W15_RW_Recognize Your Managerial Style

Problem statement

In many organizations, we could see many managers manage their organization or team with their own style, some be a pleasant manager and some don’t. Some people who work for the pleasant manager looks feel happy to work and more energy compare with them who work for the unpleasant manager/s.
Knowing the manager style will allow us know what should be done to managing the kind of managers.

The Feasible Alternatives:

  1. Douglas McGregor X and Y theory
  2. William Ouchi’s Z theory

McGregor X and Y Theory

Theory X (Authoritarian Management Style), this theory describes that the manager/management believe that:

  1. The average person dislikes work and will avoid it he/she can.
  2. Thus, most people have to be forced with threat of punishment to work towards the organization objectives.
  3. The average person prefers to be directed, to avoid responsibility, relatively unambitious and want security above all else.

While

The Theory Y (Participative Management Style), this theory describes that the manager/management believe that:

  1. Effort in work as natural as work and play
  2. People will apply self-control and self-direction without external control or threat of punishment.
  3. Commitment to objective is a function of reward associated  with their achievement
  4. People usually accept and often seek responsibility.
  5. The capacity to use a high degree of imagination, ingenuity and creativity in solving organizational problems is widely, not narrowly, distributed in the population.
  6. In industry the intellectual potential of the average person is only partly utilized.

McGregor X and Y theory is mainly focus on management            and motivation from the manager and organization perspective.

It could easily recognize the managers with the X style are the “unpleasant” manager. As it will have some characteristic that most of the people dislike such as:

  1. Result and deadline driven
  2. Intolerant
  3. Distance and detached
  4. Aloof and arrogant
  5. Short temper
  6. Shouts
  7. Instruct, direct, edict
  8. Issue threat to make people follow instruction
  9. Demands, never ask
  10. Do not participate
  11. Do not team build
  12. Unconcerned about staff welfare or morale
  13. One Way Communication
  14. Poor listener
  15. Etc

Then now how we manage those kind of X style managers? There are some ways to manage those kind of managers, the first of all is to avoid confrontation, avoid conflict, straight to the point, give the result not the process, be on time and set your own objectives, we know that deal with this kind of manager will make some people headache. The higher workers turn over mostly caused by the X style manager.

William Ouchi Z Theory, it advocate the best on McGregor Y theory combine with “Japanese” management style, that give the freedom and trust to the workers and assume that workers have a strong loyalty and interest  in team-working and the organization. Theory Z focus on caring and good relationship of worker and manager, it believe that strong social relationship will improve the productivity.

The conclusion:

For easily remember the X style is the “Bad” style and Y is the “Good” one. The X and Y theory focus on management while Z theory believe that strong social relationship will build the loyalty to the company. The manager should pick the right management style by considering local context and culture. Here in my company in Indonesia which is mostly employed local people with low profile and politeness, will be suitable to use the Y and Z managerial style.

References:

What is William Ouchi’s Theory Z of Leadership?, retrieved from: http://www.businessmate.org/Article.php?ArtikelId=225

Douglas McGregor’s XY Theory, managing an X Theory boss, and William Ouchi’s Theory Z, retrieved from :http://www.businessballs.com/mcgregor.htm

Theory X and Y, retrieve from: http://www.accel-team.com/human_relations/hrels_03_mcgregor.html

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W14_RW_Quality Gurus’s Philosophy Influence to Company Quality Management System

Problem Identification:

In the current modern era, which the quality is one of the mandatory requirement to all of process deliverables of every line of business and organization, quality management system embedded to the business and organization business processes and its strategic plan. In the role of project planning and controlling, I try to recognized what is the philosophy used behind the quality management system that I use in my company.

Some important points that we need to know to recognize the Quality Guru’s Philosophy:

Philip Crosby Dr. W Edward Demings Dr. Joseph Juran Dr. Kaoru Ishikawa
  • Quality is Conformance to requirements, not a goodness
  • The system for causing the quality is preventive, not appraisal.
  • The performance standard must be zero defect
  • The measurement of quality is price of non-conformance, not indexes
  • Quality is Free
  • Management responsible for quality and its improvement.
  • Quality start from the top
  • Do It Right The First Time (DIRFT)
  • Quality improvement is a process not a program.
  • Share with employees the measurement of non-conformity cost to company.
  • Two factor cause defect: Lack of knowledge and Lack of Attention.

