By Kenneth E. Arnold June, 2007

1. Engineering Leadership Professionalism, Ethics, Sustainability and Thomas Jefferson By Kenneth E. Arnold June, 2007 Engineering Leadership June 07.ppt

2. Requirements of an Engineering Leader • Understanding the Context • Creating a Culture of Dignity and Respect • Developing a Vision • Communicating a Strategy • Monitoring • Adjusting Engineering Leadership June 07.ppt

3. Understanding the Context • The Commercial Environment • Company • Clients • Competition • The Technology • Design • Construction • Operation • Project Management • Motivating for Success • Staff • Clients • Vendors, Contractors Engineering Leadership June 07.ppt

4. Requirements of an Engineering Leader • Understanding the Context • Creating a Culture of Dignity and Respect • Developing a Vision • Communicating a Strategy • Monitoring • Adjusting Engineering Leadership June 07.ppt

5. Creating A Culture –The “Engineering Company Conundrum” • “Our most important asset is our people” • “We are a company of engineers and not just an engineering company” • Yet … • Management’s efforts concentrated on: • Client relations • Commercial relations and contract administration • A few “key” project managers and technical leads Engineering Leadership June 07.ppt

6. Creating a Culture –The “Engineering Company Conundrum” (Cont’d) • “We need X manhours of Y type of engineers” • Engineering is viewed as a commodity • Engineers are “hands” • Engineers are disposable • Engineering is provided “givens”, a list of standard “deliverables” and a budget of manhours • Engineering is not consulted in making major decisions • Little attention paid to engineering technology and work processes. Engineering Leadership June 07.ppt

7. Creating a Culture • Created by thousands of actions and omissions not words • The most important and least understood step • Must flow from top through each level of management down to all first level supervisors • Cannot be delegated to Human Resources • Involves all staff and not just engineers, technical staff or a select few. Engineering Leadership June 07.ppt

8. Creating a Culture of Dignity and Respect • Understanding “Professionalism” and the burden of thinking this implies for every member of the staff • Understanding “Ethics” and how it effects the way we interact with each other • Understanding what is meant by “Sustainability” • An example of how to Communicate these concepts to the staff • The “Payout” for creating a culture of dignity and respect Engineering Leadership June 07.ppt

9. My Background • Technical • Co-author of two textbooks on Production Facility Design • Editor of Petroleum Engineering Handbook, Volume 3 • Published over 50 technical articles in various journals • Recipient of technical awards form SPE, API and 2003 TSPE Houston Engineer of the Year • Member NAE • Commercial • Founded Paragon Engineering Services - 1980 • Staff of 160 in 1993 and 500 when sold in 2005 • Between 1993 and 2005 had nine major changes of ownership while growing the staff and maintaining the culture • Voted one of the ten best companies to work for by Houston Business Journal in 2003 Engineering Leadership June 07.ppt

10. Understanding “Professionalism” To be a professional company each individual in the company must behave in a professional manner. Engineering Leadership June 07.ppt

11. 1st Principle: Spend the Client’s Money As If It Were Your Own • A professional contract is a license to steal • We must always operate in the best interest of the client • Definition of Client • The public • The client • The project • Internal “clients” • Each individual must think about what he is doing in context of the best interest of the “client”. • The best interest of your company, the best interest of your career does not govern. • The drag reducer example Engineering Leadership June 07.ppt

12. 2nd Principle: We Owe the Client One Strong Agreement • Professionals are hired for their brains • You are not allowed to say: • “ I knew there was a better way but they wanted it done this way”. • “I knew he wouldn’t listen”. • “This is standard practice, even though it doesn’t make sense in this context.” Engineering Leadership June 07.ppt

13. 3rd Principle: “Shut up and Do What the Client Wants” • You could be wrong • Different data • Why might a client disagree: • Comfort • Ego • Best interest of the client • Handle disagreements with care • Station controls example • But don’t forget the following trump all • Technical reality • Safety • Ethics Engineering Leadership June 07.ppt

