President of OHM Advisors (Hot Firm #25 for 2017), a 440-person engineering and architecture firm based in Michigan.
By Liisa Andreassen Correspondent
“Many firms tried to cut their way to success,” says Hiltz, looking back at the Great Recession. “We were fortunate and pushed for growth during the worst of times. I think the decision to focus on maintaining our team during difficult times truly paid off.”
A CONVERSATION WITH JOHN HILTZ.
The Zweig Letter: 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?
John Hiltz: Although I would like to say this never happens, this is a definite reality that we’ve all experienced. There’s always the temptation to overload the star performers. That said, we have taken the time to step back and better define job duties and responsibilities for all of our roles, including our PMs. Additionally, as we have grown, we’re finding that we need to shepherd individuals to let go of roles that no longer bring the greatest corporate contribution. We’ve found that the PM role is much more manageable when not combined with a department director and/or a BD role.
TZL: What is the role of entrepreneurship in your firm?
JH: Cultivating a spirit of innovative thinking and creation of new opportunities is a core focus of the firm, so we continue to foster a culture that encourages and rewards this behavior. Interestingly, our Environmental Water Resources Group – one of our largest disciplines in the firm today – was formed as a direct result of a small group of individuals who embraced this entrepreneurial spirit. They saw an unfilled client need and started offering new services to our clients. Today, the services we offer through this team are truly a differentiator for OHM Advisors. Innovating thinking and entrepreneurship is not only a passion we need to feed, but also, the results bring great value to our clients.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
JH: For public sector work, my hope is that strong infrastructure funding will accelerate the markets we serve and carry the day for years to come. I’m not overly optimistic that infrastructure legislation will be passed soon in Washington, but hopefully I’ll be pleasantly surprised. More than likely, we will see growth in our public infrastructure spending combined with a far stronger public/private collaboration. In terms of other segments that we expect to perform well, the energy sector seems to be hot, and I’d expect it to remain hot despite growing competition in this space. Private development has historically been the first to be hit when the economy takes a downturn, and we expect that to remain true.
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?
JH: We spent close to a year creating a discernible path to leadership for every position in the firm, ensuring that every employee understands what is required to advance to a leadership role. Our internal education infrastructure supports ongoing and specific leadership education for multiple career paths and interests. We are focused on empowering our next generation to make decisions, and we’ve created committees designed to allow aspiring leaders the opportunity to engage in corporate management.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
JH: We’re fortunate to have strong growth across our organization. We’re looking for all types of talent – but experienced PMs, practice leaders, and technical experts are the most significant roles we need to fill currently. Additionally, our leadership team strongly believes that a diverse workforce is essential to best serving our clients, and we’ve put initiatives in place to continue to attract and retain diverse talent. We’re particularly aware of the industry-wide need for more women and minorities in senior leadership roles and are creating programs to foster growth of this talent within OHM Advisors.
TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that haven’t taken steps to identify and empower the next generation of owners?
JH: Several years ago, we identified that our future ownership transition needed to be staggered to minimize volatility while also encouraging the next generation to come to the ownership table. Identifying and empowering the next generation of owners is critical, and we’re fortunate to have 36 partners, all at various stages of their careers. We recommend that firms continually train and develop the next generation of talent, and in doing so, they strengthen their firms and reduce the volatility around ownership transitions.
TZL: Monthly happy hours and dog friendly offices. What do today’s CEOs need to know about today’s workforce?
JH: We’ve worked hard at being a “cool place to work” for some time now. We’ve embraced a more casual dress code, improved our physical environment, offered flexible work hours, and targeted events and wellness to name a few. But, what I believe people in today’s workforce really want is to be a part of something they’re passionate about that brings value to the greater good. When they feel engaged and energized in this way, they seek out opportunities to contribute. We’ve built our firm’s mission around the idea that our team members truly aim to make a difference for the clients and communities they serve. Compliment this with an open door management philosophy and encourage people at all levels of the organization to bring forward ideas that challenge the status quo and then be willing to change. No matter how successful we’ve been, we can always get better.
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?
