Engineering change Featured

8:00pm EDT September 25, 2009

When Ann Massey and her team at MACTEC Inc. first realized that the economy was changing in August 2008, they didn’t waste any time or wait to see if things were just a fluke at the engineering, environmental and construction services firm.

Within a couple of weeks, they had reduced close to $4 million in overhead at the $490 million company, stopped spending cash and started conserving it. By October, the decision had been made to reduce employee health coverage, going from seven health plans to two, while asking employees to pay for more of it. Then, over a five-month period that winter and spring, they had to lay off about 100 employees — about $5 million worth of salary — while simultaneously making a few key hires to support their strategic plans. While they had fewer people, they pushed employees to spend more face time with customers so they’d remember MACTEC when things did change. And throughout all of this, they worked to change processes and programs that were costing too much money or were inefficient.

And this was all in the last 14 months.

“What’s detrimental to any company is when managers, and senior managers in particular, do not make decisions,” says Massey, the firm’s president and CEO. “They just stay status quo.”

Massey has been proactive in leading change at MACTEC by finding broken processes, making changes quickly and handling layoffs in a kind way. By doing these things, she’s positioning MACTEC to be successful not just after the downturn ends but also right now while it’s happening.

Find broken processes

MACTEC had long taken a particular approach to reviewing contract risks, but Massey saw a problem with it.

“That process was broken and too expensive, …” she says. “It was something we had been doing six, eight years, and it had kind of spun out of control in terms of the amount of time people were spending in review of contracts on the operations side.”

So she pulled together a team to address that process, which is one of the first things you have to do to improve your business in tough times. The team consisted of operations people as well as the head of the legal group, the quality manager, the chief engineer and select others.

“It was people that were touch points in the process,” she says. “We had sign-offs or approvals that involved three or four different groups, so I put people from those groups onto the team. I didn’t want to miss anything that was necessary, so I knew if I had representatives from those different groups that they would each make their argument as to why they should be involved in the process.”

When you put a team of different personalities together, that’s when you’re going to get the best results.

“Ultimately, the buck stops with me, but I find that the best ideas do not come from me — they come from the people that I surround myself with,” she says.

The team found a way to completely change the process. The result? Cost savings between $2 million and $2.5 million. But you have to look for these broken processes or you’ll never find those kinds of savings.

“Ask questions,” she says. “They need to challenge their department managers on why we do things the way we do things. I started asking questions — ‘Well, why do we have this program, and why is it costing this kind of money? How can we do it cheaper? How can we do it with less people?’”

And don’t stop after you resolve one problem. After that fix, Massey started looking for other inefficiencies, as well.

“When you’re trying to increase margins and create additional efficiencies in the business like these times require, it challenges management to step back and look at things that you haven’t looked at because times were good, such as overhead, processes, systems, the way we approach our customers, several things like that,” Massey says. “We’ve centered around those things and said, ‘How do we want to do this different now?’”

Move quickly

A few years ago, MACTEC switched to an Oracle accounting-based system. One of the accountants told the then-CEO that there was no way the company could roll it out in less than a year because there was too much required to get it done. Instead of saying OK, that CEO told him he wanted it done within six months but that he’d like to see it in four.

By four months, MACTEC had pretty much finished it, and by the six-month deadline, it was fully integrated. In contrast, another large company had made the same transition, and after a year, everything was still a disaster because that company dragged it out too long. The lesson Massey saw in this was that when you decide to make changes, you need to move quickly.

“If you’re going to make wholesale changes, you need to plan well, schedule well and move quickly,” Massey says. “Otherwise, everyone gets too absorbed by the change, and they then do not focus on the business.”

So when her teams had found solutions to broken processes, they also had to come up with implementation strategies that involved both communication methods and action items, much like a normal project they would have for a customer.

“Those changes are treated as projects,” she says. “They have a project manager within their group that runs that project. … Like any project, we have scope, schedule and budgets.”

Identify someone to lead the change. It may be someone in the affected department or simply look for people who have been successful in the past.

“Find a project manager within their own firm, someone who has a track record of being able to roll out a new process or system,” she says. “There’s no magic tool. It’s the individual and that individual’s knowledge of how to run a successful project.”

Then decide a time frame for implementing the change. For instance, sometimes with process changes, MACTEC doesn’t roll it out to the entire company at once. Instead, the company may start in maybe four large offices.

