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ScienceCo Case study - managing an expert workforce
ScienceCo was founded in 1995. It is a medium-sized, science and technology-based consultancy company, located on the outskirts of London. It operates today on a global basis. At the time of its inception, the founder wished to create a consultancy environment that would not only develop solutions in response to client problems, but also stimulate invention and innovation more generally. Eighty-five per cent of the workforce are highly educated scientists and technologists, who rely primarily on their expertise and knowledge rather than equipment or systems to provide inventions and innovative solutions for manufacturing, engineering and pharmaceutical companies around the world.
Since 1980, the firm has grown from a small entrepreneurial business employing a handful of scientific consultants specializing in engineering and communications to a medium-sized company employing about 200 people and incorporating other scientific disciplines such as biotechnology, applied sciences and information systems. The workforce is truly international, incorporating 19 different nationalities. In defining the type of projects that ScienceCo conducted for their clients, it is important to understand the difference between invention and innovation. Consultants working in interdisciplinary project teams develop completely new concepts and products that are marketed as intellectual property rights (IPR) to clients and project teams. They also develop innovative solutions to client problems using existing concepts, ideas and technologies in new ways. The firm has been responsible for the invention of major scientific and technological developments that are recognized and used throughout the world. One such item is the electronic security tag, which since its invention has been manufactured and marketed by the Swedish firm Esselte. ScienceCo is primarily in the business of creating new knowledge and applying existing knowledge in new ways. A crucial issue for management at ScienceCo has always been attracting and retaining a highly skilled, expert workforce of international standing in order for the firm to grow and successfully compete on a global basis. Thus developing an appropriate organizational environment in which expert consultants are keen to work has been of paramount importance. The following sections outline the organizational structure, human resource practices, patterns of IT usage and organizational culture that have developed within the firm over time.
Attempts have been made to maintain a fairly flat organizational structure throughout the firm's development. Even today, there is fundamentally only one level of management, consisting of the founder (now Executive Chairman), Chairman and Managing Director. Decision-making within the firm has typically involved significant numbers of consultants as well as management. A worker committee, the Board of Management, which consists primarily of consultants and one or two support staff, make recommendations to management regarding day-to-day operations and organization. Management communicates constantly with the whole of the firm (generally using e-mail) regarding new projects and potential future projects. Turnover and profitability are also communicated to everyone on a monthly basis. Consultants are encouraged to innovate outside of client project work, and they can request financial resources for this through the Innovation Exploitation Board. This forum includes consultants from across the firm, as well as the management team, who meet regularly to discuss the feasibility of new ideas proposed by consultants. All members of the management team are also active consultants, contributing to project teamworking within the firm.
Consultants are organized across three divisions within the firm according to their particular scientific expertise. These are Business Innovation (BI), Technology, Internet, Media and Entertainment (TIME), and Engineering (ENG). While divisional managers head up divisions, there are actually no hierarchical levels either within or across divisions. Divisional managers tend to be those individuals who are prepared to take on some minimal administrative responsibilities such as recording revenue generation and monitoring the projects that are being managed by consultants within their own division. In many cases, divisional managers are actually remunerated less than other consultants within their division (see section on 'Performance management') and they also actively contribute to project working across the firm.
Divisions have emerged, merged and disbanded in a reactive manner over time, based on the client project work in hand. In 1980, there were only two skill groups, Engineering and Communications. However, in 1990, a divisional structure was introduced in order to provide improved financial accountability. By 1996, seven divisions existed including two business consulting divisions, Information Systems and Applied Sciences. The Life Sciences division emerged at this time from the Applied Sciences division when enough biotechnology projects had been secured to ensure the divisions' sustainability in the medium term. By 2000, however, Life Sciences had again merged with the Engineering division together with Applied Sciences. Business Innovation by this time incorporated both business divisions and the Information Systems division. Despite the existence of divisions, consultants tend to work in an interdisciplinary manner across divisions within small project teams. This occurs because the nature of client requirements generally requires cross-disciplinary skills and expertise. These project teams are self-forming and self-managed. Project teamworking is discussed in more detail within the section on 'Performance management'.
