The Growing Pains of Harvey (Engineers) Ltd

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Introduction

Harvey (Engineers) Ltd is a company that caters for the business in farm building construction. It was founded in the south of England in 1970 by a John Harvey. John Harvey started the company as a one man band and within 20 years had a large number of personnel with a company turnover of 6 million pounds.

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The business started off as a small company made up of few employees which were mainly family, dealing with the fabrication of steel. The business’ portfolio gradually began to change with the complementary addition of Civil engineering and as the company showed growth the number of employees did too.

As a company grows managers have to rethink their business strategies and structure in order to cater for the larger number of employees and in order to profit from this expanding economy. Managing people well and developing your organisation or team are vital to your ability to improve your service. It is about making sure that your organisation is flexible and able to adapt and change to make the best use of its staff. It is about recruiting the right people to the right jobs, managing them effectively and developing their skills. And it’s about paying and rewarding them fairly, as well as ensuring that your workforce is diverse and representative of your community.

In this Case Study I will look at the number of problems Harvey Engineers faced such as poor communication between its vertical structure, poor leadership and authority throughout management.

By answering a number of questions this will help identify the problems areas of Harvey (Engineers) Ltd. It will show the company’s strengths and weaknesses and how the structure of the company is an important factor for a successful business.

What are the PEST factors that may affect a company such as Harvey Engineering Ltd.?

A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm’s control and sometimes present themselves as threats. For this reason, some say that “pest” is an appropriate term for these factors.

Many macro-environmental factors are country-specific and a PEST analysis will need to be performed for all countries of interest. The following are examples of some of the factors that might be considered in a PEST analysis.

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Political Analysis

  • Political stability
  • Risk of military invasion
  • Legal framework for contract enforcement
  • Intellectual property protection
  • Trade regulations & tariffs
  • Favoured trading partners
  • Anti-trust laws
  • Pricing regulations
  • Taxation – tax rates and incentives
  • Wage legislation – minimum wage and overtime
  • Work week
  • Mandatory employee benefits
  • Industrial safety regulations
  • Product labelling requirement

Economic Analysis

  • Type of economic system in countries of operation
  • Government intervention in the free market
  • Comparative advantages of host country
  • Exchange rates & stability of host country currency
  • Efficiency of financial markets
  • Infrastructure quality
  • Skill level of workforce
  • Labour costs
  • Business cycle stage (e.g. prosperity, recession, recovery)
  • Economic growth rate
  • Discretionary income
  • Unemployment rate
  • Inflation rate
  • Interest rates

Social Analysis

  • Demographics
  • Class structure
  • Education
  • Culture (gender roles, etc.)
  • Entrepreneurial spirit
  • Attitudes (health, environmental consciousness, etc.)
  • Leisure interests

Technological Analysis

  • Recent technological developments
  • Technology’s impact on product offering
  • Impact on cost structure
  • Impact on value chain structure
  • Rate of technological diffusion

The number of macro-environmental factors is virtually unlimited. In practice, the firm must prioritize and monitor those factors that influence its industry. Even so, it may be difficult to forecast future trends with an acceptable level of accuracy. In this regard, the firm may turn to scenario planning techniques to deal with high levels of uncertainty in important macro-environmental variables.

Below I have created a PEST table which will represent the key strengths and weaknesses that face Harvey (Engineers) Ltd in the construction sector.

