Case Study Worksheet | CH2M Hill

Open Posted By: highheaven1 Date: 26/02/2021 High School Assignment Writing

Begin by reading the case study, CH2M Hill:  Reinventing Organizational Careers. And fill out the worksheet

Category: Engineering & Sciences Subjects: Electrical Engineering Deadline: 12 Hours Budget: $150 - $300 Pages: 3-6 Pages (Medium Assignment)

Attachment 1

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This is the first step in your analysis of HBR Case CH2M Hill: Reinventing Organizational Careers. You will use your completed worksheet in F2F Class #2 as part of a class discussion. Use this form to do your initial analysis. Remain open to the fact that your interpretation of the facts may change - you should continually revisit your answers. This blank worksheet is one page. Your completed worksheet will be longer. Use as much space as you need to document all your thinking and ideas.

Define the Problem: Describe the type of case and what problem(s) or issue(s) should be the focus for your analysis.

List any outside concepts that can be applied: Write down any principles, frameworks or theories that can be applied to this case.

List relevant qualitative data: evidence related to or based on the quality or character of something.

List relevant quantitative data: evidence related to or based on the amount or number of something.

Describe the results of your analysis: What evidence have you accumulated that supports one interpretation over another.

Describe alternative actions: List and prioritize possible recommendations or actions that come out of your analysis.

Describe your preferred action plan: Write a clear statement of what you would recommend including short, medium and long-term steps to be carried out.

Attachment 2

CH2M HILL: Reinventing Organizational Careers 93

CH2M HILL: Reinventing Organizational Careers Karen L. Newman,* University of Denver–Daniels College of Business

Copyright © 2013 by the Case Research Journal and by Karen L. Newman.

In January 2012 Jan Walstrom reflected on the progress she had made in her new role as Chief Learning Officer for CH2M HILL, a large engineering company. With a background in biology and program management, moving to the HR func- tion in July 2010 was uncharted territory for Walstrom. Yet her career was character- ized by risk taking, so she accepted the opportunity. And while she was making prog- ress, she had much yet to do. She looked back over the last eighteen months, recalling her assignment, her accomplishments, and the challenges that lay ahead.

The Challenge

Walstrom’s boss, John Madia, Chief Human Resources Officer, and Lee McIntire, CEO of CH2M HILL, had met with Walstrom in July 2010 to describe the problem they wanted her to solve. McIntire observed:

We are not growing our own employees well enough. We have vacancies at the top that we cannot fill because we have not developed our own people. Even in this recession, the external labor market is tight for the kind of talent we need. And it is only going to get worse when the Baby Boomers start retiring.

People from our recent acquisitions have filled many of our top positions, and I am afraid we are losing some of our good employees because they see outsiders getting a preference and blocking paths they might have taken. It’s not just a problem near the top of the ladder. Voluntary turnover is increasing among new employees at all levels. When almost 60 percent of our people have less than five years of service and turnover is increasing in that group, we have a problem.

Madia presented the opportunity:

We want you to reinvent career development inside CH2M HILL. We want you to create a climate of continuous learning and development for our employees so that they have career opportunity in the company and so that we have the talent we need internally to staff our key top positions. This will be an out-of-body experience for you, in HR. You have spent your entire career on projects. Now we need you to run a


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94 Case Research Journal • Volume 33 • Issue 1 • Winter 2013

project for the company rather than for a client, to reinvent career opportunity inside CH2M HILL.

Eighteen months later, in January 2012, Walstrom had made progress, but the prob- lem was multi-faceted, systemic and evolving. She reviewed the process she had used.

From the beginning, I wanted to be sure I was addressing the real problem, not just symptoms of a larger problem, and do it in a way that was consistent with our culture. Initially, I approached the problem with the end goal in mind—to make career paths known to employees and to have employee development opportunities in place so that we could grow our own talent in the future. As time went on, I realized that I needed to have a firmer grasp of the roots of the problem. So far it’s turned out to be a balancing act and I have some real questions about the best way to proceed. We live or die by the quality of our people. We have to get this right.

I’ve come to believe that our lack of home grown executives is due in no small part to the fact that the industry in which we compete moved rapidly in the direction of much larger infrastructure projects during the 1990s. As a small consulting firm, we could not compete effectively for that work because we had not done it in the past and did not have people on staff with that experience. And we could not give people the experi- ence without winning the work. So we targeted strategic hires and acquired businesses that gave us the experience that we lacked. We hired Lee McIntire, our current CEO, from Bechtel for exactly those reasons.

