Oct 14, 1996

There are lots of different success formulas for A/E/P and environmental consulting firms. It’s always interesting to me when one of our consultants discovers that a company we are working with is successful in spite of not doing everything the way we would do it ourselves. But when you look at A/E/P and environmental firms that are able to sustain this success over an extended period of time— and there aren’t all that many of them— they all do have one thing in common: They have balance. I’m talking about these companies’ (and their principals’) uncanny ability to take the right course in spite of resource constraints, conflicting pressures from both inside and outside the company, and a turbulent business environment. It really is the “art of management,” if there is such a thing. Here’s what I mean specifically: Balance between hiring experienced staff and bringing on raw recruits. I used to advocate that firms in this business hire only experienced people, with the logic that we can’t afford to do a lot of training and that it’s in the company’s best interests for people to come in and be immediately billable to projects. While I still know that there’s a lot of truth to that point of view, I have learned that there are some problems with the way I used to think. The benefit of hiring some completely inexperienced people also lies in the firm’s ability to mold these people into exactly what they want. They have fewer bad habits formed while working at fewer firms. On top of that, it’s nice to have some people that you can bring along with high percentage pay increases and still not break your bank account; this gets more and more difficult the farther along people are in their careers and the more money they are already making. Balance between pleasing existing clients and going after new ones. This is so tough, yet nevertheless absolutely critical to achieve. It’s dangerous to forget about your old, loyal, faithful clients who have stuck with you through thick and thin. These people deserve to get the best from your company— after all, they have done right by you. On the other hand, it’s also dangerous not to bring in new clients continuously. The fact is that these new clients may teach you a thing or two that can benefit your old clients. And they, like new employees, tend to create and excitement and energy level that the old cannot. Once again, the art of management balances the need to take care of the old as well as bring in the new. Too much emphasis on either group can kill a company fast. Balance between high work effort expectations and allowing staff to have a personal life. This is also tough. I have learned over the years that you can have too much of a good thing. You may love what you do and like to put in those long hours year after year, and there’s nothing better than having some other people working for and with you who feel the same if you really want to get something done. Yet, too much work, and no personal life whatsoever, will lead to burn-out and negativism eventually. Very few people can sustain 70- and 80-hour weeks forever without having it take a toll on their attitude and productivity. The well-balanced company understands this and gets its people to do the right thing for themselves and the firm over the long haul. Balance between quality and speed. This is always something that we will wrestle with in an A/E/P or environmental firm. I am not one of those people who believes that good quality is free, and that you can always have your cake and eat it too. I’m not sure who it was that started all that nonsense, but my experience has always been that there are tradeoffs that have to be made. You have to have a decent product, but you can’t take forever putting it out or you’ll go broke. On the other hand, there are refinements that you can make to your process that will allow greater output and consistency in that output, but they always take time to properly design and implement. The well-balanced company does what it needs to make sure the quality is good— it invests in process improvements, reviews its work product before it goes out, and so on— while it also manages to stay within project budgets more often than not. Balance between growth and profits. Another way to look at this is balance between taking care of the future and dealing with today. Every firm, and I mean every firm, has to grow to remain successful. Oh sure, occasionally I’ll see an article in the architectural press or American Consulting Engineer, where some firm owner tries to justify why he or she doesn’t want to grow their firm, that it’s best for their clients, employees, and themselves to “stay small.” But it’s all only so much B.S.— a rationalization for their own inability as managers, laziness, or worse, greed— that somehow, staying small allows them to not have to share any of the real rewards of the business with anyone else. On the other hand, you can’t just pursue growth initiatives without making sure you have adequate capital (and management time) to make sure that present-day business needs are being addressed so you can have a “tomorrow.” That requires attention to the bottom line, or you’ll lose your financing, lose your ability to reward your staff, and lose your credibility with everyone inside and outside the company. Balance between taking care of owners and taking care of employees. A touchy subject that no one wants to talk about, but important nevertheless. The successful firms understand that no owner will stay motivated if they make an investment that in effect, pays no dividends. It’s just not rational! Owners need, and are entitled to, higher compensation than non-owners if they have made sacrifices and put their money at risk. I don’t think that a 10-25% return on investment in the form of dividend income (which is many times disguised as a bonus) for owners, above and beyond their incentive compensation as a manager or key employee, is at all excessive. On the other hand, 50% or 100% may be excessive. And owners better not rob the company and then tell their employees they can’t pay them what they are worth, or they won’t have a very good work force. Balance between providing adequate direction and supervision and letting people do their own thing. I struggle with this one, but think I have learned a great deal over the years about how to get the right balance here. Many people who start companies or who become principals have some pretty strong convictions and ideas about how things need to be done. Their tendency may be to decide that since their approaches worked for them and allowed the firm to grow and prosper that they have somehow found “Grandma’s recipe” for success. But the other smart people that we bring into our companies want to have a chance to try out their thinking, too. If they can’t ever spread their wings, they’ll decide that “big brother” is too oppressive and they’ll quit. The answer, I think, lies in being inconsistent to some extent over what level of review you provide, and what level of difference you will tolerate in the way someone does something versus how you would have done it. Sort of “intermittent” enforcement. You have to choose when it’s critical to direct and when it’s not— and whose work you need to check and who you can trust. It’s not easy! Is there an easy answer to finding balance in all of the areas mentioned above? Of course not. It certainly helps to have different people involved with managing the company— I think that this provides a greater chance to find this balance than you’ll have as a sole proprietor/manager. The important thing is to keep searching. Originally published 10/14/1996

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