Recruitment and selection
For many years, the firm did not employ a Human Resources (HR) manager. However, in 1995, based on predicted and expected project work, the firm was faced with a requirement to increase the expert workforce by 15 per cent (and this was projected to continue annually, compounded). The firm recruited a Human Resources manager to develop a more formal recruitment and selection process, and to develop ways of maintaining high retention rates across the firm.
In the past, consultants had typically been recruited informally by word of mouth, drawing upon consultants' global personal networks of colleagues and contacts. In order to make the recruitment process more effective, the HR manager developed good relationships with two international recruitment agencies that had offices throughout the world. Once provided with a person specification and a brief that described very broadly the type of work carried out by the firm, they provided shortlists of candidates on an ongoing basis. In terms of the selection process, the founder had always insisted that candidates take an AH6 intelligence test and Cattell's 16PF personality test. Given that the majority of candidates shortlisted by the agencies generally had a PhD in a scientific discipline, it was virtually impossible for any candidate to fail the AH6 test. It was also difficult to 'fail' the 16PF because the firm did not look for an 'ideal' profile other than 'openness' and a 'willingness to experiment'. Consultants were simply keen to see what sort of personality profile candidates had. Thus, almost all candidates who had been shortlisted proceeded to an initial short interview with the HR manager and the relevant divisional manager.
During this preliminary interview, the HR manager stated that candidates were expected to demonstrate a strong understanding of their own and, more importantly, other disciplines, because of the need to work in interdisciplinary teams sharing knowledge. They were also expected to be 'almost naturally innovative' and have a strong commercial awareness. The HR manager stated:
It's quite a unique mix we are looking for. All the way through the selection process, we give out big indicators to say the sort of organization we are. It's quite aggressive maybe, and I'm sure interviewees will pick up quite a lot of arrogance on the part of the company. But the messages we are giving out are more about confidence in what we do and how we do it rather than us thinking we are better than anyone else.
The majority of candidates tend to be rejected at this initial interview stage and only approximately 25 per cent, which typically equates to four candidates, progress to a second interview. The firm was not overly concerned about the high numbers of candidates rejected. Management is only interested in individuals with either a PhD or particular expertise within a scientific discipline, who are fluent in English, have some commercial/industrial experience, and who are prepared to adopt the role of a consultant. This role involves marketing their own and, more generally, the firm's abilities and expertise. It is therefore a relatively unique set of characteristics which is sought in candidates.
The second interview focuses on assessing the candidate's ability to market to clients, their overall level of expertise, and their ability to work within interdisciplinary project teams. This second interview is a panel interview involving a number of consultants from several divisions, who 'quiz' the applicant in some depth on their knowledge of their own and other science- or technology-based fields. Panel members are randomly drawn from across the firm, based on availability at the time of the interview. If the panel agrees on a candidate, then the candidate will be recommended for appointment to the MD.
In 2006, typically, 16 candidates were interviewed for each post, and for each of those interviewed, approximately ten CVs would have been received from the recruitment agencies. The selection process is described as 'rigorous' by the HR manager. He emphasized that the interviews focus primarily on the candidates' ability to 'fit in' to the ScienceCo way of working. This involves willingness and ability to collaboratively share knowledge across different science- and technology-based fields, both within project teams and more generally. The HR manager commented:
You get a CV, and the person has a PhD, and they've worked for a pretty high-powered research agency, and that's brilliant. You've got to see them, but you know that there is a pretty strong chance that the moment you meet them you're going to know what they're not - they're not one of us.
Only one formal system exists at ScienceCo, and this is the performance management system that was introduced in 1990. This system was introduced at the same time as consultants were allocated to divisions. Before this, individual consultants' performance had not been managed. The system focuses on divisional revenue targets (DRTs) and personal revenue targets (PRTs). Management establishes these targets at the beginning of each financial year, and they are monitored monthly. The same monthly PRT applies to all consultants, regardless of age, experience and so on. Hence, DRTs are the accumulation of PRTs, premised on the number of consultants within the divisions. By default, then, the larger divisions had to generate more revenue.
