Conference call: John Caruso

May 08, 2017

President of Passero Associates (Best Firm #5 Multidiscipline for 2016), an 85-person engineering and architecture firm based in Rochester, New York.

By Liisa Andreassen Correspondent

There’s lots of calculated risk,” Caruso says.

A conversation with John Caruso.

The Zweig Letter: What’s your philosophy on fee/billing and accounts receivable? How do you collect fees from a difficult client?

John Caruso: I like fee/billing and do not like A/R. We try to establish our policies upfront on collections. When it does not work, we resort to an old fashioned sit-down meeting.

TZL: What’s the recipe for creating an effective board?

JC: Communication, accountability, and transparency. All people have different personalities. Some are good communicators and others are not. I have to understand each of them to try to keep our business together and in harmony.

TZL: Is there a secret to effective ownership transition?

JC: Yes. Start early and disclose everything.

TZL: How do you go about winning work?

JC: Bidding and negotiating; some is strategic, some is repeat business or referral.

TZL: What’s the greatest problem to overcome in the proposal process?

JC: Estimating phantom services until you are selected.

TZL: Once you’ve won a contract, what are the “marching orders” for your PMs?

JC: Solid due diligence, understand the schedule, design to client’s budget, and QA/QC.

TZL: How does marketing contribute to your success rate? Are you content with your marketing efforts, or do you think you should increase/decrease marketing?

JC: Marketing is a portfolio of effect. Some efforts are more effective and tactical, and others are less effective and visionary.

TZL: What has your firm done recently to upgrade its IT system?

JC: Execute an annual funded strategic plan with targeted improvements (i.e., video conference).

TZL: What’s the best way to recruit and retain top talent in a tight labor market?

JC: Pay fair wages, offer great benefits, and maintain a great culture. We have also done the following to improve recruitment and retention:

  1. Introduced a new human resource information system that reflects the firm’s commitment to placing key information in the hands of employees 24/7/365 via computer or mobile phone app. Through the implementation of payroll and self-service modules, employees can check their wage statements, request time off, verify PTO balances, review benefits and tax information, and accomplish a variety of other activities. This investment in our people allows them to stay connected and engaged, with easy access to pay and benefit information, and to company policies and procedures.
  2. Improved communication and knowledge sharing within the firm. We introduced a new web-based, discussion forum/bulletin board called, “PA Perspectives.” By sharing postings on events, our people, project news, new technologies, and other topics, we stay better connected as “One Firm.” It’s a great way to spread news throughout our company, share knowledge, and hold discussions.
  3. Introduced a 401(k) Safe Harbor Plan for the benefit of staff. Under the enhanced plan, the firm places 3 percent of each staff members’ salary in a 401(k) plan, without any match requirements. Our former 401(k) plan had matching requirements. The new Safe Harbor Plan will help staff at all levels, and stages in their career, to save for retirement without added restrictions.
  4. Introduced a technology committee, as part of our strategic plan, to identify, evaluate, and implement new technology that will allow us to better serve our clients and offer enhanced deliverables. The committee’s charge includes replacement of old technologies with new, leading-edge systems. The committee researches advanced and emerging technologies such as drones/video promotion, tablets, and 3-D laser scanners. They also search out advances in 3-D-modeling, reprographic, and communication technologies.
  5. Developed a PA Leadership Program that addresses key topics that fuel the growth of emerging leaders: leadership, behavioral analysis, marketing/business development/customer relations, giving/receiving feedback, critical behavior, interviewing (recruitment), firm governance, and financial metrics, to name a few.
  6. Recognized in 2017 with a philanthropy award given by the Association of Fundraising Professionals, in recognition of Passero’s long-standing commitment to giving back 10 percent of our company’s annual profits to charity, and for active involvement in service to not-for-profit organizations throughout all our office locations.

TZL: What’s the key benefit you give to your employees? Flexible schedule, incentive compensation, 401(k), etc.?

JC: We have flex schedule, 401(k), and two peer-based rewards systems.

  • Thumbs up. This award program allows colleagues to recognize one another with a well-deserved “thank you” for areas of extra effort. In 2016, a record 188 “Thumbs Up” nominations were submitted, recognizing 62 members of our staff, who received gift cards.
  • Cornerstone award program. This award program allows colleagues to recognize one another for exceptional performance and contributions around one or more of our company’s “Four Cornerstones” – Best People, Fulfilling Work Environment, Growth and Profitability, and Exceptional Client Service and Outstanding Results. Cash awards ranging from $100 to $3,000 are awarded to staff as a result of peer recommendations.

TZL: How do you raise capital?

JC: Not applicable; we are privately held.

TZL: What’s your preferred strategy for growth, M&A or organic? Give us a synopsis of how your firm effected growth in the recent past.

JC: We have had no M&A yet, but our organic growth has been from returning employees with new clients and/or old clients that move to new geographic areas and ask us to follow.

TZL: What’s the greatest challenge presented by growth?

JC: Distance, clear communications, and accountability.

TZL: What’s your prediction for 2017 and for the next five years?

JC: Good growth, 2 to 5 percent; five years, 3 to 5 percent. I’m a trend follower. I read and attend both local and regional events that discuss our economy. There’s lots of calculated risk.

About Zweig Group

Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.