Political / Legal Economic Social Technological
  • Environmental regulation and protection
  • Local authority conditions
  • political interests
  • Economic growth (overall; by industry sector)
  • economic recession
  • inflation
  • Income distribution (change in distribution of disposable income;
  • The gap between the rich and the poor.
  • Racial discrimination
  • Government spending on research
  • The cost of hiring technical experts
  • infrastructural adjustments in readiness for new technologies
  • Taxation (corporate; consumer)
  • Monetary policy (interest rates)
  • Access to credit(Loans)
  • Demographics (age structure of the population; gender; family size and composition; changing nature of occupations)
  • social classes
  • Government and industry focus on technological effort
  • Adoption of new technology by industry
  • International trade regulation
  • regional integration
  • Government spending (overall level; specific spending priorities)
  • imports and exports
  • foreign policy of government
  • Labour / social mobility
  • cultural diversities
  • social amenities
  • New discoveries and development
  • the viability or technology to industry
  • Consumer protection
  • Policy towards unemployment (minimum wage, unemployment benefits, grants)
  • policy on occupational safety and hazard
  • Lifestyle changes (e.g. Home working, single households)
  • life expectancy(The productive age )
  • Speed of technology transfer
  • obstacles to technology transfer.
  • Employment law
  • Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates)
  • Attitudes to work and leisure
  • perceptions and believes
  • cultural differences
  • Rates of technological obsolescence
  • levels of technological awareness
  • Government organisation / attitude
  • Exchange rates (effects on demand by overseas customers; effect on cost of imported components)
  • trade restrictions
  • Tariffs
  • Education
  • Religion
  • Energy use and costs
  • Infrastructural development
  • Competition regulation
  • Government control over prices
  • Inflation (effect on costs and selling prices)
  • Fashions and fads
  • Changes in material sciences
  • Security concerns
  • Stage of the business cycle (effect on short-term business performance)
  • Health & welfare
  • Impact of changes in Information technology
  • Government policy on foreign investment
  • Economic “mood” – consumer confidence
  • Living conditions (housing, amenities, pollution)
  • Internet

What were the STRENGTHS and WEAKNESSES of Harvey Engineering?

It’s important to look at company’s strengths and weaknesses in order to start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market. Some of the possible strengths and weaknesses that might want to be consider have been listed below.

Strengths

  • What advantages does the company have?
  • What do the company do better than anyone else?
  • What unique or lowest-cost resources does your company have access to?
  • What do people in your market see as your strengths?
  • What factors mean that you “get the sale”?

Weaknesses

  • What could you improve?
  • What should you avoid?
  • What are people in your market likely to see as weaknesses?
  • What factors lose you sales?

The strengths and weaknesses have to be looked at from an internal and external basis in order to see the best opportunities for your company and to dodge any potential threats. I will look closely at what strengths and weaknesses which were faced by Harvey Engineers during the case study.

Harvey Engineering

Strengths

  • Divided tasks and responsibilities to increase opportunity
  • Boom created more opportunities and growth
  • Branched out into Civil engineering
  • Civil engineering and steel fabrication complemented each other so no need for subcontractors
  • Massive expansion and sales in boom

Branching of the company into civil engineering created more opportunities in terms of an increased capacity than what it could offer initially. This had the effect of improving on the level of revenue and income for the company. Furthermore more assets could be acquired in this course. The cost of subcontractors was curtailed by the organization as a result of the two departments complementing each other. Massive expansion and sales increase in the company is fundamental to its strength because it is the basis to which the company can establish a good position in the industry and market as compared to the competitors. The competitive advantage is improved by this kind of expansion.

Weaknesses

  • No training given to senior management
  • Senior management routines and communications were bad with middle management
  • Mr Harvey gets too involved in everything
  • Too much family involvement
  • No other back up strategy
  • Harvey looked as centre piece
  • Admits none of senior management are paper minded
  • All were shop floor workers
  • No professionals except middle management
  • Middle management question senior management
  • Lack of trust throughout the organisation
  • Poor communication throughout the structure
  • Harvey opens and signs all mail which cases slow turn around
  • Creates low moral
  • Slow performance and low moral was created causing immeasurable damage to organisation
  • No job descriptions so people didn’t know what exactly their role was
  • This adds confusion and jobs were being done twice or not at all
  • Middle management were given no trust
  • Work wasn’t distributed through the workforce and middle management were looked at as just followers.
  • Complaints weren’t being heard or put across from middle management so grievances weren’t being solved
  • Some senior management knew staff weren’t passing work down so sympathised with the middle management. Middle management felt they were ill equipped to do the job.
  • Company began to move away from its traditional role of steel fabrication.

During the 1987 Lawson Boom a surge of business resulted for Harvey Engineers. To cope with the expansion of business, a vast number of personnel were employed and the existing framework had to be changed in order to adapt to the growing company. As the company grew knew opportunities arose for the company. Harvey Engineers decided to branch out into civil engineering as well as steel fabrication, and this became its main source of income thus moving away from its more traditional form of work. This gave rise to more opportunity for work and different roles within the company.

