time. Meanwhile, kids with a growth mindset sought more challenging puzzles even if they could not solve the original one. They were motivated by the challenge itself and sought novel strategies to identify potential solutions.
So, what does mindset have to do with engineering managers? As leaders, we encounter both personality types. Some of our colleagues believe they are skilled and talented engineers just because they are inherently special and unique. Others (like Edison) recognize that each failure represents a chance to grow our knowledge base and to continuously improve. It is the responsibility of a good leader to build and reward project team members while simultaneously growing a learning culture that drives toward project success.
Dweck relays tips to help us establish a growth mindset. Rewarding effort over talent encourages people to try new theories and to investigate new possibilities. Punishing failure is, of course, adamantly discouraged. Dr. Dweck freely admits that she tends toward a fixed mindset in many situations, but by focusing on goals and learning, she can change her perspective to a growth mindset. So can we and with a focus on project objectives, we can encourage team members to also learn and grow.
For instance, she tells of a colleague who wanted to lose weight for a class reunion. He tried the same things as he had in the past, but to no avail. Implementing the same tools and techniques is an indication of a fixed mindset personality. A person with a growth mindset instead would try new strategies to tackle the old problem – change meal portions, exercise with a buddy, etc.
Mindset is packed with data and research from Dweck and her colleagues, much of it from the field of education. Chapter 5 focuses on examples and application of mindsets in business. Mindset is a fascinating look at how our internal perspectives can lead us to decisions in how we learn and how we achieve success. I recommend Mindset to any engineering manager or leader as well as to all practicing engineers. All of us can benefit from a positive growth mindset!
What learning and success perspectives influence your engineering teams?
Teresa Jurgens-Kowal, PhD, PE, PMP, CPEM, NPDP
Global NP Solutions, LLC
By Patrick Sweet, P.Eng., MBA (Blog #4 EMBOK series)
Photo credit: Rawpixel.com
At some point, engineering managers will have the privilege and responsibility of being involved in strategic planning and management in their organization. Strategic planning is the process of setting up, launching, adjusting and improving a corporate-level strategic plan. Strategic management, on the other hand, constitutes the set of tools and techniques to put that strategy to work.
Coming up with strong, focused strategies and executing them well is critical to the success of any organization in a competitive, global market. Engineering managers play a central role in making that happen. We, as engineers, are uniquely positioned to understand our organizations’ products and technology, and how they can fit into the bigger picture.
In this post, I’ll provide a summary of Domain 3 in the Engineering Management Body of Knowledge: Strategic Planning. I’ll cover the main sections in that domain, including the planning process, strategic management, strategy formulation, and executing strategy.
The first step in the strategic planning process is to understand the organization and its current state. You need to understand where you are before you can plan to end up somewhere else. Once you establish a baseline, you can launch into a “plan, do, check, act” cycle.
Plan – This involves creating the organization’s mission and vision statement, understanding the relationships between the firm and its suppliers, customers, and competitors. Next, medium and short-term goals are set in order to realize the long-term vision. Finally, specific strategies (such as growth strategies, acquisitions, partnering, etc.) are chosen in order to realize the overall vision.
Do – This stage is all about the day-to-day work to actually execute the strategy. This often happens in the form of projects and requires strong project management.
Check – The checking process happens in parallel with the other steps, and is used to control the strategic planning and management activities.
Act – This final step is to adjust work in response to having checked the work in the previous step to make sure things stay on track. Using the measurement in the “check” step above, corrective action is taken, and the PDCA cycle starts again.
Strategic management is about implementing strategy and making changes as problems and opportunities arise mid strategic-planning cycles. The tools and techniques used to do this should help make sense of the organization’s current state, what the future should look like, and how to get from the current state to the future state.
A number of tools have been developed that can help with strategic management:
CROPIS Analysis – CROPIS stands for Customers, Requirements, Outputs, Processes, Inputs, and Suppliers. An in-depth analysis of each of these elements can help to reveal opportunities for improvement throughout the organization.
SWOT Analysis – SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. In a SWOT analysis, an organization is looks at the good and bad in the organization’s internal and external environments. This can help an organization understand which risks and opportunities to address and how.
Boston Consulting Group (BCG) Competitor Matrix Analysis – This tool uses a matrix to plot products, services, divisions and companies on two axes: sales growth rate, and market share. Products and services fall into one of four quadrants, called Stars (high growth, high market share), Cash Cows (low growth, high market share), Dogs (low growth, low market share), and Question Marks (high growth, low market share). Understanding what quadrant your products or services fall in can help you understand what to do with them in order to improve your company and help it meet its strategic goals.
