President of Reaveley Engineers, a national structural engineering firm based in Salt Lake City, Utah.
By Liisa Andreassen Correspondent
“I am fortunate to be surrounded by great people who are dedicated and loyal to the firm,” Adams says. “I have never terminated or demoted long-time leaders as the firm grew, although we have had a few leave through retirement. The challenge I face most often is getting my leadership team to dedicate enough time to building the business – working on the important/not urgent things needed to prepare us for the next level.”
A conversation with Dorian Adams.
The Zweig Letter: Do you tie compensation to performance for your top leaders?
Dorian Adams: Yes. There is a profit sharing bonus that incentivizes our leaders to market and bring in profitable work that makes up about 5 to 10 percent of their compensation.
TZL: Do you share base salary or bonus amounts with your entire staff?
DA: Our base salary and bonus information is kept confidential. However, when determining bonuses and salaries I make the assumption that the information is known to all employees.
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?
DA: At Reaveley Engineers, the primary responsibility of principals is to strategically grow the firm and mentor employees. I believe it takes a minimum of 10 to 15 years for an individual to gain the skill set necessary to thrive in that role. We don’t tie ownership to the position nor do we have a specific set of criteria that must be met. Individuals promoted to principal earn their position by having leadership ability and/or a significant book of work. Our youngest principals were promoted to that level in their late 30s.
TZL: Internal transition is expensive. How do you “sell” this investment opportunity to your next generation of principals? How do you prepare them for the next step?
DA: We share ownership quite broadly within our firm. Roughly 50 percent of our employees are owners. This allows the benefits of ownership to come to people relatively early in their careers. By the time an individual is ready to become a principal, they already have significant ownership. We also share project and firm financial information with our employees to train them to think about the business. It also helps that our founder, Ronald Reaveley, chose to sell his interest in the firm at book value which significantly reduces the cost of the investment.
TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your professional life?
DA: I must say this last year has been the most fun I’ve had since becoming president of Reaveley Engineers. In 2017, we began a huge brand evolution project to be the most client-driven structural engineering firm in the region. This brand evolution is much more than a new logo and website. We are keeping the great things about who we were and infusing our culture with a new client-driven focus. Communicating the new brand to our staff is a big deal. We have a “Brand Rally” every Monday morning to promote client-driven behaviors in a fun and energizing way. We also hired a trainer to conduct a year-long training for all of our employees on emotional intelligence, which completed in February. The essence of who we are has evolved – real cultural change has occurred. Cultural change is hard, but when it happens, it’s extremely rewarding.
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?
DA: I am fortunate to be surrounded by great people who are dedicated and loyal to the firm. I have never terminated or demoted long-time leaders as the firm grew, although we have had a few leave through retirement. The challenge I face most often is getting my leadership team to dedicate enough time to building the business – working on the important/not urgent things needed to prepare us for the next level. I’ve moved people to new roles and delegated important initiatives to younger leaders with ambition to make things happen. We all wear many hats so it’s a major challenge to make time to do it all.
TZL: How do you promote young and new leaders as the firm grows?
DA: We strive to provide challenging opportunities to our employees and the cream rises to the top. As individuals gain experience, they’re provided with more challenging and important opportunities. Eventually, it’s clear who has leadership potential and those people are given important initiatives to lead, management responsibilities, and client-facing roles. We also provide management training through offsite seminars to our emerging leaders and work hard to ensure our promotions are merit based.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
TZL: What happens to the firm if you leave tomorrow?
DA: I think Reaveley Engineers would be in good shape if I left tomorrow.
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?
DA: Commoditization is a real problem in our industry, but it is based on a false assumption that all firms are the same. Anyone can own software, but not everyone can use it effectively and even know if the results are accurate. Firms must communicate the value they provide to their clients outside of the technology. Insist on lump sum contracts and advocate for qualification based selection to public and private clients.
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 workforce?
DA: I see wages increasing to compete for scarce resources, but not necessarily to attract people into AEC careers. That might be a positive side effect of increasing salaries. We have considered offering scholarships to attract high school graduates to enter engineering. Technology will help, but we still need people to do the work.
TZL: There is no substitute for experience, but there is pressure to give responsibility to younger staff. What are you doing to address the risk while pursuing the opportunity to develop your team?
DA: We have a coaching and mentoring program that has a two-part focus: build skills at a faster pace and get assigned to projects that build experience. Coaches review a skills gap analysis with young engineers on a regular basis, and help them set goals to develop skills to meet minimum competency. Coaches also advocate to principals to get engineers assigned to work that helps them build the skills they need. We also have a principal level person with the role of QA/QC as his only responsibility.
TZL: Engineers love being engineers, but what are you doing to instill a business culture in your firm?
DA: The financial information for our firm and every project is communicated to all employees. Project budgets are set up in terms of dollars and everyone is expected to create a project management plan with a schedule to meet a target margin. We also send people to business training seminars on a regular basis. Our in-house training program also includes sessions geared to the business. All employees are invited and welcome to attend our annual shareholders meeting. We encourage employees to build personal relationships with clients at every level.
TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program?
DA: It’s true that the seller-doer model has been very successful for us, but it’s supplemented with full-time marketing people. We have not deviated from the seller-doer strategy yet, but we have a team-based strategy to service clients which gives marketing responsibilities to individuals on the principal track.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
DA: As most of our work comes from architectural clients, we have a goal to have our workforce mirror our client firms. Utah is not a very diverse state and there are fewer women graduating in the engineering profession than men and even fewer minorities. This is a challenge.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
DA: We conduct an annual employee engagement survey every year and one of the questions is “how long do you plan to stay at Reaveley?” Eighty-three percent indicated they plan to stay 10 years or longer and 67 percent indicated they plan to stay until retirement. I attribute this to the broad distribution of ownership, exciting and rewarding projects, and our people caring about one another.
TZL: Benefits are evolving. Are you offering any new ones due to the changing demographic?
DA: We have started a new initiative called “Reaveley Cares” with millennials and baby boomers on the committee to tackle this issue. I expect the outcome will be maximum overtime guidelines to improve work-life balance, more paid holidays, and possibly a policy to create a shared pool of PTO for family leave from time donated from other employees.
TZL: What scares you about the geopolitical environment today?
DA: Tariffs driving up costs, lack of qualified hires, and economic downturn.
TZL: How are the tariffs impacting your business and that of your clients?
DA: Cost of building materials are going up.
TZL: How are the tax cuts impacting your business? Have salaries and bonuses increased?
DA: Lower taxes have allowed us to retain more earnings and build up our rainy day fund.
TZL: How have the tax cuts impacted your firm’s valuation? Do you plan on doing another valuation due to the tax cuts?
DA: Our valuation has not changed because it’s based on book value.
TZL: Are you currently pursuing the R&D tax credit?
DA: Yes, starting in 2015 for the first time. The CPA costs are high, but we will continue to take advantage of it.