Hunter Engineering was established in 1936 and is now a public limited company in which the Hunter family owned the controlling interest. It relied solely on Government Contracts as primary source of business. Until the late 1990s, contracts had been placed on a "cost plus" basis, but with the government's shift in policy towards reductions in public expenditure, the method of placing contracts had been changed to "fixed price". Sizes of the contracts were reduced. Instead of relying solely on large contracts involving over a hundred employees or more for up to 5 years, the company handled contracts that frequently involved less than 15 employees for a duration of under two years. Having projects at the right staffing levels and efficiency drives meant that between 1998 and 2012, employee levels had fallen from 1,500 to 720. Staffing levels in the Electrical Engineering Department fell from 45 to 26 over the same period. Between 2012 and 2017, further organisational restructuring initiatives resulted in the loss of over 170 employees.

Peter Green, Project Manager in Electrical Engineering, had joined the company in 1987 as a relatively young senior electrical engineer in his early 30s, and for the first ten years of his employment at Hunter Engineering, he worked on just 2 very large projects, each spanning 5 years. He had not enjoyed this long-term project commitment, so was relieved to find himself transferred to smaller projects because of more projects with lower staff levels. After working on 16 smaller projects in various capacities, first as the Project Team Leader, and later as a full Project Manager, he was promoted to Small Projects Director in January 2017. His promotion coincided with the company's decision to rename itself Hunter Engineering Group, a signal that it intended to diversify going forward.

Going commercial

January 2018, Peter put forward his ideas to expand the Electrical Department by going commercial and tendering for contracts outside the Government Defense Portfolio. While this had received the agreement of his Divisional Head, Peter was well aware of the problems facing smaller commercial projects in a company, where operations had to be defined solely by government interests and requirements.

The company had very high fixed overheads, but more importantly the highly demanding Quality Assurance System, a mandatory for government defense work meant rigid processes that included time-consuming Government contracts. For example, every deviation from the issued drawing had to be recorded and approved with a dated electronic signature from the Head of the Design Unit. Thus, any scope for judgement was not permitted by the inspection engineers. Peter realised that one of his first problems was to introduce some scope for judgement if small commercial projects were to be viable.

Hunter Engineering Group had no experience in tendering for commercial projects. Government contracts required very strict and complex approval process, which include documentation with contributions from all departments. It would therefore require considerable effort on Peter's part to prevent these departments from getting in the way when it came to new commercial ventures, particularly as most departments were looking for work - due to the downturn in recent government projects.

Peter was also concerned about staffing levels. The Electrical Engineering Department's involvement in minor projects could be anything from 3 months to 2 years in duration. Yet extra staff could only be recruited if it could be shown that there would still be a shortage in twelve months' time. The Electrical Engineering Department was always 25 percent understaffed due to difficulties involved in the forward planning of the workload. Recruitment policy remained unchanged. Peter estimated a need for 6 more engineers. Staff morale was falling. New graduates that joined required training. The senior engineers in the department were having to spend more and more time training the new graduates. Although there was a dearth of experienced engineers between the 25 to 40 age group, these qualified engineers found higher paying positions outside Hunter Engineering. While new graduates saw their 20-year age gap between themselves and their seniors and felt that promotion was impossible, so they left at the earliest possible moment. 

The Sales Operations Team was also a serious cause for concern for Peter. It was staffed by ex-government employees who responded to general staff requirements issued by the Government Department. They sold only components and products which the company had already manufactured and approved by the government regulators. They did not explore the market to assess its future needs, nor did they initiate any internal research and development activity.

A further problem arose in the Manufacturing Department. The continuity of large projects meant that the staff employed at the end of one fiscal year would be employed only at the start of next year. The Finance Department therefore had become accustomed to delaying the issue of engineering and manufacturing order numbers by up to 6 weeks into the new fiscal year.

The HR Department moved slowly. Several weeks could elapse between an interview and the issue of an offer of employment. They seemed unconcerned that experienced engineers were at a premium and that new graduates steadily left Hunter after two years, thus continuing to exacerbate the age gap. Peter's current engineering staff on small commercial projects numbered 4 where 3 were new graduates with less than 6 months' professional experience, and one was an engineer with merely five years' experience.

As such Peter is determined to get more work into the department and to increase staff levels in order to handle it. He is particularly determined to initiate action change. His priority was to change proposal to the Senior Executive Team, via his Divisional Head. He needs change and he developed a change plan to the Electrical Department by going commercial.

 

Case questions

What are the relevant change concepts, theories, and frameworks that can be applied to this case?  Provide at least two and justify the relevance of each theory.