Revenue is generated through project work that is generally priced at a flat rate rather than a fee rate. A lead consultant emerges on client projects. Typically, this is the consultant who has the most contact with a particular client. The 'lead' consultant is responsible for negotiating the value of the project with the client, after careful consideration of the resources that will be required in terms of breadth of expertise and time. Lead consultants will use e-mail to inform consultants throughout the firm about potential new projects and the skills and expertise that will be required. Once the value of a project has been determined with the client, it is the responsibility of individual consultants who want to work on the project to negotiate with the lead consultant regarding the amount of project revenue they will be allocated. As there are no formal systems to record these negotiations, e-mail messages serve as a record of any negotiations that take place. The allocation of project revenue contributes to the individual consultants' PRT and the DRT to which they are assigned.
Management described PRTs as a scheme for making people sell their skills to other people in an effective manner:
It is a micro economy. It is a free market for expertise. Over the years it has been the subject of much controversy as it puts a lot of pressure on people, and it is in this way that we try to maintain a competitive (some would say combative) environment. It does create tension, but at the same time, it enhances innovation given by the rate at which new ideas come out of the organization.
In order to achieve PRTs, consultants generally work on a small number of projects at any one time, commanding a percentage of the overall revenue from each one. Achievement of PRTs consistently over time is expected of everyone, other than the most inexperienced consultants and recent recruits. The majority of consultants usually achieve their PRT. However, consistency across whole divisions is problematic and occasionally divisional managers find it difficult to achieve their DRT. At the end of each financial year, divisional managers performance-rank those within their division, based on achievement of PRTs and contribution to overall sales. This is a transparent process and individual consultants are free to discuss, and in some instances dispute, their overall ranking position. When divisional managers have agreed on their rankings within their division, they meet with the management team to agree on overall ranking across the firm. Individual consultants are then awarded percentage increments according to their ranking. Underperformers are tolerated in the medium term. Consultants who do not achieve PRTs over time will not receive a salary increment, but they are actively encouraged and helped by management to improve performance the following year. Management has never introduced salary scales within the firm, and no formal career structure exists because there is a no formal hierarchy. Individual consultants are therefore awarded a percentage increase based on the salary they have personally negotiated with the MD on their appointment to the firm.
It is also important to recognize that consultants manage their own time both within and outside of project working. Consultants are free to choose their hours of work and length of vacations. This means that some consultants work continuously, occasionally for months at a time and then take extended vacations, up to two to three months at any one time. Other consultants choose to work regular hours and take shorter breaks. Divisional managers only expect to be made aware of vacations (time and length) and consultants are trusted to manage their time effectively.
Training and development
Professional development is particularly important to all consultants at ScienceCo. In order to stay at the top of their professional fields, consultants must be aware of any developments in their field, and they need to participate in activities that offer the opportunity for further professional development. Again, consultants are responsible for identifying their own requirements in terms of courses, conferences and workshops. Management simply provides the necessary financial resources, which in some cases are considerable. It is assumed that consultants will organize their workloads accordingly, in order to participate in professional development without any significant disruption of project work occurring.
Training for consultants has never been considered an issue within the firm. Management has always believed that the quality of the people employed negates any need for systematic training. It is assumed that if dedicated training is required, for example, in the use of particular software application for project work, then consultants are sufficiently skilled to train themselves at times that suit them.
Significant resources have always been made available for investment in any technology that might facilitate project working. E -mail was introduced in 1990. By this time, the firm had grown to around 100 consultants, and the opportunities for regular face-to-face contact with everyone were rapidly diminishing. E-mail began to be used extensively almost immediately, as there were very few formal systems or procedures in use for communication, and on any one day, significant numbers of consultants would be working remotely at client firms. By 1996, consultants were receiving between 100 and 150 e-mails each day, and despite attempts to curtail the use of e-mail for trivial matters, in 2000 consultants were regularly receiving 200 + e-mails a day. This is because no protocols are used to classify mail sent, other than to attach a prefix of SOC for 'social' communication and INNOV for an e-mail where the sender is searching for information. Generally e-mails were sent to everyone regardless of the subject matter.
