S w

910C01

FINEMASTER PROJECTS LTD. (A)

Julie Harvey wrote this case under the supervision of Elizabeth M. A. Grasby solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

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Copyright © 2010, Ivey Management Services Version: (A) 2010-04-28

It was 6 p.m. on May 10, 2007, and John Balmer, assistant site supervisor at Finemaster Projects Ltd., a
design-build residential and commercial construction firm in Ottawa, Ontario, was struggling with the
problem of approaching his boss, Bob Donovich, for a raise. When he was hired in early 2006, Balmer
accepted a lower pay rate than he had expected because he was told that there would be regular annual
reviews and that employees would be rewarded for good performance with corresponding pay increases.
But now he was discovering that the two owners rarely acted on this policy, leaving it up to staff to
approach management about raises, promotions and other performance-related issues. He was even more
discouraged to learn that his compensation was far less than that of a fellow employee who had less
seniority, fewer skills and less experience. Balmer’s faith in the company’s pledge to reward its workers
for good performance was quickly fading, and he wondered whether he should heed a colleague’s advice to
take matters into his own hands and “even the score.”

COMPANY BACKGROUND

History

Finemaster Projects Ltd. (FP), a full-service residential and commercial construction firm, was originally
established in 1955 by two brothers in the Ottawa region of Ontario, Canada. In 1985, ownership was
transferred to their sons, Skip and Bob Donovich, currently the managing partners of the business. As a
non-unionized, privately held company, FP specialized in new, high-end residential and commercial
building projects and renovations, offering a complete turnkey service,1 including drawings and blueprint
preparation, cost estimation and budgeting, job scheduling, design, construction and installation, and
interior decorating. The company employed over 55 qualified and licensed trades people, who were highly
committed to their craft and shared the owners’ objectives for superior workmanship and professionalism.
FP utilized the best techniques, latest technology, newest styles and highest quality products, allowing its
customers the opportunity to fully customize their renovations and tailor their building projects to suit their

1
Involving the provision of a complete product or service that is ready for immediate use.

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individual needs and unique vision. The company was also heavily involved in the community. FP
donated its services to many charitable organizations and was a regular recipient of a number of industry
awards, including Builder of the Year. Because of its commitment to excellence, the company was a
leading builder in the Ottawa region, with an exceptional reputation and a long list of satisfied customers.

As the company grew, the partners were able to offer more employment benefits to FP’s construction staff
in addition to their regular wages. An optional group benefits package and a pension plan were available
to employees who wanted to take advantage of the preferred rates and favorable terms. An annual
equipment allowance of $250 to $700, based on seniority, was also given to assist construction staff who
required expensive tools for their trade. Subsidies were offered for safety boots, hardhats and company
uniforms. One of the most attractive benefits offered by FP was the opportunity for workers to earn the
required workplace hours that were necessary, under provincial apprenticeship programs, to achieve
licensing as a general carpenter.2 Those employees training as carpenters appreciated working with a firm
that specialized in high-end custom construction because they could develop a variety of skills and be
exposed to advanced techniques and specialized work. The owners sought talented tradespeople who
possessed the ambition and skill to eventually become self-employed, since they believed that working at
FP would be excellent preparation for these individuals. The company encouraged workers to take on
work outside of FP and often permitted staff to use company equipment to complete these outside jobs.

Organization

Although the company was a single entity with one office building that housed the administrative functions
of the business, construction projects were assigned to one of its two branches, each managed by one of the
owners. All site workers were FP employees, but they were specifically selected to join one of the two
branches and rarely worked on jobs linked to the other partner’s branch. Each branch often had five to 10
projects of varying sizes ongoing at a given time. When required, resources were shared between the two
branches; otherwise, they functioned independently, allowing the owners to accept more projects than
would have been possible if they had operated as a single unit. Despite this divide, the partners worked
hard to maintain a unified front and family-like atmosphere. Annual holiday events and other special
occasions were held regularly to ensure familiarity among the staff throughout the entire company.

