Changes came hard at Stein, Bodello, & Associates, Inc. (SBA). Following a move to a new location and an upgrading of both the business and project management functions, some unhappiness had developed in the ranks of middle management.
Stein, Bodello, & Associates was a consulting civil engineering firm founded in the mid- 1980s by Dan Stein. It was located in the Midwest, employing 100 people in four branch offices. The business had grown rapidly, especially in recent years. In the past three years, business volume had grown from $20 million to $50 million annually. As Dan Stein explained, "The firm is committed to growth."
The firm was managed by four principals: the senior partners, Dan Stein and Joe Bodello, and two junior partners, John Lahey and Robert Waters. The senior partners were both in their mid-5Os, with over 30 years of experience in the field. Dan Stein was the founder of the firm. He had both a BS and an MS in engineering and had presented more than 20 professional papers over the years. An engineer's engineer, he was oriented to the practical end of the business. He liked to keep abreast technically of the projects in which he was the principal in charge and enjoyed making technical input into solutions; he would rather be an engineer than a manager. As a businessman he was conservative and didn't like to take risks. He was sensitive and on several occasions asked what image, such as an older brother or friend, he portrayed to younger employees, most of whom were under 40.
On the other hand, he did not walk around the office to socialize. If he was seen away from his desk, it was because he was on his way out of the building or asking an engineer a technical question about one of his projects. Because principals in the firm were required to have high chargeable ratios for billable work, just as did the staff, they found it hard to find "free time" to socialize with their employees. Likewise, they found it hard to find time to be participative leaders or to take on more management responsibility.
Joe Bodello had joined the firm shortly after its founding. He also was a professional engineer but had become more of a businessman and was treasurer of the firm. His management style was quite strict. He spent some time walking around the office, usually visiting engineers twice a day to maintain visibility.
The junior partners had been with the firm for 15 years and had become vice presidents. John Lahey was a professional engineer with 20 years of experience. He was a good practical engineer and managed in a participative, trusting style. He usually mixed with employees at lunch. Robert Waters was not an engineer but had a degree in an engineering-related field. He was an aggressive go-getter. His style was "strictly business," and though he was willing to chat with employees and occasionally would sit and socialize, he was usually too busy to do so. Both vice presidents, however, were regarded as easygoing.
The board of directors, composed of Stein, Bodello, and Lahey, had overall responsibility for management of the firm. However, if an issue didn't meet with Stein's approval it had little chance of being passed. There was also a management committee comprised of the four partners. It functioned as an advisory group to the board of directors to deal with matters of business management, including internal operations, marketing, and profitability. It was a forum for discussion of policy and company goals. In addition, there was a personnel com-mittee comprised of Stein, Bodello, and a senior associate, which functioned as an advisory group to the board of directors on matters of personnel management.
When the firm was young, Stein and Bodello had performed all the functions of the business from field work to engineering to report writing. As the firm grew they gradually had to give up various activities; first the field work and then some of the engineering. However, they continued to want to be involved in the engineering whenever possible. In recent years the senior staff associates and senior-level employees, who were project managers, had the responsibility for seeing projects through to completion. Occasionally, more experienced junior staff also would function as project managers. This included detailed budget tracking, management of personnel assigned to the project, client relationships, approving invoices for billing, and overall projection direction.
Although project managers had a high level of responsibility, they were not provided with all the tools they believed they needed to manage the projects. One issue was whether salary levels or ranges for employees should be made available to the project managers for use in controlling budgets. Dan Stein, as president, was reluctant to make this information available. He explained that he was uncomfortable with allowing staff members to know one another's salaries, because he did not wish to be confronted. Nevertheless, what each employee earned probably was no secret among the project managers and engineers. Other members of the management committee disagreed with Stein and had been trying to persuade him to make the information available.
What budget information was accessible to the project managers was obtained by asking the accounts manager for the data. This usually was provided as a lump-sum figure. Many times the information given to the project manager was late, incomplete, or incorrect. The accounts manager had many other things to do besides developing this type of information. The data was often incorrect due to incorrect recording of labor-hours. This frequently would not be discovered until the bills had been made out or until after they had been sent. Engineers were reprimanded when the budgets were significantly overrun, and it reflected poorly on their ability to control budgets. As a result, many project managers were frustrated. The issue was often a topic of conversation at lunch or around the office, and the management committee heard rumors about the frustrations and problems with controlling budgets from a few of the more senior employees.
Stein, Bodello, & Associates had formulated a plan whereby partners' stocks would be sold to senior-level employees and associates according to a prearranged formula. The purpose of this was to provide a mechanism for selling the company to employees, provide value to the stock, and provide incentive to younger en-gineers. Senior staff had recognized this potential and therefore were interested in maintaining SBA as a comfortable place to work, as well as maintaining its growth and profitability.
