AeroTech Inc Case

Patrick Delacroix, Vice President of engineering for AeroTech, an aerospace technology

research and products firm is in discussion with Cassandra Shibitola, an organization
development specialist within the AeroTech Human Resources department. She has been
assigned to consult with Patrick and help him with a problem he is experiencing.

AeroTech is located in a metropolitan area, housed in an old concrete building built in the
1970s, without many of the showy glass and steel characteristics of many of the companies
in the same locality. Whilst a multi-million-dollar company, it would be easy to drive by the
headquarters and not even realise it was located there.

AeroTech has a long and distinguished history, having been a major supplier to the top
government contractors contributing to US space and defence programmes since the 1980s.
However, over the past 20 years it has fallen out of favour among government contractors
as quality problems have plagued the company’s products. AeroTech briefly considered
bankruptcy but averted this by appointing a new CEO 4 years ago, who has helped the
company to partially recover by revising its strategy. As a result, AeroTech has begun to
diversify into other areas where there is higher demand. Some of these business segments
have become very successful enterprises, but it is clear that the pressure to succeed is high
in these new lines of business.

A recent media report predicts the demise of AeroTech if annual losses continue at the
present rate, and it is suggested, based on financial analysts’ projections, that layoffs this
year are almost certain to repeat the 16`% reduction in staff that occurred last year. This
report states that “with financial performance mirroring last year’s, we may be witnessing
the slow death of one of the area’s original companies. Unless it merges, or is acquired, we
would be surprised if we are still reporting on AeroTech a few years from now.”
Patrick Delacroix began at AeroTech 25 years ago as an associate engineer. He has
witnessed extensive changes in research and development of engineering products in his
various roles as engineering manager for metals fabrication, as director of the new
component division, and now as Vice President of the entire engineering operation. He lived
through the decline in personnel and morale after quality problems forced the closure of
the fabrication operation, but he also saw rises in revenues following the successful
component products released in the past 6 years. Most recently he presided over the largest
loss of talent that the company has seen through voluntary and involuntary termination
programmes. Much of the new strategic direction is resting on his shoulders.

Speaking to Cassandra, Patrick explains that he is under great pressure to get a new laser
system released to market and that this is a complicated operation. “We’re relying on our
best and brightest engineers to create some of the most innovative applications of
advanced laser technology on the market today. Unfortunately, we can’t always predict how
long it will take to develop a product. How long it takes to be creative is a volatile challenge
that’s always present in our division. We have to balance cycle time with our financial
investments in research and development. We put a lot of pressure on our engineers and
we rely on them to deliver.”

Cassandra nods and says “I hear that many of them are working nights and weekends. So,
what is that you want to discuss with me.”

Patrick goes on to provide some background and context for Cassandra.

“We have 5 engineering teams in this division: laser systems; component systems
(separated into two teams, new components and enhancements to existing components);
satellite technology and custom design. The laser and satellite teams are relatively new,
having been only organized in that way since last year, and they’re two critical areas in
terms of the new direction of the company. The other teams have the same charter that
they’ve had for the past few years.
Productivity is the main issue. We have very limited budget and very short delivery windows
in which we’re expected to produce results. If we don’t, a competitor will get there faster
and we’ll basically have lost the battle. In general, we’re not meeting our commitments to
getting our products out and we’re losing market share every time we’re late. That impacts
our sales force, marketing team efforts and the credibility of the engineering team.“

Cassandra asks, what Patrick thinks is the cause of the low productivity.

“Well, I think there are many causes, but the most basic seems to be time management.
How our engineers spend their time is obviously critical. We need then to get skilled at
prioritising their time and spending it on the most ‘value-added activities’ so that our
development can be completed on time. We need them to be self-managing and
productive, and that’s why I’ve called you in. I’d like your help in designing a time
management and prioritization seminar to address some of the issues that I have with the
engineers. You might throw in a little project management as well.”

Cassandra tells Patrick that this can certainly be considered, but also what’s led him to the
conclusion that the engineers cannot manage their time well.

“Well, I’m obviously nervous about the laser systems team. I go downstairs to get an update
fairly frequently and to see how things are going. I always see people working, but the
results don’t seem to be coming in.”

Cassandra asks Patrick what he has done so far

“I prefer to let my managers do the managing; I don’t like to bypass them. They know that
the whole company is waiting for their product to be ready. But to be fair, it’s not everyone,
it’s mostly Tod’s group.

Tod is the manager of the laser systems group, he joined about a year ago, right after we
reorganized the engineering group following the layoffs. We brought him in to lead the
development of the new laser systems and we were lucky to recruit him, he has extensive
background in laser engineering at one of our competitors. He’s incredibly intelligent and
came with great credentials.

Since Tod arrived his team has led three new product releases. Two were upgrades, and one
was a new product. Two of the three were delayed beyond the original release date.”

Cassandra asks how the laser team group performed before the reorganization and Tod’s
arrival.

