Founder and CEO of GATE (Hot Firm #35 for 2017), a 300-plus person oil and gas engineering consulting company based in Houston.
By Liisa Andreassen Correspondent
“When clients/friends see what we post and comment to colleagues, or know who we are before we walk through the door, marketing is doing its job – generating awareness and interest,” Gibson says.
A CONVERSATION WITH GRANT GIBSON.
The Zweig Letter: There are A/E leaders who say profit centers create corrosive internal competition for firm resources. What’s your opinion on profit centers?
Grant Gibson: We have five major profit centers depending on type of work, business model, and clients. Each profit center has a president who is responsible for all financial performance of his group. We try to create collaboration between the groups as they will each benefit by higher revenues and meet strategic objectives.
TZL: What’s your policy on sharing the firm’s financials with your staff? Weekly, monthly, quarterly, annually? And how far down into the org chart is financial information shared?
GG: On a weekly basis we share our prime covenant – liquidity and over 90-day invoices. Monthly, we share our financials with all presidents and business group managers. Quarterly, we have a shareholders’ meeting where we share the group performance and each president presents on their performance.
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 and not lose them to other firms?
GG: Our focus has been to develop leadership to grow the firm. We’ve taken what we call a “Level 4 Organization” where we focus on people development. We do this in three areas:
- GATE University: A technical syllabus
- GATE Excel: Develops business acumen
- Five Levels of Leadership: Develops servant leadership culture
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
GG: We need to fill the next level of leadership, so our current presidents can continue to expand their businesses.
TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
GG: Ownership is the key ingredient for our business. We do this via restricted stock grants and options. The plan was developed more than five years ago and is still in progress. We are just coming out of an oil price crash and that has presented an opportunity for us to issue options to our staff that will see more upside. My advice is to start early and hire some advisors to help you make good decisions.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
GG: This depends on each of our affiliate businesses. For engineering/consulting, business is generated via relationships, referrals, and technical reputation in the industry. For large integrated projects, which have a large field component, reputation and past project history bring us into being part of bid requests or sole source awards. For our service business lines, they require dedicated sales teams to interface with the client and ensure we are on the bid list.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
GG: When the oil price crashed, we went in four directions with our portfolio. We were concentrated in deep-water projects. The oil companies put almost a 100 percent hold on all new projects and they changed their contracting strategy. We decided to diversify our revenue into operations and maintenance, services, geography, and downstream. Thus, we started working for pipeline operators, fertilizer plants, refineries, shale oil production, overseas and shallow-water production. Our goal was to have a balanced portfolio of 50 percent OPEX and CAPEX. We achieved that goal by the end of 2017.
TZL: The list of responsibilities for project managers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?
GG: While PM burnout hasn’t been a concern for the past three years, we manage this risk with a flexible vacation/time off policy and ensure that staff has access to leadership so they can communicate any stress or frustrations associated with long work hours. We also compensate our employees for longer hours worked with bonus money or equity options. To date, we have never had a PM burnout from excessive hours worked and we plan to remain proactive when supporting our employees’ work-life balance.
TZL: What is the role of entrepreneurship in your firm?
GG: It’s critical for us. Our team needs to recognize when they are in the right place at the right time to capture opportunities. We train our team of future leaders through our GATE Excel program to develop business acumen and future leaders so we can grow.
TZL: Measuring the effectiveness of marketing is difficult to do using hard metrics for ROI. How do you evaluate the success/failure of your firm’s marketing efforts when results could take months, or even years, to materialize? Do you track any metrics to guide your marketing plan?
GG: Most of our tracking KPIs and monitoring is done during specific marketing campaigns. Marketing campaigns allow us to see how effective our campaign efforts are. We can measure how effective LinkedIn is at bringing traffic to the website and generating awareness for the specific service.
Success with marketing is typically through word of mouth. When clients/friends see what we post and comment to colleagues, or know who we are before we walk through the door, marketing is doing its job – generating awareness and interest – especially when other avenues besides Google searches are bringing people to the website or when a new client contacts us. As far as measuring lead generation, the only path we currently have is if someone contacts us through the website.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
GG: The oil price crash was a big wake-up call for GATE. We had 15 years of continuous growth. All we had experience with was a business that was growing. Our clients quit spending about 60 percent of their capital budgets overnight. Through the process of adjusting to the new “lower for longer,” we really learned our business, our market and what was important to our clients, stakeholders, and employees. We also saw it as an opportunity of a lifetime to make acquisitions and pivot to new services/markets.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
GG: Even if you’re making acquisitions, it doesn’t pay out unless you grow the firm you acquired. Our presidents focus on growing their respective groups organically, but also through synergy between the groups to help gain more market share, vertically integrate, and also bring our expertise to each to help entry into new markets.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
GG: Yes. We switched to an ERP system and this has given our leadership a lot more data than we had before. With the oil price, our clients went from being schedule driven to cost driven. Using past project man-hours, we can become more accurate on project budgeting based on variables such as project tonnage or number of control loops.
TZL: What’s your prediction for 2018?
GG: The upstream oil and gas market for deep-water is trending in the right direction. Last year was our worst year of the downturn, while 2018 will be a return to growth and profitability. Our backlog is now reaching levels we’ve seen before.
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