Compensation

Construction employees were generally offered two to three weeks of paid vacation annually, but they
were expected to work overtime and weekends during periods of high demand and throughout the busy
summer months. While it was common practice for construction companies in the area to lay off several of
its workers during the slower fall and winter seasons, FP generated enough business to keep all of its
workers employed year-round. Management guaranteed a minimum of 40 hours of work every week, even
during the off-season, which was considered a major benefit to many tradespeople, whose peers in the
same industry were forced to manage irregular hours and varying periods of unemployment.

Overall, because of these formalized programs and the professional workplace experience offered at FP,
employee turnover was much lower than at competing construction firms; however, although the partners
took great care to hire and retain highly skilled and talented trades people, the company had a reputation as

2
An apprentice was someone who learned a skilled trade on the job, under the direction of more experienced workers.
Apprentices also completed classroom instruction as a part of their training. Apprentices were employees who earned a
salary while they learned a skilled trade. http://www.edu.gov.on.ca/eng/tcu/apprentices/faq.html, accessed July, 2008.

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being one of the lowest-paying firms in the industry. The owners believed that it was necessary for
construction staff to prove themselves before earning raises and thought it was important for new staff to
properly “pay their dues” before being rewarded with promotions or raises. The owners also believed that
the company’s additional benefits, such as regular employment and the opportunity to train on high-end
work with a reputable firm, put FP on par with other firms that offered higher wages.

Although a major portion of the company’s staff were long-standing employees who believed the benefits
of working at FP outweighed the prospects of higher wages elsewhere, many staff had left and accepted
jobs with other firms that offered up to 30 per cent to 40 per cent more pay. Once fully licensed as a
general carpenter, some FP staff moved on to jobs with large unionized organizations, where fully funded
benefits packages and pension plans were offered along with standardized pay rates that could be double
those earned at FP. Although the owners generally regretted losing these employees, they firmly believed
the work they offered was much more valuable, challenging, diverse and exciting than the work offered at
larger companies.

JOHN BALMER

As a self-taught carpenter with no formal training, Balmer had amassed 10 years of experience in the
construction industry. He had acquired his skills on the job, working under a number of experienced and
highly talented tradespeople. Balmer’s educational background was in computer science and, before
switching to the construction industry, he had enjoyed a successful career in sales and technology.
Balmer’s grandfather and uncle were both accomplished furniture-makers and finish carpenters, leading
Balmer to believe that woodworking was in his blood. After several years in the corporate world, Balmer
chose to pursue his passion and so began his own career in custom carpentry, working with several
commercial and residential construction firms throughout Ontario and the United States.

Prior to accepting a position with FP, Balmer worked for two years with a small custom cottage builder in
Peterborough, Ontario. Since Balmer’s wife and family lived in Guelph, Ontario, working in Peterborough
kept him away from his home life. He rented a house in Peterborough and travelled back to Guelph
whenever possible, but he was forced to spend a lot of time away from his friends and family. Despite the
distance, Balmer enjoyed working with the cottage-building company and was particularly proud to have
some of his work featured in a number of national design and home improvement magazines. Balmer had
also received an offer to work as a carpenter for a renovation television program that aired on the
syndicated Home and Garden TV network. At the same time, Balmer and his wife found they were
expecting their first baby. Balmer’s wife was a veterinarian, and she had secured a new position with a
veterinary clinic in Ottawa. Deciding to spend more time with his family, Balmer declined the opportunity
with the television show, left his work in Peterborough and moved with his wife and baby to Ottawa.
Having no interest in working with a large, unionized company, Balmer considered starting his own home
renovation and repair business in Ottawa, but he decided it would take too long to build a client base in a
new city where he did not yet have a network. In the interest of providing a steady income for his family,
Balmer accepted a position with FP.