Ch2M hIll BaCkground

CH2M HILL was a global leader in full-service engineering, consulting, construction, and operations. With three major divisions, over 170 area offices, active work in more than ninety countries, nearly 30,000 employees and about $6 billion in revenue in 2011, CH2M HILL was a complex, diversified firm (See Exhibit 1 for a high-level organization chart).

Founded in 1946 by an Oregon State University engineering professor and three of his former students, the firm of Cornell, Howland, Hayes, and Merryfield quickly became known as CH2M. The 1971 merger of CH2M with Clair A. Hill and Associ- ates created CH2M HILL (See ch2m.com for additional historical detail).

After almost two generations of steady growth, CH2M HILL promoted a twenty- five-year veteran employee, Ralph Peterson, to CEO in 1991, ushering in eighteen years of rapid growth and diversification. The firm ballooned from 6,000 employees and revenues close to $1 billion in the early 1990s to over 23,000 employees and revenues of about $6 billion when he retired in 2009. Most of the growth came from acquisitions, the largest of which were the 2003 acquisition of Lockwood Greene and the 2011 acquisition of Halcrow (See Exhibit 2 for growth data and Exhibit 3 for a time line of acquisitions, other key events, and the background of key staff).

Before Peterson’s tenure, the company was in the consulting engineering business, focusing on water and environmental projects. It had grown organically and not hired top-level people from outside. Peterson saw the industry moving to more comprehen- sive firms that could also design, build, operate, and maintain facilities, in addition to consulting on the projects. He led a change in CH2M HILL’s strategy to become a comprehensive firm through strategic hires at higher levels and strategic acquisitions to add capabilities.

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CH2M HILL: Reinventing Organizational Careers 95

Exhibit 1: Top Level Organizational Structure of CH2M HILL


Energy, Water & Facilities Division

Government, Environment &

Infrastructure Division International Division

Energy & Chemicals Business Group

Environmental Services Business Group Canada

Water Business Group

Transportation Business Group Europe

Power Business Group

Nuclear Business Group

Middle East/North Africa

Operations & Maintenance

Business Group

Government Facilities & Infrastructure

Business Group Asia/Pacifi c

Industrial & Advanced Technologies

Business Group Latin America

Source: CH2M HILL. Within each business group is a matrix organization to support project-based work.

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96 Case Research Journal • Volume 33 • Issue 1 • Winter 2013

The CH2M HILL culture was embodied in The Little Yellow Book, penned by Jim Howland in 1982. The book itself reflected the corporate culture—unassuming, egali- tarian, and empowering. There were no assigned parking places; dress was informal; there was no executive dining room; and offices were simple, similar and small. Every- one was on a first name basis, including the CEO. Since its writing, the 4ʺ x 5½ʺ book- let had been distributed to every employee in hard copy (See Exhibit 4 for excerpts and a copy of the book’s cover.)

The IndusTry

Companies in the engineering services industry plan, design, construct, operate and maintain industrial and government facilities. These companies provide feasibility studies, preliminary and final plans, and technical services during the design stage of a project, as well as actually completing the project. In 2012, the $183 billion indus- try was primarily made up of small firms—about 75 percent of all firms employed fewer than ten full time people (ibisworld.com). The largest firms in the industry were Bechtel Group (2011 revenue of $32.9 billion, privately held), Fluor (2011 revenue of $23.4 billion, publicly traded), and Jacobs Engineering (2011 revenue of $10 bil- lion, publicly traded). Employee-owned CH2M HILL, at $6 billion in revenue, was large by industry standards but smaller than the industry’s largest firms. The company listed its main competitor as UBS, a $9.5 billion dollar publicly traded firm. Each of these firms offered a full range of engineering, design, construction, maintenance, and operating services.

Exhibit 2: CH2M HILL Growth in Revenue and Employees

Source: CH2M HILL

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CH2M HILL: Reinventing Organizational Careers 97

The Work aT Ch2M hIll

CH2M HILL’s work reflected four broad capabilities. First, it did consulting work (its historic roots) that could run the gamut from fairly hands-off to significant involve- ment in project design. Second, it did design-build work which went beyond con- sulting and included actual construction management of projects. This capability was established organically (from within) in 1984 and enhanced in 1997. Third, it did operations and maintenance, which, as its name suggests, involved engagement with a project after its completion and included a number of engagements on projects built by a different firm. This capability was established organically in 1980. Finally, it did program management that could involve multiple firms over many years and over- sight of the other three activities.

These four capabilities were not evenly distributed across all business groups. For example, operations and maintenance was concentrated in that business group. Project management was found in every business group. The water business group was the legacy business and had the highest concentration of consulting work. Employees’ careers usually unfolded in one business group if they were technical specialists. Project management careers most readily transcended business groups.

