Best performing firms

When my colleagues and I here at Zweig Group meet with a client to discuss their firm’s performance in any area, inevitably we’re asked, “Is this normal?” or “What’s average for a firm like ours?” While it’s always good to have a baseline, I always caution clients that just because their firm is sitting at average or just above/below, it may not be the right metric for their goals – that’s why I love putting together Zweig Group’s 2020 Best Performing Firms in the AEC Industry Report.

We looked at the following demographics and 2020 award winners, and compared them to the overall reported data sample representing industry norms:

• Fast growth. Firms that experienced an average annual growth in revenue greater than or equal to 20 percent over the previous three years.
• Very high profit. Firms that experienced an annual net pre-tax, pre-bonus profit on net service revenue of 15 percent or higher over the previous three years.
• Hot Firm Winners. Zweig Group ranks the 100 fastest-growing firms in the AEC industry, based on three-year revenue growth factors (both dollar and percentage growth rate).
• Marketing Excellence Award Winners. Firms that were awarded for creating award-winning marketing campaigns, based on creativity and results achieved, within the AEC industry
• Best Firms To Work For Award Winners. Firms are ranked according to a composite score comprised of a corporate survey on policies and benefits, as well as an employee satisfaction survey.

This year, staff turnover (both voluntary and involuntary) has been a concern for firm leaders and staff alike. In 2019, the median turnover rate for all firms was 12 percent. This past year, turnover rates were a median of 13.8 percent at all firms, 15.4 percent at fast-growth firms, and 16.4 percent at very high profit firms.

While high performance firms had higher turnover rates, they still grew their overall staff levels at a greater rate than the average firm. Despite the increasing turnover rates, staff growth was up among all firms – a median of 3.6 percent – more than double the previous year’s figure of 1.4 percent, but it was more than double the overall rate, 9.3 percent at fast-growth firms, and 5 percent at very-high profit firms. What these numbers tell us is that individuals who aren’t a good fit for the organization may be leaving (voluntarily or involuntarily) at a faster rate in firms that prioritize growth or profits – but overall, these firms are able to more easily attract candidates and have prioritized staff growth. We also found that fast-growth (92 percent) and Best Firms To Work For Award recipients (83 percent) were more likely to have an HR department than the overall sample (70 percent).

Here are a few other areas where best performing firms stood out:

• Bonuses. It’s no surprise successful firms spent more on bonuses last year – a whopping $15,019 per full-time employee at very high profit firms, $9,288 at fast-growth firms, and $7,730 in the general population.
• Chargeability. Although chargeability rates were similar, fast-growth and very high profit firms were less likely to have a gap between actual chargeability and chargeability goals – just 1 percent at very high profit firms, 1.6 percent at fast-growth firms, and double that (3.2 percent) among all firms surveyed.
• Young principals. Very high profit firms were also more likely to have younger principals – 11 percent falling into the 30-39 year old range – just 4 percent of principals at fast-growth and all other firms fell into this age range.

Knowing your firm’s numbers and having some benchmarks is absolutely vital for success (in any area), but make sure when comparing your firm to the industry that you are looking at the full range of data available and choosing the best possible benchmark for your firm’s goals.

Christina Zweig Niehues is Zweig Group’s director of research and e-commerce. She can be reached at czweig@zweiggroup.com.