Space Engineering Services

Case Study 1

Space Engineering Services has been established for 22 years as a refrigeration engineering company. By 2012, they had 700 employees (450 of which were engineers), were now nationwide and developing into different specialisms such as heating and air conditioning, and mechanical and electrical engineering. The organization is now established internationally, with offices in Hungary and Poland. Their main customers are supermarket chains; however they have started to branch into non-food retail and supplying/maintaining heating, ventilation and air conditioning.

Between 2008 and 2011, Space Engineering Services grew rapidly owing to several contractual wins. More resources were needed to cope with the demand. As a result of this more managers were needed, and engineers who were very good at their job became managing engineers or managers. However, with this new found responsibility came no formal training on how to manage people. HR issues were not being handled by the managers, but being dealt with by the HR department – distancing the front line managers even further away from people management duties.

Space Engineering Services engineers are primarily remote, working either solely or in pairs. They see their line manager perhaps once a month as the core communication is by telephone. Engineers also do not have access to e-mail, and so any company-wide communication is sent via the post. After initial focus groups and interviews, it was found that the engineers’ morale was generally low. They believed that senior management did not care, and they were always the last to find out about core company decisions that would directly affect them.

Over the past thee years, the engineers had been subject to several amounts of change. This made employees extremely nervous about their positions. This uncertainty was not helped again by the lack of communication from senior management.

Within the organization and the engineering industry, there is a precarious nature of annual (no longer) service contracts to key customers. The customer typically draws up contracts for between one and two years, decreasing the risk on service delivery. The effects for the supplier tend to create an ethos of uncertainty which is echoed throughout the company. It was seen throughout Space Engineering Services that it also created a culture of gossiping and ‘storytelling’, where a lack of communication from senior leaders allowed for gossip to prevail across all employees.

Strategic direction

When starting the knowledge transfer partnership project, I asked to see the business plan to ensure HR and project objectives were aligned with the overall strategic direction. However, this was more difficult than originally thought, for the following reasons:

  • Long-term strategic direction is challenging to determine.

As the nature of the industry is extremely reactive, long-term planning can be difficult. The strategic direction can change in terms of priorities at a given time.

  • Directors rarely ‘seen’ by wider workforce.

Although the directors are visible in head office, the directors are not seen in the regional offices or out in the field. There have been comments about asking if the directors care, and even asking what their names are. There is a gap and a disconnection between senior management and front line employees.

September 2010

I joined Space Engineering Services as part of a knowledge transfer partnership scheme in order to join academia and industry. My position here was to design and implement a performance management process, looking at measuring and monitoring performance through an appraisal.

Also during this period I developed a SWOT analysis for the project, and a stakeholder analysis to think about who could be involved in the project team. These stakeholders identified were contacted to explain the project and where their involvement may lie if they wished to be involved.

To supplement this, I conducted consultation focus groups and interviews with employees to understand opinions from all stakeholders. I also designed an employee opinion survey to give a baseline indication of where employees’ engagement stood. This included measures such as job security, opinions on managers, training and development, and performance management. The results from this employee opinion survey showed that employees in the service and compliance department (primarily engineers) were dissatisfied with the level of leadership and communication from management. They didn’t necessarily receive any feedback on performance, or understand how their performance was measured. The other two departments (projects, and central services) scored better in these areas, however the overall score showed employees were ‘dissatisfied’. Communication of the survey results spurred information on the performance review system, indicating that the low scores from the survey would be addressed through performance appraisals. The focus groups and interviews highlighted the low morale among the engineers. The engineers are mainly lone workers, and do not regularly see managers or regional offices. They stated that they felt that they were not important enough to receive information.

This highlighted the first challenge for managers. Employees, and in particular engineers, were disengaged with the company, and with managers. The focus groups illustrated that engineers lacked faith in the capabilities of their managers, mainly because they rarely communicated information to them. There is a tendency for engineers to talk among themselves, and so gossip is high in the organization. As soon as one engineer starts talking about something negative, it gets around the workforce quickly.

January 2011

The second quartile at Space Engineering Services focused on designing the new system. This included the performance review form, guidelines for use for both management and employees, the core competencies which all employees were to be measured on, and the policy and procedures behind the appraisals. Once the design was completed, I had started to focus on the pilot. With this in mind, I created a training package for the managers to understand performance management, as well as use the performance reviews. I trained 16 managers in performance management, interviewing skills, and how to conduct appraisals.

