Managing Engineering in a Time of Change
Kenneth E. Arnold
K Arnold Consulting, Inc.
This is a time of great change for engineering companies in our
industry. Not too many years ago, we were in one of the most severe
“buyer’s markets” in history, where cost competition was a determinant
and where cost cutting, downsizing and the need to accept onerous
contract clauses from our clients were necessary management
focuses. Then we entered the more recent “seller’s market,” where our
clients where no longer as focused on the cost of our service but were
concerned mainly with our ability to field enough people to get the job
done in a timely fashion. Engineering company management was now
focused on adding staff, managing expansion, increasing market
share, and getting more billable hours out of the staff to meet the
client’s needs. Margins were reaching all-time highs and looked like
they would increase forever.
In the “boom” of the past three years we were faced with the need to
make accommodations to encourage older staff to defer retirement,
find ways to utilize those who wish to slow down and not fully divorce
themselves from the workforce, and train a new group of engineers
who are unlike anything we have ever seen before in the work place.
Due to the press of business, we may not have done as good a job in
accommodating older staff and training newer staff as we would have
liked. In many cases, the quality of our work suffered.
Finally, in this “perfect storm”, we were faced with severe competition
for engineering staff. Never in any of our memories had there been a
time where all sectors of the engineering and construction industry
were short of engineers. In the past, when upstream oil and gas was
busy, we were able to attract engineers from the downstream sector or
retrain available personnel from power and infrastructure. Similarly,
when other sectors needed more people, they typically could absorb
the surplus from oil and gas when oil and gas was not busy. This was
not the case during the seller’s market. Staff had many options and
opportunities open to them, not only in upstream oil and gas and the
downstream sectors, but equally in the booming power and
Today we are in a state of instability, wondering where in the coming
few months the state of the industry will land. Will we go back in the
sad (for us) days of a buyer’s market, will the seller’s market be re-
invigorated, or will we land somewhere in between? Should we lay off
engineers as soon as the billable work declines, or should we keep
them so we can do a better job taking advantage of the upswing when
it eventually gets here? Should we once again encourage our
experienced, expensive staff to retire or should we lay off the new hires
who have yet to be fully trained and thus are less “saleable” in a
At the same time that we are experiencing these organizational
challenges, we are in the midst of an epochal change in our workforce.
Not only are we on the cusp of losing a significant number of
experienced staff to retirement, but the very nature of “motivation” is
changing as the “Mature” and “Baby Boom” generations are replaced
by the new “Millennial” or “Generation Y” engineers who are beginning
to enter the workforce in large numbers. In addition, the “Baby
Boomers” who are running our companies soon will be replaced by the
in-between “Generation X,” who, as a group, may look at work in a
manner that is significantly different than that of either the Baby
Boomers or Generation Y.
The recent economic problems have alleviated all of these pressures.
Both upstream and downstream projects are being delayed and
canceled, and the infrastructure and power industries are on life
support. In addition, the recent downturn in the stock market may
alleviate the retirement problem somewhat as individuals adjust their
plans to the realities of shrinking retirement accounts.
Sooner or later, the economy will recover, demand for engineers will
increase in all sectors as the government introduces its infrastructure
stimulation programs, and the need for energy will once again become
acute. At that point, hopefully, retirement plans will recover their lost
values, and those who are currently deferring retirement will join those
who are just getting to their planned retirement date. The shortage of
experienced engineers will accelerate once again.
Engineering company management will once again be faced with the
need to keep experienced engineers engaged, train young staff, and
find ways to motivate a new generation that does not respond in a way
that makes sense to current top management.
Will we learn from our past mistakes and use the current “breathing
space” to encourage training, retention of older staff, and
establishment of positive corporate cultures? Or will we revert to what
we have always done in the past and lay off staff quickly to protect
margins, encourage staff to think that we are not responsible for
providing them with meaningful careers, and assume we can rebuild
when the time arrives without sacrificing quality? Unfortunately, history
has shown that we will learn nothing from the recent turmoil of trying to
grow engineering capabilities too quickly and will probably repeat the
mistakes that we said three years ago we would never do again.