“Then we get feedback, and then we identify problems and get those issues solved before we go companywide with it,” she says.

With a point person and schedule in place, then you have to tell your people what’s going on.

“We start with the communication of why we’re making the change and what the benefits of making that change will be for the employee, and then … we communicate the schedule and when it’s going to impact different offices,” Massey says.

The more employees know, the more likely they are to buy in to your change.

“Too often we assume that with employees, the less they know, the better off we are,” Massey says. “That’s a poor approach, and I would encourage anyone to give employees obviously all of the good news you can find, but when you do have bad news or have to make changes that will impact them directly, be as honest and direct as to why you’re making the changes, why you’re taking actions that you’re taking.”

When you do that, employees respond better. For example, a year ago the team decided that it needed to reduce health coverage while also asking employees to pay for more of it. In any organization, that’s not going to go over well, so Massey made sure to give them far more information than they had ever received in the past about how much the health program costs the company. Sharing that financial information was key to fostering buy-in.

“Because of the communication and the honesty and why we were doing the change and the impact to the bottom line, most of the employees, their reaction to it was along the lines of, ‘I don’t like it, but I understand it, and, ‘I understand why the company had to do it,’ so there was an acceptance, and I find that to be true of many things,” she says.

Be sensitive with layoffs

If you haven’t had to witness an embarrassing layoff, then consider yourself lucky. Massey has seen and heard of enough of those to know that’s not how you treat people.

“Some companies take the approach, ‘OK, you’ve been RIF-ed, here’s your check, here’s a box, go pack your office and meet so-and-so at the reception area, and they’re going to walk you out,’” she says. “To me, that’s not a kind RIF. That’s an embarrassing RIF.”

Instead, she says you have to be professional and kind. While it’s important, like other changes, to move quickly and be honest, you also have to be extremely sensitive as well, when it comes to people changes.

When MACTEC does layoffs, the person’s manager and an HR person together meet with the employee. The person’s manager explains the situation and why it’s happening, and then the HR person addresses the immediate concerns the person likely has, such as severance, final paycheck, references, etc. The HR person also encourages the laid-off employee to check the job board because if there are future openings, the company likes to hire back employees. Then it’s important to let the person process the situation.

“Allow the employees to leave the office without having to pack their office up so that they have time to go home and deal with the loss of their job before they have to walk back in and, in front of all their peers, start packing up their office,” Massey says.

The HR person also tells the employee to take some time, and when he or she is ready, to call the company and come back in to get his or her things.

“Give them time to deal with their emotions,” she says. “It’s much easier, and I’ve seen this in my entire career, when people are able to go home and deal with the loss of their job and come back when they’re ready, it’s just so much easier — not only on the employee who’s coming back to get their things, but it’s also easier for the employees that are remaining.”

And that’s another issue you have to address when you lay off people. Naturally, if someone loses his or her job, everyone remaining will fear that he or she is next, so you, again, have to communicate with all of your employees what’s happening.

“If there’s a layoff at a particular location, as soon as the layoff occurs … there’s a meeting that occurs that afternoon or the next day, and it’s discussed that a layoff has occurred, and there are no others planned, and typically, there’s a reason given for the reductions in staff, and people are allowed to ask questions and express concerns,” Massey says.

Typically, this message is given by the office manager because he or she is more closely attached to his or her own employees, but an HR manager is also there to coach the office manager through the process and help that person if there are any questions that he or she cannot answer.

Some employees may have concerns or questions but will never bring them up in front of others, so invite them to come to you one-on-one if they don’t feel comfortable in a large setting.

“Always set up that opportunity for the employee to go one-on-one with a manager, recognizing that many of them will not communicate in an open forum,” Massey says.

By finding broken processes, moving quickly and being respectful to people, you’ll set up your business to be successful both now and after things turn around. Because of Massey’s efforts, MACTEC is growing and is above plan for the year, so they’re seeing some financial fruit from all of their change labor.

Massey says, “People have a tendency not to make hard decisions, and because people are slow to make hard decisions, I think, in the end, it makes it much tougher to recover, so my advice would be to evaluate quickly what needs to be done, take the action and move on.”

How to reach: MACTEC Inc., (770) 360-0600 or www.mactec.com