Tasks were divided up and responsibilities were given out to newly promoted staff. Mr Harvey gave people within the company managerial roles in order to cater for the expansion in sale and growth. The first mistake Mr Harvey made was to only offer these positions to people that had worked for him for a long time and gained his trust. He didn’t offer any sort of training to the staff in order to cater for the managerial roles and most of them felt ill equipped to do their job. Mr Harvey went on to admit that him and his senior managers weren’t really paper work minded as they had originally been shop floor workers.

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As the company continued to grow, middle management roles were needed. Mr Harvey went on to employ a number of educated and qualified middle management to inject some professionalism into the company. This resulted in tension between the senior and middle management because of the lack of experience shown by the senior managers. The senior managers felt they weren’t capable to do their job, and we’ll go on to see, the middle management felt that their senior colleges weren’t doing a great job.

When giving senior management roles Mr Harvey failed to give real job titles and job descriptions. This resulted in a lot of confusion over who did what. Some jobs were done twice and others not done at all as for confusion between job descriptions. This was made worse through a lack of communication which seemed to arise throughout the company.

Lack of adequate management skills in the management team is a major obstacle towards efficiency in the company. This is so because strategizing and formulating good policies is key to strategic planning and success in the company.Lack of good management presented a major weakness in the company since no significant change could be expected. Indeed this can be attributed to lack of trust in the company that so the appointment of unskilled people into managerial position just because of their loyalty and experience. Such a criteria cannot yield the required efficiency results in the management process of this organization.

Using Griener’s model of organizational change as a framework, at what stage of development has Harvey Engineering reached before the onset recession?

Fast growing companies can often be chaotic places to work. As workloads increase exponentially, approaches which have worked well in the past start failing. Teams and people get overwhelmed with work. Previously-effective manager’s start making mistakes as their span of control expands. And systems start to buckle under increased load.

While growth is fun when things are going well, when things go wrong, this chaos can be intensely stressful. More than this, these problems can be damaging (or even fatal) to the organization.

The “Greiner Curve” is a useful way of thinking about the crises that organizations experience as they grow.

The "Greiner Curve"

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By understanding it, you can quickly understand the root cause of many of the problems you’re likely to experience in a fast growing business. More than this, you can anticipate problems before they occur, so that you can meet them with pre-prepared solutions.

Greiner’s Growth Model describes phases that organizations go through as they grow. All kinds of organizations from design shops to manufacturers, construction companies to professional service firms experience these. Each growth phase is made up of a period of relatively stable growth, followed by a “crisis” when major organizational change is needed if the company is to carry on growing. I will look at the various stages that Harvey (Engineers) went through up to the onset of recession to see where they were in comparison to the table.

Phase 1: Growth Through Creativity

Harvey Engineers originally founded the firm with just the help for a few family members to help run his business. He was busy creating products and opening up markets for his steel fabrication. There weren’t many staff, so informal communication worked fine. As the company grew an external accountant advised the company to gain limited status and Mr Harvey made his wife a joint stock holder.

Mr Harvey wanted to employ more staff to accommodate the boom in order to expand production and there was a need for more formal communication. This phase ended when because more staff and professional management was needed. Mr Harvey had to change his style and take on this role.

Phase 2: Growth Through Direction

Growth continued and the company expanded by taking on 10 more employees which produced an environment of more formal communications, budgets and focus on separate activities like marketing and production. The company began to change and add to its portfolio by branching out into Civil engineering.

The products and processes become so numerous that there are not enough hours in the day for one person to manage them all and more management was needed for different areas within the company.

This phase ends with an Autonomy Crisis: New structures based on delegation are called for.

Phase 3: Growth Through Delegation

Here Mr Harvey decided to add managerial roles to the company by making staff that had been with him along time and had gained his trust managerial roles. This would give mid level management opportunities in order to deal with the fast growth of opportunities for new products and in new markets. The organization continued to grow and further managerial roles were created and employed from outside of the company. Top management was supposed to just monitoring and dealing with the big issues and let middle management run the different areas of the business. However like many businesses, managers let the company flounder at this stage, as the manager whose directive approach solved the problems at the end of Phase 1 finds it hard to let go, yet the mid-level manager’s struggle with their new roles as leaders.