The Product Life Cycle Model – All products progress through a life cycle. They move from introduction to growth, maturity, and decline. Understanding which phase your products are in will inform how you treat those products and what kind of investments you make in them – a brand new product needs to be treated differently than one that is in decline, but both can help the company reach its goals if treated properly.
Strategy is fundamentally about choosing a way to try and realize an organization’s vision. There are three fundamental steps to forming strategy:
1. Use strengths to capitalize on opportunities
2. Mitigate weaknesses by acquiring new resources
3. Adjust course in response to environmental changes
Porter’s Five Forces – Michael Porter’s Five Forces model distills what an organization needs to consider with respect to the formulation of strategy into five elements: rivalry among existing firms, threat of new entrants, buyer power, supplier power, and threat of substitute products. All of these forces need to be evaluated in order to know where a firm should go with its strategic direction.
Porter’s Generic Strategies – Michael Porter also developed a series of generic strategies that companies can use as starting points for understanding how they should position themselves in the market. Strategies can be plotted on two axes. The first axis has cost leadership (providing a product or service at the lowest cost) on one end of the spectrum and differentiation (offering something unique and valuable in the market place, which commands a high price) on the other end. The other axis deals with market focus, with a focus strategy (trying to appeal to a specific, niche market) on one end, and a global focus (selling to a broad market) on the other.
Core Competence Strategy – The core competence strategy focuses an organization’s business activities on areas of expertise that would be difficult for competitors to replicate. This strategy grew in response to the failure of vertical integration strategies that had worked so well previously.
Services-Based Strategy – Many companies in the West have started making moves toward becoming more service-based than manufacturing-based. This is in response to the dominance that regions outside the West have enjoyed in manufacturing in recent years due to lower worker wages. Companies such as IBM, who used to focus their attention on hardware and computer products, now offer services such as consulting as their main business.
Joint Ventures, Outsourcing and Partnering – Joint ventures and outsourcing are two strategies that can be used to help a company compete in a market where they either don’t have all the core competencies themselves, or they are too expensive. Partnering with other companies is an effective way to leverage the strengths of both organizations. Outsourcing can be a way to shift scope to another organization in order to realize cost reductions, take advantage of special capabilities, or shift risk. Partnering is sometimes achieved through joint ventures, and other times through acquisition.
Once a strategy has been established, it needs to be put into practice. This can be either in the form of permanent teams that take care of ongoing operations, or special teams organized to achieve a one-time objective. Regardless, teams need to be clear on their mandate, and be comfortable and competent at leading change.
The Strategic Planning domain covers topics that are critically important to organizations of every size and in every industry. When an organization is technical, engineering managers play a vital role in the formation and execution of the company’s strategy. Developing a strong sense of strategic management and the tools used to develop and implement strategy can be very beneficial to both the engineering manager and the organization as a whole.
Patrick Sweet, P.Eng., MBA is a recognized expert in engineering management and leadership with expertise in systems engineering, project management and product management. You can read more from Pat at the Engineering & Leadership blog.
We have just completed a successful Board Meeting at the Coeur d’Alene Resort where the 2018 IAC will be held. The venue is a perfect location for the conference with all of the amenities necessary to make the conference successful. Beginning January 1 of this year, Ed Pohl and Heather Nachtmann assumed the role of Co-Editors for the Engineering Management Journal (EMJ). They have just released for your reading pleasure, Volume 30, Issue 1 of the Journal. I would like to personally thank Toni Doolen and Eileen Van Aken for their dedicated service to the EMJ over the years as Co-Editors and their role in facilitating a smooth transition of the EMJ to Heather and Ed.
The Board continues to be visible and actively engaged in various activities such as joining the Society of Women Engineers and other professional societies in sponsoring the fourth Annual STEM Capitol Hill Day. ASEM also welcomed the institution of a new student chapter at the University of South Florida.
Just a reminder! We continue to have opportunities to serve the society and continue to solicit assistance from the membership. I am excited that Elizabeth Gibson yielded to the call of service and has been elected the new South West (SW) Regional Director, replacing Christy Bozic. I would like to thank Christy for her service during previous years.
Enjoy the newsletter and make plans to attend the 2018 IAC.
by TA Jurgens-Kowal, PhD, CPEM
(Blog #3 EMBOK series)
Business savvy engineers are found at all levels within an organization. Last month, we learned that engineering managers are charged with planning and organizing work, allocating resources, and directing and controlling work activities. In this post, we will drill down into the management skills, tools, and philosophies that a business savvy engineer needs to lead, direct, and organize resources effectively.
In Chapter 2 of the EMBOK, we are introduced to the Integrated Management Model. The external environment is made up of customers, competitors, suppliers, vendors, and regulatory agencies. The internal environment, on the other hand, includes all of the company’s staff, assets, and special capabilities. We’ll dig deeper into the management systems, organization structures, and people orientations at the heart of the integrated management model.