This article discusses the generational changes that are taking place
and that we must deal with in any case, along with what I call the
“Engineering Company Conundrum.” This catchy phrase refers to a
situation that leads us to establish cultures that, by their very nature,
keep us from training, retaining and motivating staff who will provide a
quality product when the eventual upturn in demand occurs. I will
provide some insights that may aid in changing this culture and
meeting the challenge that this situation presents to engineering
II. Generational Change
(The concepts discussed in this section are based on my own experiences as well as
information from the following sources: a Marston Communications’ presentation
called “Strategies for Leading the Next Generation,” the Petroleum Extension
Service of the University of Texas, and Steve Klineberg of Rice University.)
Demographers have classified those in the work force as belonging to
one of four groups, or “generations,” of workers, depending on their
date of birth. The four groups are: The Matures (born prior of 1946),
the Baby Boomers (born between 1946 and various times between
1960 and 1965), Generation X (born between 1960 and 1965 and
1977) and the Millennials or Generation Y (born after 1977). Each of
these groups is impacted by the way they were brought up, major
events that were happening in the world at large as they were coming
of age, and their interactions with the “generations” that came before.
Figure 1 is a forecast made by the Petroleum Extension Service of the
University of Texas that shows how the oil and gas workforce makeup
will change over time. This forecast is probably a good estimation of
what we can expect in engineering and construction companies, as a
subset of the oil and gas industry. It seems pretty clear that, within the
next ten years the “Matures” and “Boomers” will stop being the driving
force of the workplace. In numbers, they will be replaced by
“Millennials,” and we will rely on “Generation X” for leadership and
The significance of this change can be truly understood only by first
defining the characteristic traits of each generation as it pertains to
views towards work, employers and society. The demographers tell us
that four such different “generations” have never before resided in the
workplace at the same time. In addition, the differences between what
motivates members of the “Mature” and “Boomer” generations and
what motivates members of “Generation X” and the “Millennial”
generation are profound.
The “Matures and “Boomers” tend to define themselves by their jobs.
They accept apprentice/master relationships at work. That is, you put
in your time and do what is expected of you, you pay your dues and
you advance from rank to rank within the company, following a logical
progression. These workersusually want to trust authority and are
open to the concept that, over the long run, you can trust the company
to do the right thing for your career. They take pride in working long
hours, making personal sacrifices and traveling to tough places to
accomplish work objectives. A common motto might be, “Work hard
“Generation X” came of age when the “Boomers” started to question
things. They have lost respect in political leadership, and they distrust
authority in general. Their heroes are people they know (parents,
grandparents, etc.) and not national or world icons (Mahatma Ghandi,
Martin Luther King, Winston Churchill, etc.). They tend to be cynical
and pessimistic and do not rely on the promises that a company may
make. Their experience tells them that they can’t count on anyone but
themselves for the future. A motto might be, “Do what you can today;
tomorrow, it’s anyone’s guess.”
“Generation X” is rapidly becoming the largest single generation in our
workforce, and we will be relying on them to teach the “Millennials.” To
motivate them, we will have to find a way to overcome their cynicism
and mistrust of authority. What worked for “Matures” and “Boomers”
will not necessarily work for “Generation X”! It will take more effort on
the part of company leadership and management to prove that the
company wants what’s best for these workers..
The “Millennials” tend to be extremely well educated, optimistic and
ambitious. While they want to assert their individualism, they are very
group-oriented and social. Everything from shopping to going to the
movies, dating, and just “hanging out” is done in groups. They are
used to having their lives scheduled for them. Work is important when
they are here, but it does not define them. It is what they do between
weekends. They define themselves by the “stuff” they do. “Millennials”
have a short attention span, and, although they have big goals for
themselves (I want to be an astronaut, I want to be a millionaire, etc.),
they have trouble charting and following a sustained path toward these
goals. Fifty percent of millennials believe that their older work
associates do not respect them, and seventy percent of the older work
associates believe that the “Millennials” do not listen to them. One in
three “Millennials” is a member of a traditionally defined minority group.
A “Millennial” motto might be, “I can’t work on that this weekend; I have
stuff to do.”
Of course, all of the above observations are generalizations that, while
they may be statistically accurate for large groups. are not germane to
specific individuals. Still, it should be clear that, as our workforce
changes and we rely more and more on “Generation X” to lead and
train “Millennials,” what we did in the past to recruit, motivate and
retain engineers may no longer lead to success.