The firm’s culture valued agility and demanded that people be able to cope with change and ambiguity. On-the-job problem solving and innovation were the norm. As noted in The Little Yellow Book, decisions were pushed down to the lowest possible level. Projects often required long hours, hard work, and real time adaptability; to the point that some employees felt they could use more clarity and direction in their jobs. (See engagement survey data in Exhibit 5.) Historically CH2M HILL had been a lean organization with few levels of management, though as it grew there was more need for coordination, hence more central management.

Job Flexibility, Meaning, and Satisfaction The flexible, fluid work environment was an advantage when recruiting new employ- ees and the firm’s engagement survey data suggested a fair amount of satisfaction with workplace flexibility (Exhibit 5). Potential employees were attracted to CH2M HILL because of its “undeniably cool projects” and its “make the world a better place” work (ch2m.com). The vast majority of its professional employees were engineers and scien- tists who spent their entire careers working on projects. Some of them had rare and eso- teric skills. As most were college-educated and working sometimes in remote locations, supervision was minimal with a great deal of individual autonomy and empowerment.

Assignments that were particularly attractive to young scientists were also the heart and soul of the company, including clean water projects, hazardous waste cleanup projects, building ports and running scientific installations for governments around the world. Employees felt they were making the world a better place through their work. As Walstrom said, “We are attracted to the work itself and to the benefits we can bring to communities worldwide, though our work.”

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98 Case Research Journal • Volume 33 • Issue 1 • Winter 2013

Exhibit 3: Timeline of Change and Growth at CH2M HILL

1946 Founded as CH2M 1969 $6.2 million revenue, 310 staff 1971 Merged with Clair A. Hill and Associates, becomes CH2M HILL 1977 Acquired Black, Crow, and Eidsness allowing national U.S. coverage 1979 $95 million revenues, 1,800 employees in the U.S. and Canada 1980 Organically added Operations and Maintenance business 1980 $125 million revenues, 1,800 employees in the U.S. and Canada 1984 Organically added Industrial Design business 1987 $330 million revenues, 3,400 employees 1990 $500 million revenues 1991 Ralph Peterson tapped as CEO, beginning third generation of leadership 1992 “New blood” hiring begins with Bud Ahearn in high-level position 1994 More new blood hired: CFO who championed all employee ownership rather than key execs 1995 Acquired Gore and Storrie, Canadian consulting engineering firm 1995 $1 billion revenues 1997 Organically added CH2M HILL Constructors, Inc., to enter construction business 2000 Acquired Hanford Group from Lockheed Martin (nuclear business) 1,400 employees 2001 Acquired Gee and Jensen (200 employees) with ports and cruise industry expertise 2003 Acquired Lockwood Green ($600 million in revenue, approx. 2,500 employees) 2003 $2.7 billion revenues 2007 Acquired VECO, oil services firm ($900 million revenue, 4,000 employees) 2007 Acquired Trigon EPC, oil and gas services company (320 employees) 2011 Acquired Halcrow, London global transportation engineering ($750 revenue, 7,000 employees) 2011 Acquired Booz Allen Hamilton; State and Local Government Transportation Practice

Key Staff Background 2012

Outside Hires Acquisitions Home Grown—Legacy CEO Power International Finance Nuclear Water Legal and Ethics Transportation Corporate Affairs Human Resources Industrial and Advanced Tech Operations and Maintenance Government, Environment, and

Infrastructure Energy, Water, and Facilities Environmental

Sources: CH2M HILL: Building a Better World 1946–2009 (in-house publication), ch2m.com, and linkedIn.com.

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CH2M HILL: Reinventing Organizational Careers 99

Exhibit 4: Excerpts from The Little Yellow Book

A good test to determine if a contemplated action is ethical is to ask, “Would I want to see it in the headlines tomorrow morning?” Avoid position perks such as parking spaces reserved for individuals, thick rugs, swivel thrones, and oversized offices. The one-page memo is the most effective form of written communication. The number of memos set aside and lost increases as the square of the number of pages. Let’s everybody be generous. The person closest to the action has the best chance of making the right decision—if the person is properly informed of the firm-wide implications. Integrity is the all-important prerequisite to employment. No matter what the organizational structure, if the people in it want it to work, it will.

The Little Yellow Book cover

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100 Case Research Journal • Volume 33 • Issue 1 • Winter 2013

Comments posted on glassdoor.com1 were illustrative of how employees felt about working at CH2M HILL.