Balmer’s friends and family described him as a kind, friendly and loyal man who took his family and
career very seriously. He possessed a solid work ethic and believed in teamwork and co-operation to get
the job done. He was a very meticulous and thorough worker who would not hesitate to work late nights
and weekends to meet project deadlines. Customers liked this dedicated attitude, making Balmer one of the
highest rated carpenters amongst FP’s clients. Balmer also maintained good relationships with his former
employers, who had valued his honesty, reliability and craftsmanship. Balmer was also non-

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confrontational: with a passive nature, he avoided conflict whenever possible. Instead, he preferred to trust
that problems would work themselves out, and he chose not to interfere in matters he deemed beyond his
control.

OFFER OF EMPLOYMENT

When Bob Donovich offered Balmer a job with FP, Balmer gladly accepted, having heard about the
company’s good reputation and high degree of professionalism; however, Balmer was not prepared when
Donovich told him his starting wage would be $18 an hour. Taken off-guard by the offer, Balmer
stumbled to find the words to explain his surprise, recalling that he had been making $25 to $35 an hour at
his previous job in Peterborough. With his other employers, Balmer had always felt comfortable with the
money he earned and had never encountered the need to dispute or discuss his wages. Now, sitting in
Donovich’s office, feeling awkward and unprepared to respond to the offer, Balmer instantly regretted not
doing more research into FP’s pay scale. He wished he had come to the meeting better prepared to
negotiate. Sensing Balmer’s hesitation, Donovich explained his philosophy on rewarding workers for
good performance, emphasizing that employees were required to put in their time before earning such
rewards. Balmer understood and appreciated Donovich’s attitude on workplace performance and, although
he remained conflicted about accepting such a reduction in pay, he was encouraged when Donovich
explained that formal annual performance reviews were conducted for all employees, and compensation
and other benefits could be renegotiated at such times. Donovich also told Balmer that the company
provided a $400 allowance for safety equipment and tools and, in three months, he would also be eligible
to receive the companywide bonuses that were paid out, based on seniority, on a quarterly basis to all
construction staff. Donovich pointed out that the last bonus averaged $1,000. He then reached into a
cupboard and pulled out several hats, T-shirts, sweaters, windbreakers and parkas, which Balmer assumed
to be company uniforms. “What size are you?” Realizing that the meeting was coming to an end with the
conclusion that Balmer was now an FP employee, Balmer shook Donovich’s hand and proceeded down the
hall, hat, T-shirt, sweater, windbreaker and parka in hand, to the reception area to fill out the necessary
paperwork. “I guess $18 it is then,” he said to himself, still feeling a little uneasy about his meeting with
Donovich.

DALE WINTERS

Although Balmer took a significant pay cut when he joined FP, he was very happy to be working with such
a professional and reputable firm that offered regular and challenging work. During his first few months,
Balmer was comforted because there appeared to be opportunities for him to move up in the business, and
he respected the owners’ philosophy of proving oneself before earning pay increases or promotions.
Having already worked on high-end custom construction with his previous employer, Balmer was happy
that he would be able to continue developing his craft as a finish carpenter at FP.

Balmer enjoyed working with a group of such talented tradespeople, and he learned a lot from FP’s highly
skilled team. Balmer formed a friendship with Dale Winters, a carpenter who had been hired shortly after
Balmer. Although Winters had spent less time in the construction trade than Balmer (four years), he had
similar work experience, having worked for several smaller builders on both residential and commercial
projects in the Ottawa region. He did not possess some of the more advanced skills that Balmer had
developed, but Winters was a quick learner and eager to get ahead in his career. Since they both started at
FP at roughly the same time, Balmer and Winters learned the ropes together and each saw a future for
themselves at the company. Balmer also thrived on the friendly sense of competition that had developed

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between them because he felt it pushed him to always do his best work. Balmer and Winters were always
challenging each other on the jobsite to see who could complete a job first or who could do the best job.
Balmer thought this made his work more fun, and he enjoyed the joking and heckling that went along with
their friendly rivalry.