III. The “Engineering Company Conundrum”
During the time that I was CEO of a small engineering company, we
were owned in part by several large engineering and construction
(E&C) companies, and I had the good fortune to observe the
management of these companies as a member of their management
teams. In my experience, most large E&C companies share the same
They claim to be, in essence if not by title, “engineering companies.”
The overwhelming portion of their staff members are engineers. Their
websites, mission statements, HR and PR announcements, policy
statements, etc., all proclaim the importance of their technical staff to
the company’s ability to deliver a quality product and commitment to
the motivation and career development of their technical personnel.
Yet the top leadership almost never talks about the way engineering is
being done, the quality of the engineering staff, the concerns and
needs of engineering management, and the need to focus on
recruiting, motivation and retention of the bulk of the engineers who do
the day-to-day work.
The focus is on business development, client contacts, commercial
contracts and the project managers who are called upon to deliver
major projects. Very little management time is spent evaluating new
engineering work processes and technologies to increase efficiency
and quality. Little time is spent on assuring that the correct technology
is being employed and that engineers are being adequately trained in
the proper use of that technology. In one of the companies I was
involved with, the CEO never talked to the Chief Engineer; in another,
the Managing Director never included the Chief Engineer in any
business decisions or discussions about allocation of resources.
Ninety percent of the engineering staff is looked upon as “hands” that
deliver “man-hours.” There is no real recognition that all man-hours
are not created equal. Nor is there a realization that, behind the
“hands,” there are real human beings who have needs and desires that
cannot be addressed solely by providing competitive salaries and
benefit packages, HR “corporate-speak” happy announcements,
contests, publications, and the occasional leadership email that says
how much they are valued.
The bulk of the engineers are kept on the payroll as long as they are
billable. As the job winds down, they are expected to find other
opportunities for themselves. Thus, they are really not part of the
company and have no reason to expect that looking out for the
company’s and thus its clients’ best interests is as important as looking
out for their own best interests. Since they will be moving on,
management has no incentive to invest in their training, and the
engineers have no incentive to find ways to work more efficiently.
In such an environment, there tends to be an emphasis on process
control as a way to assure quality. If the right procedures are followed,
it is assumed the results will be correct. No one worries whether the
engineers really understand the impact of their decisions and the
technology behind their calculations so that they can actually exercise
proper professional judgment and develop designs that are efficient,
constructible, operable and safe. It is almost as if there is an
assumption that engineering is not a profession requiring informed
judgment, but rather a series of defined work processes that can be
accomplished by technicians performing routine tasks.
In this type of culture, it is to be expected that engineers who want to
be treated as professionals will look to retire early or to seek other
employment. Training becomes just a matter of showing people how
to follow set process instructions in carrying out calculations in a
prescribed manner. Job satisfaction begins to mirror a Dilbert cartoon.
This then is what I define as the “Engineering Company Conundrum”.
It is, in short, that many “engineering companies” do not value their
engineers as professionals.
IV. Comparison to a Small Company
For 25 years I was the founder and CEO of a small engineering
services company that eventually grew to employ a staff of 600. It
was designed and managed as an engineer-oriented engineering
Discipline leads and the Engineering Manager had a large say in the
company management and the way the work was estimated, staffed,
and performed. Procurement, document control, and cost and
schedule control were overseen by the Head of Projects. Since IT
and the development and implementation of all electronic work
processes were under the control of the Engineering Manager,
however, these project support services were considered to be
support services to engineering as much as they were considered to
be support services to projects. If there was a fault in the company
culture and organization, it was that the project manager’s role was
perhaps less strong than it needed to be.
From an engineering staff motivation perspective, the top
management of the company was inward-focused. Engineers were
considered long-term assets of the company and were not hired for
specific projects or laid off when workload decreased. This
philosophy created a culture where staff felt tied to the company and
its leaders, had an above average commitment to the company’s
goals and needs, and were protective of one another and the
company. Consequently, the company had a high retention rate,
high employee satisfaction (voted one of Houston’s best places to
work), and an industry perception that its work was of consistently
high quality. With management focused inward, informal
organizational structures, duties, and responsibilities worked.
Engineers and project managers were given more leeway to exercise
their professional judgment. Work processes were easily modified to
meet the needs of the client and the project.