It is e-mail that is generally used to broadcast requests for information when putting together proposals for clients. Anyone who wants to be involved in a potential project initially communicates in outline their potential contribution, in terms of skills and expertise, via e-mail. The system works well in this respect as the medium is good for communicating low-level information, quickly and across the whole firm. However, the level of e-mail communication consultants are exposed to on a daily basis is recognized generally as a significant burden. Norms have developed, such as sending replies to everyone in the firm and failing to edit the title of e-mails to ensure that it relates to the content of the e-mail. These norms, while making the use of e-mail relatively informal and simple, have generated a somewhat chaotic and haphazard system of communication. For example, some consultants, when faced with ever-increasing numbers of e-mail, choose not to bother reading the majority, and only use the system when absolutely necessary.
Other technologies such as groupware are used and intranets have been set up in and across divisions. Consultants are aware that a variety of apps and packages can provide useful project documentation. However, the majority of projects continue to be documented in a highly idiosyncratic manner because project leaders are free to provide documentation in whatever way they deem appropriate. Client requirements need to be fulfilled in this respect. However, if the client is satisfied with the documentation produced, no further effort is directed at producing, recording and classifying project documentation in a consistent manner across the firm. Again, consultants are trusted to produce high-quality project documentation, without recourse to formal standards, systems or procedures. The use of project apps, packages and intranets tends therefore to be spasmodic and piecemeal and only tend to be used when geographical constraints impose a need to work in this fashion. Consultants prefer project teamworking to be face to face, rather than via discussion threads as it is not generally considered rich enough to adequately convey some types of complex information and knowledge required during project work. In many instances, when significant decisions or results need to be shared across a project team, the technology is simply used to schedule a telephone conference call.
As stated in the introduction, from the outset the founder wanted to promote an innovative environment and one that would stimulate creativity. With this in mind, he attempted to develop and perpetuate an environment characterized by an absence of hierarchy, rules and formal procedures. An emphasis was placed on maintaining an egalitarian environment, one in which everyone was in principle free to contribute to decision-making, and one that allowed individuals relative freedom to be creative. While the founder was keen to promote a corporate culture around a small set of core values specifically regarding the importance and value of creativity and innovation, both to the firm and society more generally, he respected individuals as individuals. He did not, therefore, attempt to develop a strong culture that encompassed particular norms of behaviour. The ScienceCo way of working is therefore characterized by a lack of prescription, informality and idiosyncrasy.
The heterogeneity and diversity of the workforce exemplify the importance placed on individuality within the firm. Not only are 19 different nationalities represented, there are also significant differences across the firm with regard to age, experience and general attitudes and behaviour. Individuality often tends to be manifest symbolically in dress, ranging from the bizarre (for example, running shorts and vest in the depths of winter!) to the more traditional conformist dark suit and tie. During project working, however, diverse groups of individuals with differing expertise are expected to work together jointly, developing solutions to client requirements or problems. While conflict inevitably arises regularly across such a range of diverse, expert individuals, the environment is one in which individuals feel free to speak out without recrimination. Consultants are trusted to resolve any differences that might arise without recourse to the management team, so that ultimately client requirements are satisfied.
While everyone agrees that the environment is highly informal and this is considered to be one of the major attractions of working in the firm, consultants do have different perceptions of what constitutes organizational reality. For example, while everyone agrees that the organization is almost flat, it is widely recognized and acknowledged that a dynamic, informal hierarchy exists based on expertise. However consultants differ (in some cases quite considerably) in their opinions as to the hierarchical ordering based on their own personal experience of working with others in the firm. As one consultant stated:
Nobody in theory has a job title. Single status applies but obviously some people are seen as more powerful, more influential, higher status than others - based purely on what they are seen to contribute to the organization in terms of big projects or particularly innovative ideas.
Individuals across the firm can therefore command powerful positions within the informal hierarchy. Their position will be based on their ability to both acquire new business and command large proportions of project revenue that contribute to their PRT. Positions within this informal hierarchy, however, are transient and relatively ephemeral, as new clients and new projects requiring different skills and expertise are acquired over time.
Question1: Define and explain which aspects of ScienceCo's organizational context in terms of the HR and project practices and cultural norms have contributed to ScienceCo's ability to retain an expert workforce and why.
Ensure your assessment is supported with reference to theories and concepts from the module.
Question2: Which two aspects does your team consider to be the most important and why?