This phase ends with a Control Crisis: A much more sophisticated head office function is required, and the separate parts of the business need to work together.

This is where I think the company fell with the onset of recession. The company began to struggle because of a poor strategy in place. Middle management began to feel there was no trust within the company and they were not allowed to do the job they had been employed to do. This created a lot of unrest within the company structure and lead to an unstable workforce.

The company began failing at the control crisis level because of the existing leadership and management structures. The leadership in the company failed to provide proper direction and motivation for the rest of the teams to follow and achieve success for the organization. Most organizations crumble because a failed leadership system which cannot drive employees into doing what is required for the well being of both the organization and them.

Are the staffs within Harvey Engineering satisfied with their jobs and motivated to work with the company? If so, why? If not, why not?

Every person has different reasons for working. The reasons for working are as individual as the person. Some people work for love; others work for personal fulfilment. Others like to accomplish goals and feel as if they are contributing to something larger than themselves, something important. Some people have personal missions they accomplish through meaningful work. Others truly love what they do or the clients they serve. Some like the camaraderie and interaction with customers and co-workers. Other people like to fill their time with activity.

Whatever the reason for working, the employee has to be motivated to do the job. The job of a manager in the workplace is to get things done through employees and that’s how they make money. To do this the manager should be able to motivate employees. But that’s easier said than done!

Firstly we should look at the concept of motivation. Motivation isn’t he only factor which contributes to job performance.

‘Motivation is also a combination of level of skill, knowledge about how to complete a task, feelings and emotions, and facilitating and inhibiting conditions under the individuals control. However, what is clearly evident is that if the manager is to improve the work of the organisation, attention must be given to the level of motivation of its members.’ (Pg 250)

Motivation at work is very complex and there are many factors that contribute to a lack of motivation in the work place. There are many theories produced on how to increase motivation of members but you have to look at them individually to see what will help benefit them. I think the situation with Harvey Engineers varies as you go up through the vertical structure and the contributing factors to their motivation are very different.

The motivation within Harvey Engineers is definitely an issue and isn’t a good one. The company saw huge growth in the larson boom which contributed a need to develop ‘systems’ for various procedures which was recognised and acted upon. However, the strategy and structure put in place wasn’t effective for employee moral right through the structure.

John Harvey saw the need to create managerial roles in order to spread tasks out within the company. The first mistake made by Harvey was he only considered people who had been working for him for years and had gained his trust. All of these had just grown with the company and were nothing but shop floor workers and had no experience or training as a manger to fill this role. This later created more problems when experienced and well trained middle management were employed to do middle management jobs beneath them.

The senior manager themselves felt they weren’t suited to the job roles they have been put in.

‘I suppose I’m General Manger really, but to my mind I shouldn’t be. I should be concentrating on the fabrication side, because that the one thing I know best. I’m feeling my way in the other and I would say jobs aren’t getting done properly.’

(Pete Dawson, General Manager)

Job satisfaction is a key part of being motivated to do a job. Without being satisfied in your job position it can easily become frustrating to be in. This frustration can be in response to a blockage of a goal. The members of the senior team seem to be frustrated as they aren’t qualified to do their job and the job they are really trained to do.

John Harvey also didn’t give manager jobs descriptions as he thought this would inhibit the flexibility of the company. This became increasingly frustrating as it resulted in poor job performance.

‘The first month I was here I could have gone away. I could have been in tears. I was so depressed because I didn’t know what they were expecting from me.’

(Grounds Manager, Mark Newton)

This caused considerable confusion within the company. Individual tasks and jobs would overlap and some jobs were done twice and some weren’t done at all. This created a lack of organisation between the firm and its employees and continued to cause frustration between management.

Middle management wanted to bring up the issues with the senior management but this proved me be unsuccessful. On many occasions the meeting were cancelled and their arguments couldn’t be put across. Middle management wanted to view their issues about not getting enough responsibility and the lack of trust they felt even to the point of telling Mr Harvey themselves, however they were cautioned for evading the wrong procedure.