Unfortunately, with an inward focus, business development, client
relationships and the ability to make smart recruiting decisions from
industry suffered. Although the company was profitable for 24 of its
25 years of existence and provided competitive salaries in a
significantly better than average work environment, its overall
profitability was not as great as that of many of its peers. In addition,
opportunities to hire the correct staff to increase the scope of
services provided were either missed or not addressed in a manner
that assured success. In “sustainability” language, the focus on
“People” and “Planet” had a long-term negative effect on “Profit.”
The contrast between the emphasis on people and attention to the
engineering staff at my company and the lack of such attention at the
large E&C companies to which we were associated was noticeable to
staff at every level who worked together on joint projects. But so was
the contrast in focus on “Profit.” Perhaps there is a path to a better
balance of the two.
V. Potential Strategy for Dealing with “The Conundrum”
There is no one simple solution to dealing with such a complex
problem as “The Conundrum.” It cannot be fixed by organization chart
manipulation, new HR initiatives, magazines, shuffling of individuals’
responsibilities, or pronouncements from on high. A change in culture
is needed. This shift can follow only from a change in actions taken by
every level of leadership, management and supervision. Change must
start at the top and be carefully driven through the organization in a
manner that does not alienate the very concepts that the company is
trying to adopt.
A company culture is based on actions and not on pronouncements of
intent, although the latter help and are necessary. The culture is made
up of a thousand small decisions, no one of which is typically
important. The actions must show all staff (not just the engineering
staff or selected engineers and project managers) that they are
important, their views are being solicited, and they are being treated
with dignity and respect.
The first step in avoiding the conundrum is for a company’s leadership
to have a clear understanding that a problem exists and that it is
necessary to modify behavior patterns, even if this modification might
result in a short-term trade-off between “Profit” and “People.”
Establishing a new culture will require work on a number of parallel
A. Role of Salary and Benefits
In the past, most of what was necessary to attract, motivate and
retain an engineering staff involved providinga good salary and
benefit package and interesting projects. These are still necessary
conditions, but, in an era of demand for engineering talent and
changing demographic attitudes toward work, these are no longer
sufficient conditions by themselves. Unless other conditions exist
that make engineers want to work for the company, the “X”
generation will eventually find a better deal for the present
elsewhere. The “Millennials” will look for an opportunity where they
feel more connected to a group and/or their supervisors and which
they perceive will lead to faster career advancement. The
“Boomers” will retire when the equities market returns and they feel
comfortable with their “nest egg” in the 401K plan.
For each group, management must understand how it can
differentiate itself from the competition. What do we offer them to
create an environment that is consistent with the work environment
they seek? Providing competitive salaries and benefits is no longer
B. Relationship to Management
Often in engineering companies the discipline leads are top-notch
technical people, but they have received little or no training in staff
motivation. At present, many of these leaders are “Boomers” who
believe in the apprentice/master relationship and expect those they
are supervising to be just like themselves. They expect their direct
reports to be patient in learning their crafts and to trust that they will
eventually work their way up through the organization.
While their direct reports may respect the supervisors for their
technical abilities, often the personal bond between employee and
immediate supervisor is not well developed. Even if the bond is
developed, often the discipline lead is not perceived as having
either sufficient knowledge of what is going on in the company or
the power to influence company policies. Sometimes there are
personality clashes, and the employee feels the organization is too
inflexible for him to receive sufficient attention. This factor is
especially prevalent in inter-generational conflicts.
Some principles to consider are:
1. Train first-level supervisors to perform their personnel
responsibilities better, or transfer these responsibilities to a
higher level and have that level interact more frequently on a
one-to-one basis with the engineering staff.
2. Have wider discussions on personnel planning issues, where
views of the first-level supervisors are combined with those
of others (whether internal or external to engineering) who
are familiar with the individual’s work.
3. Increase the authority of all levels of supervision and
management to commit the company and make decisions.
Take the risk that some mistakes may be made and some
decisions may be made that are different from what would
have been done by the next higher levels of management.
In the end, some of these decisions may actually turn out to
be better because those making them are closer to the
problem. At the least, the process will give staff the feeling
that the supervisors and managers they interact most
directly with have some power to affect their lives.
4. Empower first-level supervisors to truly represent the
company. This means that first-level supervisors must be
included in discussions that impact the culture of a company.