During the past year an MBA was hired to manage the business office; changes in business and accounting procedures had followed. The computer system, purchased two years earlier, was put to use for word processing and financial accounting, which previously had been done manually. Getting the computer system in operation, working out the bugs, and making it useful had been a long, tiring, and frustrating process. Additional staff were hired, procedures formalized, accounts receivable collection tightened, and productivity and profitability stressed by management in the new procedures that were instituted.
Frequent memos announced these changes on short notice. The memos dealt with such issues as time-sheet reporting and charging telephone calls to a project by computerized methods. In some instances, the staff made jokes about the triviality of the requests-for example, charging file clerks' time to the project. One of the real issues, however, was that these memos appeared without any discussion about the reason the changes were being made and without any prior request for suggestions.
Often, only a few weeks after a change had been implemented, the staff reverted to its "old" ways or chose to forget about the new procedure. In many cases, changes were being made by support staff personnel who were responsible for purchasing materials, and so on. However, those changes usually had an impact upon the technical staff, who never had an opportunity to provide input.
In one case, several senior associates and staff became quite angered when each employee suddenly was assigned an employee number for accounting purposes. Comments about the loss of the old "homey," informal atmosphere were common. Employees remembered the early years of the firm when it was one big, happy family with direct access to all the principals by all the staff. However, as the firm had grown, the senior principals had become more and more removed from the staff. One person commented that instead of insisting on high-quality engineering as in the past, the firm was now satisfied with "adequate" engineering at a profit.
As its growth continued, the firm outgrew its facilities, and a decision was made to move to new, larger quarters. The new building was owned by Stein and Bodello through a realty trust, and the company leased space in the building. Although relocation was rumored for some time, only a few people knew of the actual plans until about two months before the move. Layout of the new facility, office assignments, and space allocations were kept secret. The responsibility for the new office layout belonged to Stein. After all, this was his project. Extensive renovations were required in the building to make it look good, but corners were cut and many things were missed in the new layout. The result was that the new office was less efficient than the old facility in terms of productivity, even though the building was larger.
The old building layout had evolved after many years. There was a common secretarial area centrally located in the middle of the building, and the business office was physically separated from the engineering staff in another part of the building. The principals' offices were adjacent to the common area, and their door opened into the area. Engineering staff, both senior and junior, were located in somewhat larger, two-person offices, each with a door for privacy if needed. Some of the offices were also adjacent to the common area, while the others were clustered along the corridors that led to the common area. Individuals were generally free to decorate and set up their offices as they pleased, and many had worked evenings and weekends doing just that (e.g., painting or building shelves). There was a sense of harmony in the environment, and morale was high. Older employees described it as homey, informal, and a place where you were treated as one of the family.
The new office reflected the "open space" concept. The partners' offices were for the most part isolated in one corner of the building, while senior engineers were given enclosed offices adjacent to a common area where the engineers, secretaries, and accounting personnel were located. The senior staff shared what amounted to good-size single offices. The accounting staff and secretaries occupied large open areas, but with minimal separation between work areas. They complained that the area was too noisy and distracting. The engineers occupied space in the rear of the common area. The section was divided into four-person work areas by movable partitions that were five feet high. Each engineer had his own 8-by-8 work cubicle with a table providing a separation between engineers. The engineers frequently complained about the noise, distractions, and absence of privacy.
Allocation of space for nontechnical work (on a per-individual basis) was clearly larger; draftsmen, technicians (who were seldom in the office), secretaries, and accounting staff had more space to work in than engineers. The new space for each engineer was smaller than the space he had left in the old building, even though the overall building was larger. One engineer stated it was clear that "those who were doing the work, who were the backbone of the organization, who were putting out the projects, got the least desirable space." One senior employee said that he was concerned because the employees had no say in changes that affected them and their future. In this view his office, which he shared with another senior employee, was too small for productive work. In comparison to the area alloted to the nontechnical employees, especially to the chief draftsman, his allocation was small; and his status seemed to have been lowered. He went on to explain that the draftsman, along with Stein, had allocated the space. When this senior person questioned Stein about the size of the shared office, Stein told him that, "if you cleaned out some of your books and shelves, the office wouldn't be so crowded."
When plans for the building were being developed, an employee petition had been circulated requesting that a shower be installed because many employees came in from the field and wanted to shower before changing into office attire. The petition was sent to Stein. The shower was not installed, and no reasons were ever given. This seriously affected morale. Employees who used to stay late to work on a problem began staying only until the end of eight hours. The traditional Friday gatherings after work at the Fish House for a few drinks stopped, even though the Fish House was still only a few blocks away. Some isolated attempts to revive the tradition were unsuccessful.
