President of PDC Engineers (Best Firm Multidiscipline #45 for 2018), a 100-person firm headquartered in Fairbanks, Alaska.
By Liisa Andreassen Correspondent
“I do a lot of ‘walk arounds,’” Emerson says. “I sometimes ask staff, ‘Why do you work here?’ The majority of answers have to do with challenging work and diversity of work and clients.”
A CONVERSATION WITH MATT EMERSON.
The Zweig Letter: What are the three to four key business performance indicators that you watch most carefully? Do you share that information with your staff?
Matt Emerson: We look at the overhead rates, utilization, and accounts receivables. We then share this information with staff. Since I’ve been president, I hold roundtable discussions with staff at least three times a year to discuss how the firm is doing overall. We’re a 100 percent ESOP so financial information is often shared with all owners.
TZL: What actions do you take to address a geographic office or specific discipline in the event of non-performance?
ME: We ask the office, or more typically the market sector, to develop a plan of action on how they are going to turn things around. They will then report to the Board on their plans to mitigate. We’ll ask them to track business more often than normal and take a closer look at monthly revenue and profits. It’s also important they get a strong handle on backlog. They need to be realistic about what’s strong and what’s not. “If” and “hope” are danger words. We also ask them to develop worst, moderate and best-case scenarios.
TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s?
ME: We just named a new principal – the youngest ever. She’s 39. We based this promotion on her relationship with clients and her ability to run successful projects. We had such positive feedback from clients and she generated a good deal of revenue. In fact, a client, after working with her, asked why she was not a principal. She’s been with the firm for more than 10 years and she fits into the company culture well. A good culture fit is so important. You can be a brilliant person, but if no one wants to work with you, it just doesn’t work. There are no hard and fast rules when it comes to age. People just sort of evolve with the company and it happens.
TZL: Describe the challenges you encountered in building your management team over the lifetime of your leadership? Have you ever terminated or demoted long-time leaders as the firm grew? How did you handle it?
ME: The greatest challenge is to make sure that I’m constantly communicating with the company – good and bad information. I’ve been lucky so far in that I have not had to let anyone go or demote them.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
ME: To serve the employees and to build the company to continue for generations. It’s also important to be accessible.
TZL: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours?
ME: There’s no silver bullet for this one. Some clients are locked into hourly. It really starts with client education. It’s a process that takes time. Some of our work with technology enhances their experience and they see value in that (i.e., virtual reality) – it’s unique for the client to come in during the design phase and to walk through their project. We try to leverage technology to give value to their experience. Once the client understands how it all works together, it’s easier to sell value as opposed to hourly.
TZL: If the worker shortage continues, do you see wages increasing to encourage more talent to enter the AEC space, or will technology be used to counter the reduced work force?
ME: Finding mid-level management people is the most difficult. We do try to hire from within when we can. Wages have increased more than using technology, even though the Alaskan recession has hit the AEC community here pretty hard.
TZL: Engineers love being engineers, but what are you doing to instill a business culture in your firm?
ME: This question makes me think of myself. In high school, I started out in the business working in construction. I then became a journeyman plumber, but later decided to attend college in my late 20s/early 30s (you know, plumbing is tough on the knees). I got a civil engineering degree and then a masters. In 2001, I was offered to start a structural department and I had a very limited business background. Since I was given this opportunity, I naturally wanted to learn the business side of things. I relied on mentors and osmosis. When I was asked to take on the role of president a year ago, I asked for specific training. I also worked closely with the outgoing president who is currently staying on as CFO for another year. I attended a training program with the ACEC – it was the Senior Executive Institute program. It provided a lot of value and also prepped me emotionally. Currently, we have a strong project management training program in-house and every other week, there’s a presentation on topics having to do with everything from accounts receivable to contracts. We also have a leadership retreat each year that often has an economic focus.
TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program?
ME: We promote the seller-doer model. Each market sector has its own sales team (but they are engineers.) If we see a project we want to pursue, we develop a capture plan, go after the project, and develop relationships with key decision-makers. For certain, it’s not something you’re taught in school. You can’t be a wallflower in this business. To help promote learning, we offer tuition reimbursement, engineering seminars, professional society memberships, and professional development support.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
ME: We’re not taking any formal steps aside from our Affirmative Action Plan. We lean towards it naturally happening and continue to hire on people’s qualifications and communication skills.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
ME: I do a lot of “walk arounds.” I sometimes ask staff, “Why do you work here?” The majority of answers have to do with challenging work and diversity of work and clients. We also have a culture that incorporates the old adage, “Work hard, play hard.” There’s a great deal of camaraderie here and we encourage that. We want people to bring their families in for special events. We’ve done everything from family Halloween parties to snow tubing. We also provide solid health benefits and retirement plans.