A second challenge for managers that emerged was the lack of training managers had received. There is a tendency to give higher emphasis and dependence to engineering skills rather than people. As there are such stringent service level agreements in place, senior management has a tendency to promote and reward engineering skills – as they get the work done. For instance, productive engineers are made into managers, rather than looking at who would make a good leader. Therefore managers have not received any training for things such as people management, or support during the period of taking on new responsibilities. Some managers had found HR issues difficult in the past, such as how to hold disciplinaries, or more broad issues, such as the consequences of speaking to an employee in a particular way. With no formal training on how to interview someone, engineers are recruited by a quick chat in the café. Therefore it may not be the best possible candidate that comes on board. With no formal training, managers are not necessarily equipped to perform their duties to the best of their abilities.

May 2011

The third quartile of the project was managing the pilot. This involved monitoring the performance reviews that were coming in, and advising managers with issues as and when they come through.

In August 2011, the pilot was completed. This gave me an opportunity to evaluate the effectiveness and performance of the pilot system. With this I conducted one on one interviews with the managers who participated in the performance interviews, and focus groups to gain group feedback. I collated the information and used the qualitative data to feed into the full implementation, and the e-system. The main points in the feedback were:

  • Employees were dubious as to the reasons behind the performance reviews – they though they may be linked to giving them more work, or demoting them.
  • Employees did not understand the relation to development, as all training throughout the organization was frozen.
  • Managers wanted extra support through the process as they had not used these before.

These points were all taken into consideration. A communication piece was written to address employees and these concerns before the full roll-out across the organization.

One challenge for managers that emerged was their resistance to conduct performance management activities. Some had seen similar schemes that had failed, and some were dubious about the amount of additional time this would take, eating into operational duties. A few had an attitude where they felt they could get away with not doing it if they were bringing in money. This is a challenge for senior managers with regard to how to handle these managers.

November 2011

The performance reviews start coming though. Again I needed to monitor the completion rate, the quality of the performance reviews, and the levels of performance. There was a definite lack of people management shown in the reviews, as some were extremely basic. Some managers had still not bought into the process and did not start the performance reviews until they were individually spoken to by their senior managers.

After the performance reviews had taken place, I gained feedback from the managers that some employees were still hesitant about why they were happening, and thought it was a micro-management exercise. When asked how they explained the performance reviews, they replied ‘I don’t really know.’

January 2012

At the beginning of 2012, I was still monitoring the completion rates of the performance reviews, as well as finishing up any management training that was missed. This was coaching more than facilitation.

There were difficulties with getting managers to submit the reviews. There seemed to be a lack of commitment and leadership from the directors, which may have affected the buy-in from managers. With this in mind the overall completion rate was slightly lower than expected (76%).

After another round of employee opinion surveys in February 2012, the results reflected a drop in morale. There were some results that were below the baseline level of morale taken in December 2010, especially relating to items on management and training. These items were mainly in the service and compliance department. The items showed employees in this area were dissatisfied by the level of communication, support, and leadership displayed by their managers. They were also dissatisfied with the amount of training opportunities available to employees. A key management challenge in an organization without a clear communications strategy is this – how do you maintain regular communication with your employees?

Adding to this, in March 2012 Space Engineering Services went through an organization-wide restructure, making a 20% reduction in overheads. At the same time the company had a large (150 engineers) TUPE transfer out of the company. The engineering industry is renowned for continuously winning/losing contracts. With this comes a Transfer of Undertaking (protection of employees) (TUPE), where employees who work on that contract are transferred across with the contract to the new supplier. For leaders this means fresh talent, but it can also mean a diverse mix of capabilities, cultures and work standards. There have been instances where companies have used TUPE to transfer across employees who are not as capable, to ensure they keep a good talent pool in their organization. With all this change and movement, employees were now working under different job roles and for different managers. The completions of performance reviews were stagnant, and mid-year reviews were put on hold.

There was an underlying rumour from employees that morale was extremely low. Despite the amount of change, this didn’t seem to be the cause of this change in mood. Instead the reason for the unrest was the lack of communication from management and senior leaders. Employees were on consultation for redundancy, and yet were not being consulted. They were not receiving updates on timeframes, or on changes in the organization such as new job positions. When looking further into this problem, it seems that department leaders were not being told by senior managers about the changes, and so could not update the process or send out communications.

May 2012

I completed an evaluation task, conducting focus groups with managers who took part in the performance reviews to gain feedback on the successes and the development areas. The outcomes of these focus groups included a standardization of technical skills for job posts, more options on performance measurement, and clear options on statutory training.

The next couple of months were reliant on me creating a version 2 of the performance reviews on HR.net.

Another management challenge has developed through the new structure within the organization. It means that employees now work under one single contract, rather than for multiple contracts. However, the management structure under this new regime would mean that potentially managers and employees may not be under the same geographical remit – making people management even harder, and creating a severe lack of visible leadership.