 

  • Meet and Exceed Customer’s need
  • Continues Improvement.
  • Quality is made in board room.
  • Deming’s cycles PDCA
  • Internal Customer
  • System of profound knowledge: Theory of Optimization, Variation, Knowledge and Psychology.
  • Deming’s Seven Deadly Diseases
  • Deming’s fourteen points

 

  • Fitness for Use
  • Majority of quality problems are the fault of poor management rather than poor workmanship.
  • Cost of Poor Quality (COPQ) is the sum of costs that would disappear if there were no quality problem.
  • Quality improvement doesn’t come free.
  • Quality Trilogy (quality planning, control and improvement)
  • Quality planning road map.
  • All people and department responsible for Quality.

 

  • Fishbone Diagram (cause and effect diagram)
  • Quality Circles (Support Improvement, Respect Human relation in workplace, increase job satisfaction, recognize employee capability and utilize their ideas).
  • Statistical Techniques.

 

The offshore construction project goal is to produce the reliable (within specification) facility to flow the natural oil and gas with the safely and environmental friendly, the quality of the project is measured by how it could meet those goals. The quality is fail if at the end the facility can’t be used for some reasons because of nothing oil and gas flow, un-safe operation and environmental.

The current construction project has a quality planning and control, each related department has its own quality system, there is engineering team that seek for design alternatives to improve the quality of the projects, and top management declare the importance of the quality.

From those attributes I do believe that Juran’s at first and Crosby’s the second are the most influence philosophy to our quality management system in offshore construction project.

Conclusion:

The Quality is important in every aspect of process deliverables, in the spirit of produced the best products in term of cost, quality, time and meet or exceed costumer’s needs, we could adopt each of quality gurus philosophy or even combine one or more philosophy to meet our requirements.

References:

Total Quality Management, presentation slides, retrieved from: http://www.ceecis.org/iodine/08_production/TQM/TQM%20foof%20presentation.pdf

View of Quality Gurus, retrieved from : http://www.qualitytimes.co.in/compare.htm

Quality Gurus, retrieved from: http://www.referenceforbusiness.com/management/Pr-Sa/Quality-Gurus.html#b

Quality Gurus, retrived from: http://www.qualitygurus.com/gurus

W13_RW_Calculate Retirement Plan and Investment

Problem Identification

My friend (35 Year) this year earned $5,000/ month, joint the company retirement program, it is automatic deduction from monthly salary by 14% to be invested in selected mutual fund with earning 10% per year. The average salary merit increase per year is 8%.  He plan early retire to start his own business at the age of 45 (10Year from now) with the minimum capital $200,000.

Problem Statement:

If the accumulated money at age of 45 is not enough, so what age he should plan to early retire with the consequence the business capital will increase in line with the inflation rate 6%?

Feasible Alternative:

  1. If at age of 45 the accumulated money is enough then he will resign and start his own business.
  2. If at age of 45 the accumulated money then he should extent to work until certain age to start his own business.

Tools and Technique:

I’m using the formula stated in Sullivan, Engineering Economy pp.144-149. To calculate Geometric Sequence of Cash Flow.

  • Current Salary per month = $5,000 – OR- $60,000 per year
  • Investment: $60,000 x 14% = $8,400 per year.
  • P=(A[1-(P/F,i%,N)(F/P,f%,N) )/ i-f
  • P=($60,000[1-(P/F,10%,10)(F/P,8%,10) ]) /10%-8%
  • P=($60,000[1-(0.3855)(2.1589)])/2%
  • P=$70,452.5
  • F=P(F/P,10%,10)
  • F=$70,452.5 (2.5937)
  • F=$182,732.65 à the accumulated money at 10th years.

Because of the accumulated money is not enough to start his own business, then he should extent the work.

