The Schizophrenic Firm

Sep 17, 2001

Irving “Tuck” Schlockmeir walked into the Schlockmeir Associates board meeting in a bad mood. Tuck was frequently in a bad mood, and if he wasn’t, the fear that he might go into one scared everyone else so much that they were still afraid to interact with him. Schlockmeir Associates was a 35-year-old firm. Tuck’s dad, H.G. “Trip” Schlockmeir, III, had started it after working 20 years at MegaFirm. It started out as a structural engineering firm, but within a few years he was joined by Cecil Thumly, a local mechanical engineer who had his own small practice, and Vance Short, an electrical engineer who had also spent the bulk of his career at MegaFirm. Another couple of years after that, the firm went from being a structural-mechanical-electrical firm to a full- service engineering firm when it merged with Dirtco Engineering, a civil and surveying company. By the late seventies and early eighties, Schlockmeir was the largest firm of its type in Raleigh, North Carolina, and had additional offices in Birmingham, Alabama; Memphis, Tennessee; Tupelo, Mississippi; and Fort Smith, Arkansas. When young Tuck joined Daddy’s firm on a full-time basis in the summer of 1980 after getting his engineering and MBA degrees, he was all fired up. And if you listened to Trip, his son was going to lead them to the Promised Land. Good management meant they were going to build something, become more than he ever dreamed when he started out in his garage, and do a lot of fantastic projects. Plus, they were going to make some money. “Nothing wrong with that,” Trip used to say, tired out after more than 30 years of 70-plus hour workweeks. It didn’t quite work out the way Trip wanted. Sure, Schlockmeir Associates grew through the eighties and into the early nineties, but everyone did. But the firm had a hard time keeping good young people. It was more of a training ground for competitors than anything else. Then, on New Year’s Day in 1993, Trip died suddenly from a heart attack. It was all up to Tuck now. He inherited Trip’s stock and had always been the one who was supposed to succeed Trip. But where Trip was stable and good at getting the input of others, Tuck was not. Undeniably brilliant, he was also schizophrenic in his approach to management. He constantly changed his mind. First, they were getting into the architectural business. After two years of building an architectural group, he decided that wasn’t the way to go and fired all of them in an afternoon. Next, the firm was going to go national. They opened offices in Denver, Chicago, Houston, and San Francisco over a three-year period. But that, too, ended when Tuck decided at the 1998 planning retreat that far-flung offices in areas where the culture was vastly different from their mid-South roots weren’t worth having. Then the firm got into the environmental business by buying a lab. But a year later, that lab was losing money, and Tuck sold it back to the employees. That takes us up to the present, September 2001. The firm is down to 100 people now. It had 200 when Trip died. Tuck is at the helm. He’s still a relatively young man of 45. He owns 35% of the stock and doesn’t want to relinquish control. The other principals have been there too long and are too far along in their careers to change companies now. And the associates and junior staffers are pretty much demotivated and resolved to keeping their eyes and ears open for something better. What can be done? I think the best way to approach a situation like this one is to pull together a new plan. Get the input of every single employee. Find out what they think needs to happen. Talk to them individually and in groups. Get an outsider, if necessary, to get good information from inside the company that can be used to get Trip to see why he has to change and why he has to let go. Find out who the up-and-comers are and put some of them on the board. Let some of the old-timers who stood by and watched the firm decline go back to working on projects— get them out of day-to-day management. Look for ways to get Tuck to start selling more of his stock so that his power and influence are decreased and he starts the process of phasing out. Find some ways to have continuous interaction among the managers so that Tuck knows how everyone else feels. If all of these efforts fail, look for a buyer. A good buyer will figure out what’s going on and fix it. Buyers don’t want turnover. They won’t tolerate revenue declines or poor profit margins. A buyer may be just the help that’s needed to fix this mess. Originally published 9/17/2001

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