Overall, flexibility is good. Work-life balance is encouraged and supported through things like flexible working schedules. Supervisors’ primary concerns are getting the job done, and they give me latitude to figure out how to get there.

I’ve always benefited from the flexible work schedule that CH2M HILL prides itself upon. This flexible work schedule provides me the ability to better maintain and man- age my work-life balance.

The work is diverse and should you desire more variety, a change in project or venue is easy.

The work is interesting and engaging and I enjoy colleagues both within my business group and throughout the firm.

We have lots of very smart folks who will work hard to achieve clients’ goals.

Walstrom noted,

CH2M HILL is a welcoming employer at all ages and all levels of activity. No one is pushed out the door as long as they are contributing. But you have to take the initia- tive around here. For example, our Emeritus Program allows long service employees to stay engaged in our work if they want to, for as few as one hundred-hours a year. It is our version of a flexible retirement program. But under the current system, Emeritus employees need to find their own projects. Some people do not sign up because they don’t know how to let others know they are available.

Exhibit 5: Employee Engagement Survey Results: 2010

Category of Engagement Percent Satisfied or Very Satisfied 0–2 Years of Service 3–5 Years of Service

Job Expectations 47.6 57.4 Growth and Development 56.2 56.3 Opportunities for Advancement 39.6 36.2 Teamwork 55.1 59.6 Resources and Support 67.3 71.1 My Manager 66.7 63.3 Recognition and Reward 59.7 59.0 Involvement 61.8 62.6 Clarity of Direction 49.6 45.2 Pride about Employment at CH 64.6 68.8

Source: CH2M HILL 2010 Employee Engagement Survey

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CH2M HILL: Reinventing Organizational Careers 101

Projects, Promotions, and Pay When asked what they liked about CH2M HILL most employees mentioned the nature of the work itself. Remediating hazardous waste sites, developing water treat- ment facilities, and planning and executing the London Olympics were meaningful, challenging opportunities. However, several employees commented on the downside of the project structure via glassdoor.com:

People are left to find their own work. This means you have to have a large network within the company and constantly be seeking out projects to work on. If you can’t find work or have trouble being the go-get-em kind of person, you’ll have a tough time here.

Like many project oriented companies, there are not clear promotion pathways or career development opportunities—it helps tremendously if you can find your ‘angel mentor(s)’ to support you as you progress through the organization.

(It is) difficult to cross over to different business groups and other positions within your own business group. (People are) very easily ‘pigeon holed’ into certain positions.

(There is) little or no career development or support.

There was also some concern among more junior employees about pay and the performance-reward link. The recession of 2007–2008 had caused a downturn in busi- ness which led to cost cutting. There seemed to be some underlying concern about how bonuses and raises were determined and how the best performers were rewarded, or not. One person on glassdoor.com said

Poor performers are often not dealt with expediently and linger in the system until such time that work gets low, and then they may or may not be laid off first. However, if work is going strong for four years, you may have to deal with poorly performing coworkers for four years since even the poor performers make the company money. Differences in employee productivity can easily be 5:1 between the Jedis [the best per- formers] and the non-Jedis. There is however, no difference in pay.

Several other people voiced frustration with raises on glassdoor.com:

There were no incentives to work hard, go the extra mile, or take on challenges. Raises for the top performing mid-level engineers were approximately 4–5 percent per year. Raises for the average performers, e.g., just showing up for forty-hours per week, were in the 3–4 percent range per year.

Average compensation and benefits, with minimal percent increase salary adjustments, even with high performance.

Good initial pay and benefits, positive work environment, flexible schedule but raises are small, and far apart. Basically you will be earning the amount they hired you on for.

Employee Orientation and Socialization The culture at CH2M HILL did not include a lot of new employee orientation and socialization. Nor did it include rotational or training assignments. Employees were expected to be independent problem-solvers who could hit the ground running. For this reason, CH2M HILL did not routinely hire employees right out of college,

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102 Case Research Journal • Volume 33 • Issue 1 • Winter 2013

preferring instead people with work experience. New employees were usually hired onto a specific project and began work immediately.

Karen Hancock, a CH2M HILL project director, said the hiring process was often compromised:

Our onboarding process is broken. Thirty percent of the time a new employee shows up and everything goes wrong: The facilities people don’t have an office ready; IT doesn’t have equipment ready; and the hiring manager is not in the office. Nobody knows the new employee is coming. The vast majority of our managers hire one person or less per year. And we have completely decentralized onboarding to the hiring man- ager. One of them told me it took eleven different requests to get a new employee’s IT equipment organized.