They need to be included in discussions before a policy is
adopted or changed. Their opinions should be solicited and
respected. In this way, they can not only explain to their
staffs what is happening but also explain the reasons and
why other alternatives were not chosen. It is always easier
to explain a decision you do not fully support if you know
your opinion was heard and if you have the history of
knowing that, on occasion in the past, your opinion changed
a pre-conceived notion.
5. Actively engage first-level supervisors in career planning and
training of their staffs.
6. Actively engage all levels of management in staff motivation.
Those with commercial, businessline or other responsibilities
must be made to understand they represent the company
and have as much a responsibility to motivate staff they
interface with in an indirect manner as they have to motivate
their direct reports.
7. We need to create more opportunities for higher-level
management to interact with engineering staff on a one-to-
one basis. Staff must feel that second, third and higher
levels of management view them as individuals deserving
respect and not as “hands” of a lower social status.
C. Role of HR
HR serves an important support role in helping management define
and carry out initiatives and policies. HR supplies important advice
on legal issues and legal risks. Nevertheless, HR cannot motivate
the staff. The responsibility for motivation must rest with direct
supervisors and management.
The “Matures” and “Boomers” respected authority. (“Rules are
rules.”) “Generation X” tends to question authority, and “Millenials”
believe that rules are meant to be flexible. (“The company needs to
respect my individuality and my needs.”)
From an HR standpoint, rules should be uniform and uniformly
applied. This, of course, is the only position HR can take and it is
right to do so. On the other hand, if management is to perform its
function of motivating the staff, it must embrace a system that
allows for individual flexibility. That is, there are times when
management must take risks to do the right thing and deviate from
commonly applied rules.
One of the biggest roles HR can play is in assuring that career
plans are developed and that annual reviews of younger staff are
followed-up thoroughly. Included in this role is ensuring that
training and mentoring programs are in place and are working
One of the signs that “The Conundrum” is at work is that upper
management of the company begins to behave as if motivation is
the responsibility of HR. All management has to do is make sure
HR makes the correct pronouncements that we value our
employees as our most important asset, figure out what a
competitive salary and benefit package looks like, administer a
mechanical system of salary administration, develop a system for
publicly rewarding a select few for doing what all should be doing,
etc., and all is well.
These are all good things that should be done, but they do not
address the heart of what is truly needed to motivate staff. In the
final analysis, staff wants to feel connected to their fellow
employees, their management and the company. They want to
believe they are viewed as individuals whose opinions, feelings and
personal problems are respected. They want the company to care
about them and if, and only if, they perceive this is true will they
care about the company.
Some principles to consider are:
1. HR should not stop doing what it is already doing, but it must be
challenged to find ways to allow greater flexibility. HR must be
encouraged to find the balance of maintaining system integrity
and providing flexibility.
2. HR should have frequent discussions with management at all
levels about how they can modify their behaviors to support a
successful company culture.
3. Communications concerning items of interest and changes in
policy and practices should come from management and not
from HR. Communications should explain why we are doing
what we are doing, and if germane, what alternatives we
rejected and why. Staff may not agree and may not even read
the whole thing, but they will appreciate that management cared
to include them in the decision.
4. Remove “corporate-speak” from all communications to staff. If
we are truly “excited” about a new development, we should be
stopping people in the hallways to tell them about it. If we are
not stopping people in the hallways, we aren’t really “excited.” If
we are careful what we say and give our staff the bad news with
the good, we can eventually get “Generation X” to trust us.
5. HR and management should constantly seek ways to solicit
informal feedback on how they are doing. Staff must be asked
what they think about issues contemplated as well as changes
made. Formal polls and solicitations of emails are next to
useless compared to old-fashioned face-to-face communication.