Most leadership training programs today fully endorse the idea of motivation over punishment of workers. You know the old adage that you get more with a carrot than a stick. Thus, it is helpful for business savvy engineers to be familiar with the major philosophies and teachings regarding motivation.
First, Douglas McGregor proposed that managers make assumptions about workers which translate into behaviors. Theory X is one in which managers assume workers are lazy, would rather be doing something else, and all they are about is their paycheck. Theory Y managers, instead, assume workers are dedicated to the organizational goals and will act in ways to achieve these objectives. Fortunately or unfortunately, our expectations often result in the outcome we support.
Next, Frederick Herzberg proposed that a manager can motivate workers to higher levels of performance through a two-factor model. He identified minimal elements of a job that must be present to prevent worker dissatisfaction. These are called hygiene factors and include safe working conditions, relationships with supervisors, and fair pay.
While Herzberg identified that the presence of hygiene factors prevents dissatisfaction, these elements do not motivate workers to higher levels of performance. In contrast, motivating factors are often the least expensive for a firm to provide and will yield higher dedication to organizational goals. These motivators include recognition, advancement, and responsibility.
Finally, psychologist BF Skinner’s behavioral research demonstrates that behavior that is rewarded will be repeated while behaviors that are ignored will be extinguished. When leaders combine McGregor and Herzberg’s motivational theories with Skinner’s Operant Conditioning Theory, we - as leaders - are empowered to improve working environments for engineering and knowledge workers. We also learn about ourselves and can improve our own management skills.
Business savvy engineers innately understand that cross-functional teams improve the effectiveness and efficiency in achieving project objectives. Henry Mintzberg identified five basic organizational structures composed of the operating core, middle managers, upper management (called the “strategic apex”), technical support, and traditional support functions. The relative power, influence, and concentration of these groups determines the speed of decision-making in an organization.
The organizational structure must align with the firm’s strategic objectives in order to deliver long-term value. Team structures may change with the maturity of an organization and/or the complexity of the project work as well.
Of course, no project or engineering work is done without people. Business savvy engineers will recognize that they will need to adjust their leadership style to suit their environment. For example, global teams include people from both high context and low context cultures. In a high context culture, relationships reign supreme, while task completion takes center stage in low context cultures. Engineering managers must negotiate a balance between team member needs and work performance.
If conflict arises, managers often act as mediators. In this role, the engineering manager must ensure both sides are able to share their positions and s/he can negotiate an equitable outcome that allows the team to move forward. Chapter 2 of the EMBOK presents a conflict model that illustrates the need to address issues as they arise, not allowing them to fester under the surface. Furthermore, learning to apply conflict resolution and negotiation skills can benefit an engineering manager both inside and outside of the work environment.
Chapter 2 of the EMBOK is packed with management and leadership theory that has stood the test of time. Engineering managers bridge external and internal environments and understand their role in team motivation. Creating the right organizational environment to empower people across all cultures leads to a satisfying and rewarding career.
Next month, we’ll delve into the role strategy plays for an engineering manager in a leadership position. In the meantime, if you’d like to read the previous posts in this series, click here and you can learn more about becoming a Certified Professional Engineering Manager here.
Teresa Jurgens-Kowal is a Certified Professional Engineering Manager (CPEM) with a passion for lifelong learning helping individuals and companies achieve strategic growth through Global NP Solutions. You can connect with Teresa on Linked In.
As the year progresses, I continue to be excited about all the great work the ASEM Board continues to do on behalf of our members. We have accomplished many key initiatives that will continue to distinguish ASEM and provide value for the membership, which includes: The transition of the new editorial team for EMJ; update of the strategic plan and key performance indicator metrics for the Society; development of director goals that tie to performance indicators; development of EMBOK PowerPoint slides to support professional training or use in the classroom; the practice periodical continues to evolve and provide relevant information for EM practitioners; completion of a very successful conference in Huntsville; and finalized plans for upcoming conferences in Coeur d’Alene (2018) and Philadelphia (2019).
There is plenty to look forward to this spring – and it’s not too late to get involved. There are two calls for papers with deadlines fast approaching: the deadline for the 2018 International Joint Conference in Europe is March 3, 2018; and deadline for the ASEM 2018 International Annual Conference has been extended to March 5, 2018. In all of the hustle to prepare for the conferences, don’t forget to submit your chapter and section reports and your nominations for Engineering Manager of the Year Award by the end of March.
We have two critical leadership opportunities available and we are soliciting interested candidates. The positions are for the Associate Executive Director and the SW Regional Director. Members who are living in the South West Region can expect to see a ballot coming their way soon.
We have a lot going on that represents many opportunities for your involvement and talent sharing.
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