This created tension between the staff as middle management could see the mistakes that their managers were making through a lack of experience and training which they already had and weren’t trusted with work loads.

John Harvey’s procedures were questioned, especially by middle management.

‘A basic lack of trust became apparent as the senior managements roles became increasingly overloaded as their ability and willingness to delegate to more professional (and, hence, potentially threatening) middle management remained minimal.’ (The Growing Pains of Harvey (Engineers) Ltd, Fiona E. Mills)

This made middle management unhappy as they felt that they weren’t trusted with the jobs they are trained to do and by managers with no training whatsoever.

Also there was a communication break down between the structure. This was for two reasons. Firstly all post was delivered to John Harvey regardless of who it was addressed to. John Harvey wanted to read every incoming and outgoing letter so he knew exactly what was going on. This again created an atmosphere of distrust and his employees felt they weren’t trusted to do their jobs. It also gave the company a slow turn around and the companies performance suffered.

‘Sometimes John (Mr Harvey) sits on stuff for three or four days, waiting for important quotes and all the rest of it. He sees it addressed to who ever, has a quick look at it and doesn’t see the relevance. He doesn’t know the relevance of how important it is.’ (Plant& Transport Manager, Paul Mortimer)

The whole structure of the company seems a bit backwards. The senior managers feel that they aren’t really capable of doing their jobs and hardly understand their job description at all. The middle management seem to feel like they could be doing a better job of the senior management role with the expertise and experience they have through training. John Harvey seems not to of structured his company around individual strengths. The people put into managerial roles have want to be doing the roles they were originally employed to do and the middle management are not doing the job they are trained to do and have to watch un experience people doing.

I think also one of the biggest problems comes from the top. Mr Harvey doesn’t delegate enough work through the company because of a lack of trust. He employs staff and them doesn’t trust them to do their job. This produces a bad atmosphere within the company as there is no mutual respect.

There is clear evidence of lack of satisfaction amongst the staff and the management. The staff are unsatisfied because they are worried that their boss does not have trust in them. This is a major contributor of lack of motivation in the workforce. Confidence in the staff is a significant factor that motivates employees to work hard. On the other hand by virtue of the fact that the boss does not trust the employees, it means that he does not believe in what they can do. Therefore as much as the employees can be struggling to achieve greater heights the boss still lacks satisfaction.

Design and justify an “ideal” organizational structure for Harvey

  • Pete Dawson (General Manager) Was on shop floor
  • Ian Lishman (Civil Manager) Was a steel erector
  • Ken Pearson (QS) was a buyer
  • Jackie Griffiths (Office Manager) Was a Clerk

Organizational structure

Organizational structure

This is an ideal structure for Harvey as it will lead to more efficient management and operations within the organization. First of all authority would be centralised with Pete Dawson as the general manager. The civil manager would be of assistance in the management process but under the authority of the general manager.

This design would mean a wide span of control. The management would be able to fully control operations within the organization from a wider perspective hence more efficiency in operations.

This design means low level of departmentalization. This is very important as far as communication is concerned. Low departmentalization would have an advantage of efficient communication than if it were the case of many departments with poor communication. Since many managers have been a problem to the organization because of lack of adequate training and skills, few departments would reduce the number of managers to a few who can deliver quality service to the organization.

Bibliography

Abbot, A. (1988) The system of Professionals: An essay on the Division of Expert Labour, University of Chicago Press, Chicago, ILL.

Drazin, R. (1990) Professionals and innovation: structural – functional versus radical structural perspectives, Journal of Management Studies, Vol. 27, no.3, pp. 245 – 63.

Goulderner, A. (1957) Cosmopolitans and locals: toward an analysis of latent social roles, Administrative Science Quarterly, Vol. 2, pp. 281 – 306.

Maister, D. (1982) Balancing the professional service firm, Sloan Management Review, p. 5 – 19.

Mintzberg, H. (1983) Structure in Fives: Designing Effective Organisations, Prentice Hall, Englewood Cliffs, NJ (Chap. 10).

Raelin, J. (1986) The Clash of Cultures: Managers and Professionals, Harvard Business School Press, Cambridge, Mass.

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