BOLA: Case Studies: Brun Security Limited

This case study is offered as teaching/seminar material to Business Studies and Organisational Analysis tutors. It is a very useful case study for exploring organisational re-structuring - TQM, Business Process Re-engineering, operations management (product and service design), communications and human resource management.

This case is based on a case I used (source unknown) when studying an age ago. It has however been considerably re-worked/expanded over the years.

The Case

Brun Security Ltd make, install and service security alarm devices in Manchester and the North West Region. At the time when investigation and changes in this case study took place, the firm was divided into three operating functions

  1. installation
  2. service
  3. repairs

Each function was run with different working techniques and with rapid developments being made in the design of equipment. A Research and Development Manager had just been appointed to advise the company on technological advances in component design and the implications for security systems.

Brun Security Limited - Organisation Chart

New installations often arose from insurance demands. Customers (pushed by insurance company rules) often thought the installation (and cost) were either over-elaborate or too expensive.

The area of operations was a radius of approx. 50 miles from the Head office in Manchester. The Commercial Director was responsible for making contacts for new business with a surveyor preparing a work specification and (Liaising with the costing section) the financial estimate for each prospect. Currently one-third of estimates resulted in a sale. In each case, the work specification formed the instructions for the installation technician who collected their jobs through their supervisor at the area office.

Installations
Materials for new installations were assembled at the central stores (taken from a copy of the work specification). The materials were transported to the job by a van delivery the day before work commenced,. Any alternative or extra materials were obtained by the installation technician either from a local supplier or by ringing from Head Office stores for delivery next day. A "collection" allowance of 45p per mile was paid for the technician using his own car to collect materials from local suppliers.

Service and Repairs
The S & R operation was co-ordinated directly from Head Office with a central communications desk. Each service technician collected a daily list of planned service visits from his area supervisor. He worked through these each day until 3.00pm when he would contact central communications to determine whether any emergency repairs were outstanding. Clients whose systems were mal-functioning could call the communications desk at any time of the day or night for emergency repair work. Insurance conditions usually stipulated that the premises must remain occupied until the security device could be set.

Ten technicians worked full-time on repairs including four on night shift.

Difficulty was being experienced in recruiting technicians (all men). New recruits were given initial basic training and occasional sessions on new equipment were provided outside working hours by supervisors and managers . Trade union membership (including supervisors) was 100% in the S & R department and about 30% amongst Installation staff. Basic rates of pay (hourly) were high and were supplemented by overtime earnings. Each man collected his pay from Head Office at lunch-time on Friday.

The Problem

The information below was obtained through interviews conducted by an organisational development consultant.

Operations Manager made the following points at interview:

  1. Overtime was particularly prevalent on the S & R side of operations. It was difficult to raise the "before 3.00" calls-completed ratio of service technicians. This led to a back-log of post-3.00 calls many of which were emergency repairs needing attention which could not be completed by the repairs team. The number of post-3.00 jobs had the effect of increasing overtime levels substantially.

  2. Little overtime was available to Installations staff. The manager ran a tight ship governed by the terms of installation contracts. Installers were spending many hours weekly however journeying to local suppliers, queuing for odd components (eg omitted from contract technical drawings). Similarly Installation supervisors spent much of their time in the office sorting out problems giving less time to on-job support. Supervisors complained of "too little control" over their technicians being seldom able to influence work standards. They were critical of "separateness" between themselves (as experienced installers), field staff and the surveyors.

  3. The Operations Manager was aware that many supervisors were in their late 50's. Some wanted early retirement saying that the company had changed from the company they knew. The job was too stressful. They were not supervisors but "under-paid errand-boys and chaperons of prima-donna fitters".

Company Secretary gave the following information

  1. turnover of installation staff was running at 34% p.a. Installers were a young group - av. age 26. There was little service and repair turnover (av. age 42). Whenever vacancies arose there was always a flood of applications from installers. Generally the Operations Manager decided who would be accepted on the basis of ability and length-of-service.

  2. HQ Personnel and Training officers were junior managers (primarily desk-bound), placing adverts and arranging interviews for managers and area staff. There was a full range of Personnel admin work to do including supervising office services including central communications. The Training Officer ran induction courses for new staff and tried to co-ordinate training given "on-the-job" by supervisors to their staff. The Secretary however was keen to improve the "mobility" of the Training officer.

  3. The Chief Surveyor was worried that his staff were increasingly placed in a sales role. They were trained in security system design, specification and estimating and not in handling the demands of the point-of-sale relationship ie nurturing customers from quotation to final contract.

    Obtaining insurance recommendations was not a problem although his dealings with insurers showed that some concerns were arising about "quality".

  4. More quotation work meant that surveyors and costers had a back-log of drawing/quotation work to complete. The time between surveying premises and tendering was lengthening (a factor in quotation-sale conversion ratio).

  5. The Commercial Manager was pressing Directors for clarification of company policy vis a vis "variation orders" ie customers wanting changes to agreed specifications at installation time. Many unauthorised changes were acceded to by installers and the surveying office was losing track of changes made. This affected costs and had implications for scheduled service operations.

  6. The Commercial Manager raised a final point about the costing office. Here two clerks took the specifications/estimates from the surveyors, costed and made up quotations which (after his approval) were sent to customers. The office was being held together by one long-service, very experienced employee. The other post was currently covered by a temp. It seemed impossible to keep someone in this post for more than three months.

The Finance Director was concerned that

  1. margins on installation contracts are too narrow. Installation time over-runs resulted in unplanned overtime. Extra costs were being incurred by technicians making on-the-job component substitutions at variance with installation specifications. Installers complained that too frequently the component deliveries to site failed to take account of specific installation problems encountered. Plans and specifications are often too generalised and surveyors had not spotted many knotty on-site factors. Clients too madedirect approaches to installers wanting boxes or wiring to be positioned differently to plans. Installers tried to keep clients happy.

    On-site changes however were are not always noted and charged - again reducing margins. The Director accepts that re-negotiation with customers on contract prices and changes might lead to fewer orders being confirmed.

    Paper specifications thus sometimes varied from the actual installation details. Service planning was based on paper specifications.

  2. He also noted that the volume and cost of repairs was rising. Too many components were needing to be replaced. There were over 45,000 components held in stock.

    There was a high incidence of repair calls within the first four weeks of installation. He was very afraid that there would need to be a big increase in service and repair charges to clients (1-year service contracts agreed with customers as part of the total installation package). Other security companies were beginning to offer 2-year service contracts (2-years parts and one-year labour).

The Chairman described three problems faced by the company

  1. the company was unable to cope with increasing demand for new installations. During the previous year, the waiting period had increased from three weeks to seven weeks and was still going up. As a result, valuable business was being lost. Nevertheless a development which the company needed to address was that within two years, insurance companies would require all installers to satisfy the requirements of BS 5750. If not then the alarm systems would not be insurable.
  2. the ratio of faults per hundred installations had increased during the previous twelve months by 30%.
  3. on being questioned about the company's information technology strategy, the Chairman was evasive and concentrated her reply around the subject of FAX machines and word processing being useful at Head Office. She was against the use of car phones.

    Her view was that productivity increases of the order of 20% were obtainable if the technicians could be encouraged to do more work on the job. She believed that a bonus incentive scheme was probably the answer and that a Company uniform for the technicians would engineer an improved sense of loyalty to the Company.

Developed and maintained by Chris Jarvis