With the same step above now we have to find the P for F=$200,000

  • F=P(F/P,10%,10)
  • $200,000=$70,452.5(F/P,10%,N)
  • (F/P,10%,N) = $200,000/$70,452.5
  • (F/P,10%,N) = 2.8388
  • Now see the interest table provided in Sullivan, Engineering Economy 5th Edition, Appendix C.
  • For N = 11 Year à2.8531 and for N=13 Year à3.1384
  • So the N would be 11 Year.
  • Now test the whole calculation with N=11
  • P=(A[1-(P/F,i%,N)(F/P,f%,N) )/ i-f
  • P=($60,000[1-(P/F,10%,11)(F/P,8%,11) ]) /10%-8%
  • P=($60,000[1-(0.3505)(2.8531)])/2%
  • P=$76,765.16
  • F=P(F/P,10%,11)
  • F=$76,765.16 (2.8531)
  • F=$219,018.69 à the accumulated money at 11th years

IF the capital investment is postponed for 1 year with 6% inflation it became:

  • F=$200,000(F/P,6%,1)
  • F=$200,000(1.0600)
  • F=$212,000

So the accumulated money at 11th Years = $219,018.69 > 11th year Capital Investment=#212,000

It is recommended he retire at age 46.

 

Post Evaluation of Result

Based on the calculation above my friend is recommended to take early retirement at age of 46 to start his own business.

Reference:

Sullivan, W.G., Wicks, E. M., & Koelling, C. P. (2011). Engineering Economy 5th Edition, Chapter 5 P.144-200

The Smartest Way to Invest for Retirement (http://www.fool.com/investing/mutual-funds/2007/04/26/the-smartest-way-to-invest-for-retirement.aspx)

W12_RW_EDN_Calculate IRR for Laundry Business

Problem Identification.

My wife and I are thinking to open laundry business in Dago Street in Bandung, since Dago Street is one of areas where most colleges’ students lived. I made calculation and showed Eli the summary of accompanying table of projected costs and annual receipts for laundry business.

Table 1. Projected Costs and Annual Receipts.

Our MARR is 10%

How much is the IRR of laundry business and present it with the graph of PW versus IRR?

The feasible Alternatives:

  1. If the IRR is less than 10% it means the business is not profitable and find another alternatives.
  2. If the IRR is >10 %, it meas the business is profitable, and I will treat Ely to for Batagor Kingsley lifetime coupon for two every time she go to Bandung

Tools and Technique:

Using the formula stated in Sullivan, Engineering Economy pp.194-200, if IRR>= MARR, then the project is justified.

We start to calculate PW using the i=10% (MARR) and do trial for another i=x% to result the negative PW.

Table 2. PW Calculation

Now we know that:

PW(10%)=$68,993

PW(25%)=($7,206)

By using the interpolation we will find the i (x%) that result the PW=0

X%=23.58%

And draw into graph

Reference:

Sullivan, W.G., Wicks, E. M., & Koelling, C. P. (2011). Engineering Economy 5th Edition, Chapter 5 P.194-200

Calculating Internal Rate Of Return, retrieved from 😦http://www.business-analysis-made-easy.com/Calculating-Internal-Rate-Of-Return.html)

Engineering Toolbox. Internal Rate of Return – IRR. Retrieved from: http://www.engineeringtoolbox.com/internal-rate-of-return-irr-d_1235.html

W13_RW_Calculate Annual Worth (AW)

Problem Statement

I try to solve the question on Engineering Economy 5th Edition for the subject of Time Value of Money, in chapter 5, no 5-35, p 216.

Answer:

The equation:

Where:

AW= Annual Worth

R= Saving

E=Expenses

S= Salvage Value (market) at the end of the period.

N= Period (year)

I= Initial Investment

X= R-E

 

To solve the above problem then:

AW(15%) = X-$1,000,000(A/P,15%,8) + S(A/F,15%,8)

=X-$1,000,000(0.2229) + 0(0.0874)

= X – $222,900

We know that the cost of recycle is $1/sq yard and selling price is $3/sq yard, then the revenue is $2/sq yard, to know the minimum square yard of carpet to be recycle, then

$222,900 / $2 = 111,450 Sq Yard in total

or

13,931.25 Sq Yard / Year.

Reference:

Sullivan, W.G., Wicks, E. M., & Koelling, C. P. (2011). Engineering Economy 5th Edition, Chapter 5, p189