Conference call: Jim Tippmann

Jun 25, 2018

CEO of FRCH, a Nelson Company (Hot Firm #41 for 2016), a global design firm based in Cincinnati.

By Liisa Andreassen Correspondent

“Everyone has access to the company’s financial information,” Tippmann says. “I believe this knowledge empowers people to perform.”


The Zweig Letter: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?

Jim Tippmann: During the economic downturn, we launched a Brazilian operation because the domestic economy was soft. We found a partner, but it didn’t work out. It would be nice to know the challenges in advance, but it doesn’t always work out that way. We broke even, so it wasn’t a total loss. It was a learning experience. Next time, I’d do a lot more research – a lot more – about the climate of the international marketplace, culture, and so on.

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?

JT: We get the most business through client retention and through an awareness we’ve created in the marketplace through speaking engagements, email blasts, white papers, etc. Selling is the smallest piece of the puzzle once you’ve built your brand. You need to have a group of marketing professionals who can create that buzz and then let the people who are working with the client close the deal. Ultimately, the ones who service the client are the ones who will sell the project. It’s a combined effort.

TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?

JT: We continue to expand offerings within our traditional services. Our recent merger with Nelson has led to building a new branding strategy.

TZL: There are A/E leaders who say profit centers create corrosive internal competition for firm resources. What’s your opinion on profit centers?

JT: They’re never perfect, but they’re essential. It’s important to manage segments of the business in manageable components. The downside is that it can be unhealthy if the company’s culture is unhealthy. In my 30 years of dealing with profit centers, we’ve had a reasonably high level of cooperation.

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?

JT: I’ve always believed in open book management. We never lay out the complete details, but we have town hall meetings and review financial data at least once, if not twice a month and also deliver financial information in internal management reports. Everyone has access to the company’s financial information. I believe this knowledge empowers people to perform.

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?

JT: We’re always identifying pay scales and trying to stay up to speed on what the industry is doing as a whole. We work to build an organization that provides maximum opportunities for people to excel through quality work and to advance their careers. This is a company where employees have a voice.

TZL: As you look for talent, what position do you most need to fill in the coming year and why?

JT: We’re in a growth model right now. We recently merged with Nelson, and we’re looking for architects, marketing people, and people just across the spectrum.

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?

JT: Start early. Create an entrepreneurial culture that encourages leaders and feeds successors to take on new responsibilities. An individual will grow as a person and as a professional in this type of culture.

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?

JT: Give them good quality projects. Keep them engaged. If burnout occurs, move them to a different project or group. A variety of work helps to prevent burnout.

TZL: What is the role of entrepreneurship in your firm?

JT: It’s the lifeblood of an organization. It engages professionals to drive the future of the business.

TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?

JT: I can’t really speak to heating up or cooling down, but I do see change. Retail is changing dramatically, work environments are changing dramatically, and so is healthcare. To me, that means we need to start rethinking these spaces and how people operate within them. If I had to pick one area that may be in a slower growth model, it would be education. They have a tough economic model right now.

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?

JT: We measure where business is coming from; referred business; and outreach. We measure our success rate of wins in each segment. You need to win two-thirds of the business to perform.

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?

JT: The best model is a combination. For example, Nelson has a lot of knowledge in the M&A world and we have a lot of knowledge about organic growth. In an ideal world, I would say a good balance is two-thirds organic growth and one-third M&A activity.

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?

JT: We use performance data and track on billable hours. The individual has to meet certain goals. We take building project fees, create billable value, and do a man-hour planning budget which equals the fee. We then determine marketplace tolerance and recalculate as needed.

TZL: What’s your prediction for the rest of 2018?

JT: Nothing really stands out as a warning sign. We might see a changing political climate in 2019 which could influence the business climate a bit, but I remain optimistic and see an opportunistic environment for businesses for at least the next 12 months.

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