14. 4rd Principle: A Professional Takes Responsibility for His Work • Mistakes and Errors in Judgment Happen • Insufficient Data • Misleading or Incorrect Data • New Data / Revisions • Communications • Think about the potential effects of new information on the project as a whole • Verify that others realize the impact • Correct errors as soon as practical • Figure out how to avoid them in the future • Dehydrator slab example If you do not know at the end of every job how you could have done it better you are not a “professional”. Engineering Leadership June 07.ppt

15. Understanding Ethics To create a culture of dignity and respect each individual in the company must act in an ethical manner in dealing with others. Engineering Leadership June 07.ppt

16. Ethics - Religion • In the Talmud Rabbi Hillel said, “Do not do to others what is hateful to you. All else is commentary.” • In the Gospels Jesus said, “Do unto others as you would have them do unto you.” • In the teaching of the Moslem prophet Mohammed it is written, “no one of you is considered faithful until you wish upon your brother what you wish for yourself.” • Confucius said, “What you don’t want for yourself, don’t do to others.” Engineering Leadership June 07.ppt

17. Ethics – Religion (Cont’d) • The Swami Chinmayananda a spiritual Hindu teacher said “Charity is an attempt wherein I try to expand and bring into the ambit of my life, all others around me and grow to consider the other man’s needs and requirements as important as my personal needs.” • The Law of the Egyptian Goddess MAAT for right and truth says, “…I have done neither harm nor ill … I have done no hurt to man …I have made none to weep….” Engineering Leadership June 07.ppt

18. Ethics – Cultural • The Declaration of Independence, “We hold these truths to be self-evident … That all men are created equal … that they are endowed by their Creator with certain unalienable rights… That among these are Life, Liberty and the Pursuit of Happiness • Everyone deserves the same respect that we believe should be paid to us. • The right to be heard • The right to be treated with dignity • The right to earn a living • The right to be told what is happening • Do we really believe in this? Engineering Leadership June 07.ppt

19. Examples of Unethical Behavior – Pecking Orders • The “Global Pecking Order” • The Client • Consultants • Vendors • Contractors • Grunts in the Field • The “Corporate Pecking Order” • CEO • Vice President • Managers • Supervisor • Project Manager • Engineers Engineering Leadership June 07.ppt

20. Examples of Unethical Behavior – Pecking Orders (Continued) • The “Engineering Pecking Order” • Engineers • Designers • Procurement • Accounting • Secretaries • Other Support Staff Engineering Leadership June 07.ppt

21. Examples of Unethical Behavior - Bidding • There is nothing unethical about bidding • But … Preparing a bid costs money and resources • It is unethical to: • Bid a job that you know may not be awarded • Bid someone you know you will not award the job • Withhold information bidders need to judge their chance of success – competition, evaluation criteria, etc. • Bid a job more than once without compensation • Take a value added idea from an unsuccessful bidder and give it to the successful bidder to implement without proper compensation Engineering Leadership June 07.ppt

22. Examples of Unethical Behavior – Change Orders • There is nothing unethical about protecting yourself from a vendor who is motivated to get the most out of change orders • Complex engineered equipment, fabrication or construction will always have the need for a change order adjustment in price • There is nothing unethical about protecting yourself from a vendor who is motivated to get the most out of change orders • It is unethical to: • Use future purchasing power to blackmail a vendor to avoid paying for extra work that was requested and performed • Hold a contractor to a legal requirement or a technicality when circumstances have clearly changed the intent • Demand something when you know your client is not able to realize it is not really a change in scope Engineering Leadership June 07.ppt

23. What If I Act In An Unethical Manner? • We all consider ourselves and our actions to be ethical • But … In the rush to do business, or because we don’t have all the facts, or because we are distracted we all act unethically from time to time • We all have bosses or clients who require us to do things we think are unethical • It is unethical to: • Refrain from explaining to someone that they are asking you to do something that may be construed as unethical • Refrain from apologizing Engineering Leadership June 07.ppt

24. Understanding “Sustainability” Meet the needs of the present without compromising the ability of future generations to meet their own needs. Balancing the three business objectives of economic effectiveness (profit), social justice (people) and environmental protection (planet). Engineering Leadership June 07.ppt