6. We need to find ways to let our staff know we value them as
individuals (e.g., birthday cards, responding to illness and death
in the family, etc.). Actions that treat a staff member as an
employee number should be questioned and, at the least,
7. HR should work with engineering management to help establish
training and mentoring programs as well as flexible working
arrangements for older staff and for staff with special personal
needs. Telecommuting, provision of child care, etc., should be
D. Role of Job Satisfaction
Employees are more likely to stay with a company if they enjoy
working with their co-workers and form connections with them
through company-supported activities. In particular, “Millenials” like
to work for companies that are community oriented and socially
active. Management must think about ways to assure that working
for the company is fun and satisfying and that it gives the employee
the feeling that he or she is “doing good.” It is not enough that we
are doing something that makes a profit for the company. Staff
wants to know that what they are doing as individuals is important
In this industry, we are inherently “doing good.” We are all working
to provide much needed energy to a world that needs it to increase
living standards and enable more people to enjoy their inalienable
rights to “life, liberty and the pursuit of happiness.” We as
engineers are using our knowledge to provide this energy in a cost-
effective manner that is as safe and environmentally sound as
possible. Yet we very rarely highlight our successes in these terms.
Some principles to consider are:
1. Allow engineers who have the ability and desire to stick with a
project through its various phases to be involved in the
procurement, expediting, inspection, construction and
commissioning of their portion of the project. Sometimes this is
referred to as the “package engineer concept” as opposed to a
strict discipline concept. Some engineers are happy just doing
pipe stress calculations, while others want more involvement.
Work practices must accommodate both.
2. Promote an active social committee to organize multiple
company-sponsored events. Some events should include
spouses and/or families, and some should take place so
employees who want to can show off where they work and what
they do to their spouses and children. All levels of management
must recognize their responsibility to encourage, support and, if
possible, attend these events. Employees like to introduce their
families to their supervisors.
3. Encourage group meetings, lunches, monthly celebrations, etc.
Anything that creates group connections and introduces
camaraderie into the workplace is positive. In some cultures,
humor at management’s expense may be effective, especially if
it is coupled with raising money for a good cause.
4. Encourage involvement with technical societies and industry
associations. The company will gain by having a more
knowledgeable employee. The employee will know that the
peer recognition he gets is supported by the company.
Consider such involvements in salary administration and career
5. Encourage committees of employees to raise money for select
charities or to do volunteer work in the community. This need
not be done on company-paid time, but the company can cover
expenses and provide resources. Management must be seen
to be actively involved and supportive of these activities. It is
not enough just to permit them to occur. Staff must see that
management appreciates its efforts.
E. Role of Training
As a practical consideration, most engineering training occurs on
the job in a mentor/trainee relationship. Often, these relationships
can be quite informal. In an era where we can expect large
turnover from experienced staff to inexperienced staff, however, it
will be necessary to accelerate this training.
In addition, “Millenials” will tend to be attracted to and be retained
by companies that can show them more formal training programs
and a willingness to invest in their career development.
Some principles to consider are:
1. Formalize the mentor/trainee relationship by providing specific
mentors and a program to assure that mentoring takes place
and features flexible goals and objectives.
2. Provide informal in-house seminars on a regular basis for
subjects of interest.
3. Provide for either in-house or external formal classroom training
that follows a training plan specifically tailored for the engineer.
4. Provide for field visits or assignments to construction sites and
operating facilities for new engineers, along with a formal
system to monitor these efforts and make sure they take place.
We have recently experienced rapidly expanding growth of the need
for engineering services and a seller’s market where the focus on
getting things done acted as a disincentive to providing the training
necessary to respond to the demographic challenges that the industry
faces. Over time, actions of company management have allowed “The
Conundrum” to creep into our corporate cultures.
We are now entering a period where the growth in demand for
engineering services will slow; demand may even decrease.. If we
take the actions we have taken in the past to protect margin, we will
reinforce the culture that created “The Conundrum” and make it even
more difficult to transfer knowledge between generations when the
industry eventually recovers. We will have trouble attracting new
engineers to the profession, encouraging experienced engineers to
delay retirement, and competing with other industries for a diminishing
pool of engineering graduates.
Due to the change in the economy, we have the opportunity now to
catch our collective breath and make the cultural changes needed to
show that engineering companies really believe that the quality of the
engineering work they perform is important. We can create a culture
where engineers are valued as professionals.
Listed above are some ideas that could be implemented if a decision
were made to change a company’s culture. I do not profess to
understand the problems fully or to have solutions for individual
companies. I have no “magic bullet” program that I can recommend.
Company leaders at every level first will need to commit to change
their attitudes and actions. The desired culture will then be made up of
thousands of individual actions, each of which by itself may have small
or even insignificant impact. But together they either create or destroy
a truly positive company culture.