Conference call: Raj Sheth

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CEO and chairman of Mead & Hunt (#82 Hot Firm for 2017), a 592-person national firm offering services in planning, design, architecture, and engineering.

By Liisa Andreassen
Correspondent

“There is something to be said for gaining experience and being willing to listen and learn from the beginning of one’s career until one retires,” Sheth says.

A CONVERSATION WITH RAJ SHETH.

The Zweig Letter: What is the role of entrepreneurship in your firm?

Raj Sheth: No consulting business can continue to be successful without at least some of its employees having an entrepreneurial mindset. We’ve always encouraged employees to try new things and consistently invest in key hires to explore and pursue new markets.

TZL: Monthly happy hours and dog friendly offices. What do CEOs need to know about today’s workforce?

RS: One size doesn’t fit all. Be prepared to be flexible and creative to attract and retain talent even if it might be out of your comfort zone. Things like allowing employees occasionally to bring their dog or child to work, telecommuting, flexible schedules, etc. We have now more than ever a multi-generational workplace and we need to tailor our benefits and processes/procedures rather than having a rigid system for how to handle things. Employees want to have a say in their work environment and benefits. It’s not like it used to be when the employee showed up for work from 8 a.m. to 5 p.m., did what he or she was told, and the employer had all the power and authority. CEOs need to listen to their employees. Meet with them face-to-face; get to know them and what their concerns are and what they’re excited about. We offer multiple ways to submit ideas and suggestions and have often implemented them. Employees want to be treated as individuals and respected, regardless of the position they hold in the organization.

TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people?

RS: We have a well thought-out internal leadership development program, which we continue to improve. We provide leadership development training opportunities to all employees. Those with high potential of moving into senior leadership positions receive advanced training, both internal and external. We promote from within and therefore employees can see there is opportunity for them to move up as we grow. We also treat employees well so they aren’t tempted to leave us.

TZL: In the event of failure, how does your firm react?

RS: I assume the failure refers to a problem on a project. Our philosophy and practice is always to take care of our clients. As soon as we learn about any perceived failure, we meet with the client to understand the situation and find a responsible solution within the ethical, legal, and, if needed, insurance parameters. We’ve never lost a client because of any real or perceived failures.

TZL: The A/E market is great right now. What are you doing to cushion your firm in the event of a downturn?

RS: We’re careful to make sure we don’t staff up more than what our long-term needs will be. We do not believe in hiring full-time regular employees for short-term needs. We also are diversified in our client services so if one area of our business happens to be lagging, it’s almost inevitable that another area of our business is booming. Therefore, we encourage our employees to be versatile and learn as much as they can about the different aspects of our business so when things cycle, they are capable of assisting with other departments or business units outside their assigned group.

TZL: How do you deal with underperforming employees? What are your steps for removal after they have proven to be ineffective, or even counterproductive, to your firm?

RS: Employees receive ongoing feedback. If someone has done a great job on a project, that person is told so immediately. If they aren’t doing such a great job, they are also told that, including what they need to do to improve. We’ve spent time coaching our managers and supervisors on how to give constructive feedback to help employees grow and improve. That includes good listening skills. Perhaps an underperforming employee is having some personal issues; how will we know that unless we ask? Another question is how long has this been going on? Managers are encouraged to get to know members of their team as individuals so they can recognize when something is “off” with one of them. Even with regular feedback, we still do annual performance evaluations for goal setting and career planning. If an employee just isn’t performing and we’ve tried to correct the issues, we do let people go. They know it’s coming.

TZL: Firms that have principals and firm owners who lower their compensation and invest back into the firm perform better, grow quicker, and have higher valuations. How do you balance owner compensation with investment in the firm?

RS: As an employee owned firm (non-ESOP), approximately 30 percent of our employees are “owners.” We consistently retain some of our year-end profit for the future. We also expect shareholders consistently to invest in the company by purchasing additional stock when the opportunity arises. Many of our shareholders use most, or all, of their year-end bonus to purchase additional stock, which is a fantastic testimony to the faith our employee owners have in the company. Regarding salaries, we tend to be slightly above market and we’ve been careful to make sure that those of us in key leadership positions don’t receive any special treatment when it comes to our pay.

TZL: How does marketing contribute to your success rate? Are you content with your marketing efforts, or do you think you should increase/decrease marketing?

RS: Continuous marketing efforts and well thought out business development efforts are necessary for ongoing business success. Repeat clients are a large part of our business and we’re always marketing for new clients. We’re satisfied with our investment in this area.

TZL: If there was one program, course, or degree program that you could take or recommend before becoming a principal or owner, what would it be?

RS: No one course, program, or degree will make a person successful in business. There is something to be said for gaining experience and being willing to listen and learn from the beginning of one’s career until one retires.

TZL: What’s the greatest challenge presented by growth?

RS: Making sure the company does not lose sight of its values while pursuing higher revenues and profits. (In the past 19 years, Mead & Hunt has grown from two to 30-plus offices and the number of employees has tripled. The company’s billings also increased from $10 million to about $80 million in the same time period.)

TZL: What’s your prediction for 2017 and for the next five years?

RS: I think 2017 looks great. We’re on track to hit our goals and probably will surpass them in many areas. I’m fairly optimistic about the next few years but it’s hard to predict what’s to come. Five years is a long time in this business; things can change quickly considering our current political climate.

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