During one lunch break, Balmer and Winters were talking about their disappointment with their starting
wages sat FP. Balmer told Winters about how he was caught off-guard when Bob Donovich told him
about the low pay.

Balmer:
“I just sat there, completely speechless. I didn’t know what to say. Donovich went on
about how his guys have to prove themselves before earning big bucks. Then he threw a
uniform at me and told me to get to work. I figured I’d better get out to the jobsite quick
to show him what I could do. There’s no way I’m going to stay at $18 an hour.”

Winters:
“Eighteen dollars? An hour? That’s what they’ve been paying you all this time? When
Donovich gave me that ‘work for peanuts’ speech, I told him I wouldn’t work for less than
$20.”

Balmer:
“Really? Donovich is paying you $20? But I have way more experience than you. And
I’ve worked here longer. How does he figure I should be paid less? I’m due to be called
in for an annual performance meeting soon. I’m definitely going to ask him about this.”

Winters:
“Oh yeah? You ever hear any of the other guys talk about their fancy performance reviews
or fat raises? Those meetings are all talk. At least Donovich was right about the bonuses
— my last one was over $800. That equipment allowance is pretty good too — another
$700. And I’m going to tell Donovich that I want one of those company pickup trucks.
We’re going to talk about it tomorrow.”

Balmer:
“What? Your bonus was over $800? Mine was $450! And you were given a $700
equipment allowance? I thought guys at our level only got $400! And Donovich better
not give you a company truck! I can’t believe you’re meeting with him tomorrow! You
haven’t even been working here for a full year yet!”

Winters:
Laughing, “John, let me give you a little advice. You have to start looking out for No. 1.
If you don’t, no one else will. Especially not Donovich. He’s so busy tooting his own
horn about what a great company FP is to work for. I’ll say! He hasn’t once noticed the
extra hours I’ve been listing on my timesheet — they can never tell how many hours we
actually work anyway. Hey, I’m only making sure I get what I deserve. Even the score a
little, you know? Plus, I helped myself to some of that extra material at the Rickard job —
they don’t keep track of that stuff either. I’m going to use it for the new bathroom I just
put in at my place. A penny saved is a penny earned, John.”

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Balmer:
“Are you kidding me? You better watch yourself, Dale. If Donovich finds out that you’ve
been ripping off the company, he’ll fire you on the spot, no questions asked.”

Winters:
“Oh please John — ‘Johnny be Good’ — everyone does it. And besides, at $18 an hour,
who’s ripping off who?

WHAT TO DO?

Balmer’s head was swirling after his conversation with Winters. He was shocked to learn that Donovich
had agreed to significantly better compensation terms for Winters than for him, and he could not
understand why Donovich would make such an unfair arrangement. Balmer was very clear about his
experience and skill set when he first met with Donovich, and he believed he had more than proven his
capability since then. Balmer was equally surprised to find out that Winters had been over-reporting his
work hours and helping himself to materials on the jobsite. Balmer had never thought Winters would be
dishonest like that, but, with the current wages they were being paid, maybe his actions were justified?
Balmer felt cheated by Donovich, but he had no idea what to do about it. Should he try to talk to Donovich
about his concerns? Should he start looking for work elsewhere? Should he relax and trust that the
situation would work itself out? Or, should he take Winters’ advice and find another way to “even the
score”? Balmer loved his work at FP and believed in his boss’s vision. But at what point did he need to
take a stand?

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Exhibit 1

PARTIAL ORGANIZATIONAL STRUCTURE

Skip & Bob Donovich

Owners, Partners

Administration Project Team 1 Project Team 2

Managed by Bob Donovich Managed by Skip Donovich

Operations Manager
Team 1

Project Manager Project Manager Project Manager Project Manager

Site Supervisors (2) Site Supervisors (2) Site Supervisor Site Supervisor

Assistant Site Supervisors (10)

(John Balmer & Dale Winters)

Laborers and other Construction Site Staff (15)

Source: Company Files

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