THE AD HOC COMMITTEE
Shortly after the move, a group of senior-level employees on their own formed an ad hoc committee to address issues of employee concern and make them known to the management committee. The ad hoc committee intended to discuss specifics, such as office layout, space allocation, and project management, and to recommend concrete courses of action.
Members of the ad hoc committee were well respected both within and outside of the organization; they formed the core of the project management group. Mike, one of the co-chairs of the committee, was 36 years old and had a doctorate in engineering. He handled both business and engineering matters and had a good rapport with Dan Stein. Bob, the other co-chair, was 34, with a master's degree in engineering. He headed one facet of the engineering section and was on good terms with John Lahey. Both men were associates.
Other members of the committee were all project managers. Larry had been with the firm for five years. He was well respected but was considered a radical. Responsible for the formulation of the ad hoc committee, he was on good terms with Robert Waters. Bruce also was considered a radical. He was very vocal and complained often. Nonetheless, in his six years with the firm, he had become well respected for his engineering ability. He also had a good rapport with Dan Stein. Tony was quiet and easygoing. He had been with the firm for five years and got along well with Dan Stein. Paul was moderate and easygoing. In his three years with the firm, he had developed good relationships with Dan Stein and Joe Bodello.
The committee decided that the way to proceed was through written memos. Face-to-face meetings with Dan Stein were judged to be useless because "he would have no time to waste discussing such matters." The first memo sent to the management committee stated what the ad hoc committee was trying to achieve (see Exhibit 1) and requested that the management committee formally recognize the ad hoc committee. This was never done, although one junior partner told the committee verbally that in his judgment its formulation was a good idea and he hoped that it would be made use of. Stein's response was that any memos should be sent to him, as president, first. Those issues he agreed with would be given to the proper people for implementation; there was "no need to waste management time on something I've already agreed to." Those issues that he disagreed with would be discussed.
The committee initially sent several memos to the management committee on various issues. Management responded by issuing a memo to staff directing that some of the recommendations be implemented. Nothing was heard regarding other items. Subsequently, the committee decided it was time to address the concerns about office layout and space. To employees, this was a major issue. While it would require some expenditures to redo the job, the ad hoc committee felt that changes in this area would help to restore efficiency, productivity, and morale.
The ad hoc committee did not want to be perceived as a threat to management and to Stein in particular. It wanted to be seen as a valuable resource and to be used to formulate worthwhile recommendations. At the same time, it did not want to waste its time making suggestions if sensitive ones were going to be ignored without discussion. They had to decide how to proceed.
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MEMORANDUM
To: Management Committee
From: The Ad Hoc Committee
Subject: Committee Organization
Date: June 17, 1983
Over the past few weeks, the management committee (MC) has been made aware of a certain amount of dissatisfaction on the part of Stein and Bodello employees in general, and senior staff in particular The initial response of the MC, as transmitted to the senior staff through John Lahey, has been positive and directed toward reducing specific sources of tension (e.g., working-space arrangements).
In an effort to carry forth this encouragement from the MC into productive action, the undersigned have constituted themselves into the ad hoc committee (TAHC). The intent of TAHC is to assist the MC in implementing the administrative policies necessary to maintain Stein and Bodello's profitability in a manner consistent with traditional family atmosphere. The means to accomplish this goal will be to develop recommendations to the MC concerning administrative matters and to provide an organization and a cadre of middle-level line managers who will be responsible for implementing procedures authorized by the MC.
We recognize that the growth of our firm has led to some loss of personal contact between principals and staff Although we may regret this change in the "personality" of our firm, bemoaning this fact will not change it. We believe that middle-management resources can be developed to compensate for the loss of "personal touch" with principals and to take on increased responsibilities within the firm.
TAHC is composed of senior technical staff (i.e., those who deal with clients and have a line responsibility for execution of engineering projects). Staff department heads have not been included, but their experience, opinions, and involvement will be diligently solicited on issues affecting their area of responsibility
Responding to needs identified by TAHC members and to the request transmitted from the MC through John Lahey, TAHC proposed to address the following matters as the first orders of business: (I) improvement of the work space and (2) accuracy and timeliness of time sheets. TAHC members have agreed to volunteer their time for this effort, meeting after work biweekly or as often as necessary to make progress. Any requests and recommendations developed by TAHC would be set forth in writing for consideration by the MC; further discussions between the MC and TAHC co-chairs might take place at the monthly luncheon meetings held on the day of projection meetings.
The members of TAHC wish to retain the quality of work produced and the quality of working conditions that have always been associated with SBA, and we are prepared to act accordingly In return we request only that the MC accord us recognition and its full support. TAHC has already begun work on the two priorities listed above.
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