Because the company was working on projects around the world that were all going to end within a few years, there was little in the way of geographically based network- ing or support. And because new employees were not hired as a cohort, there was little opportunity to develop networks with fellow hires. In addition, the company’s intranet was not equipped to facilitate social networking, communities of practice, or geographic communities.

Walstrom observed that the younger generation seemed to want more early ori- entation and training as well as ongoing feedback, guidance and mentoring. Yet the corporate culture was more about autonomy, agility, and immediate productivity. Wal- strom wondered if the culture could be shifted enough to support new employee ori- entation, socialization and career development, or if they needed to change their hiring criteria toward more independent, experienced people.

Project Organizational Structures Though CH2M HILL was organized into three business groups—Energy, Water and Facilities; Government, Environment and Infrastructure; and International (Exhibit 1), work was accomplished via matrix-based projects that ranged in duration from a few months to several years. Each business group included staff in several disciplines or areas of functional expertise (e.g., geologists, civil engineers, chemists). Each business group was its own matrix organization, staffing and re-staffing projects as necessary. Some projects involved two or more business groups in or outside the U.S., which complicated staffing. For example, when a water project was undertaken in North Africa, the Water Business Group had responsibility for the technical work while the international division undertook local staffing and local government relations.

There was no fully functioning systematic process for project reassignment. New employees were hired onto specific projects within a business area, not into the busi- ness area first, to be assigned to a project later. As such, some new employees identified with their project more than their business group. And the transition from the first project to the second project was a crunch point. Though the firm had an internal people-project matching system, it did not work well because information was not kept up to date. New employees with good networking skills, those with a mentor and those with visible roles had little difficulty transitioning from one project to another. Those with fewer networking skills, without a mentor, or with more isolated roles had a more difficult time transitioning. The vast majority of employees worked on projects and most chose to stay within their discipline rather than go into management.

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CH2M HILL: Reinventing Organizational Careers 103

Walstrom noted another perverse feature of the culture. She knew from her own experience that sharing employees across businesses and functions had to be part of any career development system so that people could learn more systematically from a variety of on-the-job experiences. Yet, as she noted, this was not happening:

Innovation sharing is part of our culture, but talent sharing is not. Most people are reti- cent to share the best talent, understandably. But if career development is to take off, if we are to develop our own people internally, we have to share talent. It will require a culture tweak and a change in the way we measure people and projects. Our current measurement system does not specifically measure and reward talent sharing. As you know, what gets measured gets done.

eMployee deMographICs and Turnover

CH2M HILL had an age distribution of employees that was more heavily weighted toward Generation X (born between 1965 and 1980), than the population as a whole. As shown in Exhibit 6, employees were fairly evenly split between the Baby Boomer generation (born between 1946 and 1964) and Gen X, each accounting for about 43 percent of full-time professional employees. Millennials, born after 1980, accounted for about 11 percent and the remaining two percent were in the older traditional gen- eration (born before 1946).

Walstrom believed her most immediate concern was the increasing rate of vol- untary turnover rates among newly hired employees. Though nearly 90 percent of employees were over age thirty, 50 percent were also recent hires with five years or less at the company (Exhibit 6). The fact that turnover was high in this large group was worrisome. Walstrom expressed her concerns:

It doesn’t matter that our overall turnover rate is not out of line with industry averages. What matters is that it is happening, to a very large degree, among experienced people who were hired specifically to bring their skills to the company and who we hoped would be the leadership of the future. And our turnover rate is increasing.

We do a terrific job retaining people who have been here for more than ten years. Vol- untary turnover is less than five percent per year in that group. For our new employees it’s a different story. Our voluntary turnover in the group with five years or less tenure is nearly 13 percent per year (Exhibit 7). And almost half of our voluntary turnover in the entire company comes from those with less than one year of service. It’s a problem throughout the industry but we aspire to a higher standard. It’s costing us more than $10 million every year, and that doesn’t count the value of expertise that walks out the door. That’s just hiring and initial orientation costs.

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104 Case Research Journal • Volume 33 • Issue 1 • Winter 2013

Exhibit 6: Generational Cohort and Years of Service Distribution of Full Time Non-Craft Employees in 2010

Cohort:* N Percent Traditionals 334 2.4 Baby Boomers 6,175 43.5 Gen X 6,145 43.3 Millennials 1,550 10.9

Years of Service

0–2 4,642 32.7 3–5 3,631 25.6 6–10 2,546 17.9 11–20 2,261 15.9 20+ 1,124 7.9

Total 14,204

*Millennials born 1981–1999; Gen X born 1965–1980; Boomers born 1946–1964; Traditionals born before 1946.

Source: CH2M HILL

She …