25. Elements of a Sustainability Program • Profitable Growth • Human rights • Health and Safety • Environment • Community Involvement • Ethical Business Conduct • Employment Rights Engineering Leadership June 07.ppt

26. Bottom Line of Sustainability • A safe place to work • A pleasant work environment Leadership must be engaged in providing • Ability for long term employment • Career Challenge • Training • Growth • Help in time of need • Competitive salaries and sharing in corporate profits • Volunteer activities to: • Promote teamwork and morale • Invest in the local community • Protect the environment • Advance technology Engineering Leadership June 07.ppt

27. The Other Side of the Bottom Line • Support the company • Be a good ambassador • Pay attention to quality • Suggest ways for improvement • Do something extra on occasion • Often the payout is clear • Sometimes it is not. Trust and commitment goes two ways. • Help secure work and staff for the company • Speak up when you disagree Engineering Leadership June 07.ppt

28. Communicating to the Staff Each company must evolve its own process. Engineering Leadership June 07.ppt

29. The AMEC Paragon Example (Orientation) • Ethical Will • A document which sets out the learnings of those who have come before concerning the principles of right and wrong that govern the conduct of an ethical life • Covers principles governing our actions towards our business objectives, goals and focus, and our responsibilities as a company, a manager and supervisor, a project manager and an employees • All new hires have a two hour meeting with a member of the Leadership Team concerning professionalisms and ethics • All new hires have a two hour presentation on safety and sustainability Engineering Leadership June 07.ppt

30. The AMEC Paragon Example (Leadership Support) • Active Social Committee with monthly events for staff and families • Multiple Community Involvement Committees • Spring Branch ISD • Rebuilding Houston • Gulf Coast Blood Center • United Way • Ronald MacDonald House • Committee for Environmental Efforts • Recycling • Car Pooling Engineering Leadership June 07.ppt

31. The AMEC Paragon Example (Leadership Support) – (Cont’d) • Support for Technical Society Involvement • Pay for dues • Pay for attendance at programs • Support involvement in committees • Active Professional Development Program • Support for outside training and degree programs • In-house courses • Lunch and learns • Professional Development Plans for engineers Engineering Leadership June 07.ppt

32. Payout for Creating a Culture of Dignity and Respect Engineering Leadership June 07.ppt

33. Benefits of Creating the Culture • One view: If we do so, in the long run we will be more profitable due to customer satisfaction, staff motivation, and increased technical competence • But … these long term benefits are hard to quantify and may not be real. Our clients don’t always understand and reward such good behavior • Our clients don’t always understand and reward such good behavior Engineering Leadership June 07.ppt

34. So What is the Payout ? • By creating such a culture and balancing needs of shareholders with those of staff and community we will: • Be profitable • Attract and retain qualified technical staff • Better enjoy our time at work • Be proud of the work we accomplish • Advance technology • As a team working together we can help make a difference in the community Engineering Leadership June 07.ppt

35. Requirements of an Engineering Leader • Understanding the Context • Creating a Culture of Dignity and Respect • Developing a Vision • Communicating a Strategy • Monitoring • Adjusting Engineering Leadership June 07.ppt

36. FINAL THOUGHTS • Leadership in engineering is not difficult, but it is time consuming and requires constant effort. • A good leader must establish the proper culture to allow engineers to be professional and demand they act accordingly. • The culture is developed over time by thousands of small actions keyed to dignity and respect of all staff and a set of “sustainable” policies. • The culture is supported by a thousand small decisions and can be killed by a thousand small cuts. Engineering Leadership June 07.ppt

37. FINAL THOUGHTS (continued) • However, the leader can only be as good as the followers. They must willingly take on the burden of being professional, being ethical and acting in a sustainable manner. • It takes a good motivated staff to be a good leader. • Thomas Jefferson did not write the Declaration of Independence by himself. He had a good, highly motivated group of people behind him with a clear understanding of where they wanted to go. Engineering Leadership June 07.ppt