“They were doing just fine. That’s what’s so frustrating about these product delays. There’s
no apparent reason for them. Before, the group was like a machine. They would get a
product design request, and they would do it. Many times, they operated under budget.
Now, they’re over budget and missing deadlines. It’s getting really embarrassing to me
personally. The group’s performance has declined significantly. That brings me to my second
request, to engage Tod in some management coaching to build his management skills.”

Cassandra nods, and says “okay, before we talk specifically about Tod, let me ask you a
few more questions about the group and its history. Who led the group before? How were
they perceived by the engineers in that group? “

“Before Tod there was Ed. He was a very popular guy and we were sorry to lose him. He was
a really good ‘company guy’ who knew how things were done around here. He’s now on a
golf course in Florida having a great time in retirement.”

Cassandra asks “so what happened when Ed left. How would you describe the team’s
reaction?”

“Ed left right before the re-organization. In fact, it was his departure that led me to rethink
how we might organise things. In order to get some cross-pollination of Ed’s excellent and
productive team, I moved a few of them into satellite technology, and a few into custom
design. I figured that would enhance the skills of both those teams, since satellite is new and
custom design is a highly specialised, high-margin business.
Ed’s team was really close. After the move was announced, a couple of the remaining team
members asked to be moved with their colleagues into the other groups, but I couldn’t
afford to have the entire team disbanded like that, so they stayed behind.”

So, after you hired Tod, how did the team respond asks Cassandra

“The team was small at the time, but they participated in the interview process,
interviewing each candidate and providing me with good feedback, and I agreed with their
decision to hire Tod. I think that was a good process to get buy-in for their new manager.
Once Tod arrived, he had the job of hiring about six new engineers to replace those who had
been re-assigned during the change process.”

So, the team is a mix of new and tenured engineers Cassandra says. Can you tell me
a bit more about them?

“There’s about a dozen engineers, ranging from late 20s to 60s in age. Most are in their late
40s or 50s. The new ones joined within the past year obviously, and among the rest the
average tenure is probably about 15 years. They have extensive education and are among
the most highly skilled engineers I’ve met”

“What’s the morale been like amongst those who were transferred out to other teams
and those who stayed behind in the laser group” asks Cassandra

“Fine as far as I know. I haven’t heard of any issues complaints.”

“Other than Tod’s group, how are the other engineering teams doing, in your
assessment”, asks Cassandra

“They’re very successful. I haven’t ever been more pleased with the performance of the
satellite and custom design teams. They’ve come through a really difficult period, which has
affected all the teams. That’s what makes it so strange about Tod’s team, that they with the
existing tenured staff he has they just can’t seem to contribute in the same way that the
other teams can.”

“So, with his extensive experience and credentials, and given that the team chose him,
what makes you think Tod needs coaching,” asks Cassandra

“Well, there’s management experience and then there’s management at AeroTech. We

have our own way of doing things. I just think Tod needs to understand that way
specifically.”

Cassandra: “So, tell me more about the AeroTech way. You’ve said that Tod’s team is
missing deadlines and is over budget”

“Well, we ask each of our managers to develop a quarterly plan that we use as
commitments across the business. I take the product development timeline that they send
to me, and I share it with sales and marketing so that they know when to begin the major
sales push. I send it to operations so that they know what components and parts to order in
advance of the volume manufacturing. I share the financial commitments with our Chief
Financial Officer so that she can make revenue projections and calculate financial
projections. My credibility rides on these commitments. Tod’s projections are consistently
inaccurate, which has caused problems obviously for marketing, sales and the finance
teams.”

Cassandra: “What do you think has caused the inaccurate forecasts for budget and
delivery times?”

“There could be many things, but I have to say that when I was manager of the engineering
group I could always come up with a realistic forecast. Maybe I didn’t always get it right, but
even when I got a commitment from an engineer that it would take him 2 months to deliver,
I always added 10% to 20% of the budget and cycle time, just to be safe. My group may not
have been the fastest, but we were always within the projections.”
Cassandra: Is that standard practice in most engineering environments?

“Yes, it’s pretty typical in my experience”

Cassandra looks through her notes and says “okay let ‘s summarise:”

“There is a new manager, with a team of new and tenured employees. The team has the
lowest productivity compared to similar teams within the division. Specifically, Tod’s team is
not producing products within his own projection of cycle time and budget. You’re asking
me to conduct two interventions. One is a training programme for the engineers in Tod’s
team, that would teach time management, prioritization and project management. The
second is to conduct some coaching with Tod to help him improve the management issues
within his team, including cycle time and budget projections. Do I have that right”

Patrick: “Yes, that’s exactly it. Sorry, I’m going to have to go to another meeting now. Is
there anything else you need to know before you get started?”

Cassandra: “Perhaps. But at this point I’m not sure what you’re asking me to do are the
right solutions. I’m not exactly certain what the true problem is, but I have some ideas.
What I’d like to do is gather some data before I make a recommendation.”

Patrick: “How long will all of that take?”

Cassandra: “How about I go away and write up a proposal, in which I explain what I think
the data will tell us, some thoughts on our roles, what I would need from you and what you
can expect from me?”

Patrick: “That’s fine, just keep in mind that we’re under time pressure here. I’ll look forward
to hearing from you.”