JH: OHM Advisors has always had a “doer-seller” culture, so there hasn’t been a major shift in our business development efforts. Our practice leaders, who understand the industry and live it every day, are in the field making connections. For years, we’ve had marketing and tech staff working collaboratively on proposals and other BD opportunities. We have long realized that prospective clients want to work with the technical talent, not a sales team.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
JH: Some years ago, we recognized that our passion and our mission was “advancing communities” – not simply engineering and surveying. We also realized that there were services that our clients needed which we weren’t offering, but which fit with our firm’s mission. Because we believe that taking a holistic approach to problem solving brings far more value to our clients than offering only a piece of the solution, we made the decision about eight years ago to significantly diversify our services through adding architecture, planning, landscape architecture, and urban design. Today, we have 12 different service disciplines across 13 different geographies. We continue to add new services and geographic locations whenever the opportunity fits with both our clients’ needs and our passion to deliver a superior result.
TZL: With overhead rates declining over the last five years and utilization rates slowly climbing back up to prerecession levels, how do you deal with time management policies for your project teams? Is it different for different clients?
JH: With all of our clients, we need to hit deadlines and ensure our staff’s availability to meet their needs. We strive to be flexible to our clients’ changing needs while also allowing our staff the flexibility to create a work/life balance that best suits them. We provide our staff with personal utilization and performance goals, but we’re flexible in how they achieve these. We’re fortunate that our team members in client-facing and support roles are very dedicated to doing what it takes to serve our clients, and allowing them the ability to self-manage their time, provided that it fits within the overall project tolerances. This has been a well-received solution for our workforce.
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?
JH: As a business owner, I like metrics, and we’re always trying to measure the effectiveness of our efforts. Some of the marketing metrics we track include hit rate for proposals (by discipline and geography) and a collection of website and digital metrics that help us understand who is visiting our site, how they’re arriving there and what content they find helpful and engaging. While these metrics are indicators that we’re on the right track, ultimately the true measure will be whether we drive the increased revenue we set out to achieve.
TZL: The last few years have been good for the A/E industry. Is there a downturn in the forecast, and if so, when and to what severity?
JH: Even the best economists aren’t great at answering this question, and unfortunately we haven’t received a crystal ball yet. Statistically, we’re due for a recession. However, we don’t expect one in the next 12 months based on economic indicators we’ve reviewed. Our best efforts are therefore put into watching leading indicators and ensuring our managers are prepared to respond.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
JH: I took over as president in January 2009 after serving as VP of operations for a number of years. Up until 2010, our firm had accumulated so many successes that I thought to myself, “This job is easy.” What I didn’t recognize was how much the stimulus dollars introduced by the Obama administration did for us. Once 2010 hit and the stimulus dollars were behind us, reality set in fast. While 2010 and 2011 were tough years and we were fortunate not to be hit nearly as hard as many other firms, I learned that the job is a lot tougher than you think. You need to be willing and able to make some tough, timely decisions, and you only succeed as a team. Many firms tried to cut their way to success. We were fortunate and pushed for growth during the worst of times. I think the decision to focus on maintaining our team during difficult times truly paid off.
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?
JH: For OHM Advisors, growth is all about recruitment and retention. To date, we’ve grown organically as well as through M&A. We’ve experienced strong organic growth by adding new services that solved a need for our clients, and we were successfully able to cross sell those new services. While organic growth has outpaced growth through M&A, we believe that M&A is critical to successfully enter new geographical markets. Through M&As, we’ve brought on new talent and added services that delivered additional value to our clients, and we benefited from the post-M&A organic growth in these new geographies. For our technical experts, M&As have created an entire new base of clients that they can serve. Overall, we expect that M&A and organic growth will both continue to play important roles in our growth strategy.
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?
JH: Our team uses historical performance data as just one of its methods to establish a project fee. Too often, however, the unique aspects of a project or the introduction of new, innovative solutions prevents this from being entirely what we rely on to establish a fee. We encourage back-checking the accuracy of the historical data with projected hourly and percent of construction estimates. Although we’d prefer to establish lump sum type fees, this is not always possible, so project managers are taught to look at project fees from many different angles. If any of the client’s demands are particularly unique, we aim to ensure that the fee covers the risk exposure.
TZL: What’s your prediction for 2018?
JH: Another strong year of growth for our industry. We expect increased client and public attention to needed infrastructure improvements. We’d love to see an infrastructure bill pass in Congress this year. We expect to see continued growth in alternative funding for infrastructure projects, which will further create strength in the industry. Oh, and as a Lions fan – and a realist – I predict the Lions will not win Super Bowl LIII. I hope I’m wrong.
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