Engineers as Managers

Suited to face the challenges
The Managers in all organisations will have to paly in increasingly important role, in the wake of the liberalisation of the Indian economy. It is, therefore, imperative to select the most suitable type of person to lead the organisation, particularly in these turbulent times. The executives generally may be grouped into two - specialists and generalists and technical people who are expert in the process and systems, while the generalists comprise administration and finance groups. The considerations which gevern the selection of managers are discussed here particularly for technology oriented industry, drawing examples from the Steel Industry.
CLIMBING UP THE MANAGERIAL LADDER
In the olden days, many years ago, a determined young person could enter the organisation as an office boy and by sheer hardwork and bit of luck move upwords to the menagement lavel. This path upwords is now virtually closed and for all practical purposes, there is no entry to the lower rungs of the managerial ladder, unless one has at least university/college education.
In all manufacturing companies, the old hierarchical pyramid has been replaced by a two-tier structure comprising a larger, truncated lower pyramid of operating personal topped by a smaller pyramid of specialist managers and executives. The size of this upper pyramid has grown significantly over the decades in term of the proportion of the total employees perhaps more because of the shrinking of the lower part. With appropriate education one gets a direct access to the lower rung of the upper pyramid usually out of college. We, the engineers generally belong to this upper pyramid.
The climb-up within the upper pyramid may possibly be visualised in three identifiable bands, each having a defined skill for effective performance. In the lowest band where the new graduate starts, the need is defined primarily by technical or knowledge-based skills. If one does well in the lower band, This require appropriate interpersonal aptitude. In the middle band therefore, the technical ability needs to be supplemented by skill in communicating, directing and technocrats, this may be a difficult transition. But this swim through the middle band and entry into the upper band, calls for conceptual or integrating skills. In other words at this level, one should be able to see beyond the immediate dimensions of the jobs and take a holistic integrated view of the various functions of the organisation. This transition of skills together with the base of technical innovation and environmental change makes the careers of senior executives complex and increasingly difficult. However, the three skills - technical, human relations and conceptualisation -still remain relevent. Many organisations demand that the young specialists and managers must possess these skills to make progress in their careers.
LEADERSHIP SKILLS AND TEAM WORK
Many often assert that "Leadership cannot be taught. One is either a born leader or one is not". Leadership is a combination of several skills. I believe leadership skills can be developed systematically and most people have the capacity to do so. Like for any skill, for developing leadership skills, the skills must be clearly identified, understood and practised. One of the most effective approaches to identification and understanding of leadership rests on group problem-solving execcises carried out in a time-bound manner. This management technique was first used by the German Wehrmacht between the two world wars. The Germans originally used this exercise for officer selection. They did find that they could predict leadership ability by observing individual behaviour within small group problem solving situations. These exercises help in improving the decision making reflex, developing the natural leadership capabilities of individuals and help in mobilising the group's energy.
While discussing leadership, one must differentiate between dominance and leadership. A dominant person assigns himself a lone role and then shouts orders while the others around may become immobilised or 'brain dead'. This is not sound leadership.
One should perhaps make a distinction between the group "leadership" and a group having "a leader". When groups work well, "leadership" emerges and submerges from different individuals, depending on circumstances. This implies that relinquishing leadership is a simportant as assuming it. Exceptionally well-executed leadership is virtually indistinguishable from well-established followership. As indiciduals develop their leadership skills, and as groups begin to function as teams, the difference between leading and following evaporates.
I may perhaps mention that in huge corporation, the leadership skills of a single chief executive has significant impact. The organisation leadership perhaps matters most during a period of stress and uncertainty. The chief executive demonstrates a level of confidence in himself and others, communicats the exceptions and standards, and demonstrates personal scarifice, determination, persistence and courage in meeting the long term objectives of the organisation. However, every organisation requires its own blend of leadership for the challenges it faces; and no single recipe of best practice can be formulated. Leadership qualities are contingent on circumstances and one has to fashion his own strategy.
ENVIRONMENTAL SAPECTS
The environment is now an established business issue. The business should aim at integration of ecological cencern with every single management process, and turning the demand for minimal environmental impact into business management. Reconciling ecology with economy makes a total ethical and business sense. Ecological solutions favor optional use of energy and materials, minimising waste, transport and storage costs. In many ways, the concern for the environment is a source of renewal and competitiveness.
INFORMATION - A NEW RESOURCE
The management models we talk of originate from the industrial era. The society is now on its way to a new information era. Ther industrial era taught us to manage the "four Ms", as resources, namely, Men, Materials, Machines and Money. Today, in addition, there is a fifth resource-information. We have to be able to manage information as an assets, both for business development and as a process for managing the organisation. Ten years ago, a change in the market price of steel in Europe would not have an impact in India for several weeks. Today, with the speed of information flow and communication, this impact is almost immediate.
GLOBALISATION
As we are alowly moving in to the 21st century, the future of the international economy is becoming difficult to predict. However, it appears that threeinter-related phenomena, will characterise the 21st Century global economy and differentiate it from its predecessors. First, the changes in the technology together with its cost, risk and complexity; second, the transnational strategic alliances; and third, the emerging global information systems and information technology.
MEASURE CORPORATE PERFORMANCE
Globalisation will continue to increase competition. It is, therefore, essential to continuously monitor the performance of the organisation. This in turn would require assessment of the performance. Customarily, the performance of an organisation is measured in financila terms. But it is important to know that financial performance cannot be sustained unless the non-financial factors governing the financial performance such as productivity, quality customer service, customer satisfaction are measured and improved. Financial indiactors mainly measure past performance, but they are poor in predicting future performance. Occasionally, new financial parameters like EVA come into the picture, but there are many more non-financial factors which need to be controlled. There has to be a balance of financial and non-financial measures in improving the corporate performance.
CHANGES IN THE STEEL INDUSTRY
For more than four decades since independence, the steel industry in India was virtually protected from ups and downs faced by the steel industry else-where. The entire economy of the country was based and run on the philosophy of licensing and controls, ensuring supply to never exceed and not even match the demand. The protection machanism not only isolated the Indian industry from all competition, but enabled us to pass on any increase in cost - either due to hike in input prices or due to our inefficiencies - to the customer. In many cases, the customer was held to ransom by blocking a part of his money as down payment and then making him wait for months and years (depending on the commodity) till the supplier could fulfil his requirement, many a times by supplying offsize or sub-standard commodity. The only measure of performance was quantity and yet that was controlled. Over-production in certain sectors was considered a commercial offence. Quality and costs were of no consequences.
During the last five years, we have been progressively open to an entirely different environment. Anybody is now allowed to import any amount of steel without any restriction. The import duties are continuing to decrease. Thus, the steel consumer has today an option to buy at the right time, the best quality at lowest prices from anywhere in the world. The managers of today and tomorrow will have to face this major challenge. Quality, cost and just-in-time will be catch world.
In the past, the purchases of equipment and technology were dictated by the aid giving country, irrespective of whether it was to the recipients' advantage or not. The price as fixed by the supplier of equipment and services were practically not subject to any competition or even a cross-check. Plants in general, therefore, become over capitalised; and in some cases, technically deficient. With the liberalisation of the economy, the private sector which was hitherto prevented from setting up the integerated steel plants, has now the liberty to install new steel plants. Enterpreneurs have also now the freedom of selecting the best technology at the most competitive price. Thus, even in the domestic steel scenario, there is the emergence of new efficient competitors. The new players also have the advantage of determining the size of the workforce and not forced to indiscriminately increase the labour force due to political and local pressures.
Steel technology continues to be developing rapidly. We have at least one new iron ore smelting technology in the COREX process. We have thin slab casting route for producing hot rolled coil and thin strip casting process is also trying to emerge as a competitor to the thin slab casting route. Thus, the choice of technology for new investments is becoming increasingly complex.
Steel producers are trying to influence the market as well as the process technology by developing new grades of steel with proper properties. A typical example is the development of the IF steel for the exposed part of the auto body produced by the conventional slab casting rolling route adopting hot charging. This is the latest challenge thrown by conventional integrated plants to mini mills for strip rolling.
From the economic viewpoint, while we enjoy highly competitive prices of iron ore, from the quality viewpoint not all Indian iron ores are best suited for producing hot metal required for steelmaking in a cost-effective manner. These shortcoming of Indian ores are well known. Our dependence on imports of coking coal is going to increase. The energy costs in India are very high and energy is a major input to the steel industry. The qualities of many of our steel products are deficient judged by international standards. Besides, many high value steels are not produced by our plants.
A matter os still greater importance is the fixed charge component in our production costs. Our depreciation costs are high, because of low equipment productivity and the abnormally high cost of capital most adversely affects the financila performance of the plant.
The future steel industry will be driven by economic environment and the three important dricers will be:

Capital market
Customer market
Technology change

Our expects greater freedom of capital movement as a result of trade and economic liberalisation. Steel companies will have to complete for capital internationally and with all business sectors. With regard to the market, the form and quality of steel will be critical to success.Increasing international standard would place more steel product into world-wide competitive arena on quality and service. The technologies will allow much greater choice in the economics-of-scale so as to suit a steel plant and its downstreem assets to particular markets and customers.
ENGINEERS BETTER SUITED TO FACE THE CHALLENGE
As I have pointed out earlier, the first skill required for effective management is technical. There cannot be any debate that the engineers are best suited to understand, analyse and evaluate the technologies, both existing and emerging. From technical skill view point, engineers are best suited as managers. In this connection, I would like to mention that experience has shown success in the steel business is as much a function of organisational approach as it is about technology. Like with most manufacturing concerns, the labour content will be minimal, but skill in technology application and management will be on a premium.
In the area of human relations, non-technical managers may perhaps perform well. Yet, the engineers have an edge, because of their understanding of the process technology and systems which help the HRD programme. They need, however, develop communication skills and inter-personal qualities, to be more effective.
From the viewpoint of costs and finance, one may argue that non-technical persons would be better suited; it is perhaps not so. An engineer with a costing background is better suited for this type of activity, particularly in the steel industry. I am remained of an incidence told to us at Jamshedpur during the graduate training programme.
Initially, Tata Steel has only accountants in the Cost Department and once so happened that while cheecking the costs of blast furnace relining the Accounts Department had raised a hue and cry that a very large amount of money has been spent on changing two bells. A scam was suspected during relining. The accountant could not apprehend what a bell is and how much it could cost. To him, the big bell was something which he saw hanging in the temples and a small bell rests on his table, to buzz for the office boy. After this, the cost department started taking engineers. Also, engineers are better equipped to define, measure and monitor the non-financial performance parameters.
If you look around today, the financial institutions both in India and abroad which are involved in industrial and/or project financing greately depend on engineers trained in costs. Rarely, perhaps never, would one find a man who has first qualified in costing, later in engineering. It would, therefore, be apparant that engineers are better suited to manage and lead technology-oriented industries like iron and steel.
I may perhaps clarify here that it is not argued that every engineer can make a good manager but there are many with technical background who could more readily acquire managerial skills to manage technology based industry. But the engineers would have to change their propensity to wasting capital. Capital productivity is our main concern. It is up to us how we gear aouselves to meet the challenges. I am sure the Institution of Engineers, Rourkela Local Chapter will aid in making the engineers aware of the managerial needs and help in developing the needed skill.