Creating Firm-Oriented People

Aug 16, 1999

If you want to build an A/E/P or environmental consulting firm that has lasting, sustainable value, this is where it is at: You have to get your primary revenue producers to see the forest instead of the trees. While doing profitable projects is important, having a profitable firm is even more important. And no matter what all of the one-person firm management “experts” tell you, you cannot assume that profitable jobs will always result in a profitable firm, especially over the long haul. Here are some things that you need to take a hard look at it if you believe there’s merit to getting everyone on the same team: Business planning. Solicit staff input on what the big issues are that need to be addressed. Get broad group involvement in areas such as quantitative goal setting for the coming year and have widespread staff participation in establishing the task list of “to-do” items for implementation. But most important, make the annual business planning communication something that will rally everyone around the company flag. Have a big event— combine it with your holiday party or open house. Put the plan in writing and give it to every employee. Make sure that new employees get a copy of it when they start work. And make the mission a real one, something simple that you can use in internal and external communications. Make it something that gets people excited. A good example of this kind of mission is one recently adopted by Horton-Lees Lighting Design, Inc. (New York, NY): “We believe in the power of light.” Neat. And it’s something that rallies everyone and excites them about what the firm does for a living. Incentive compensation. If you want everyone to be on the same team, why pay one group more or less based on how it does compared to the others? I know this is one of the basic tenets of incentive-based compensation— paying for performance. But do you really want to pay for performance in one area or pay for performance as an organization? Which best suits your interests in building a sustainable company? I say it’s the latter. I would encourage you to reduce the complexity of your incentive scheme and pay out the bulk— if not the entirety— of your bonus awards based on company performance. You can recognize individual performance through salaries and promotions. But you can get everyone focused on overall company profits and growth by tying incentive compensation and owner distributions to firm profits and by tying stock value, at least in part, to revenue growth. Contrast this with pitting the Bakersfield office against the Tupelo office and paying each based on how it did on its own. Accounting. People will respond to what you measure. Again, in the interests of getting all of the people focusing on all of the firm, I would suggest that firm measures of profits, backlog, and efficiency be the numbers that are collected, distributed, and talked about—most of the time. I’m not saying you don’t ever want to get into the details to diagnose problems. But if you always provide details and don’t emphasize consolidated data, then your employees will tend to think of their own little areas and how they are doing as all that’s important. If you want the people to think about the firm, then don’t keep focusing on how architecture is doing versus site development. Use data on individual performance to maintain a culture that says you better perform as an individual and use data on firm performance to keep everyone thinking that it’s really how the firm does that matters, not just their area. As we all know, different geographic locations or different disciplines or even different market sectors are hot at times and not at others. But that doesn’t mean the greater good is not served many times by staying in these businesses because they can provide balance in volatile times. If you only push what’s profitable or what’s making the most money right now, my guess is that you’ll end up being out of step with the market at some point in the future due to your inability to invest. Getting everyone focused on the firm is a real challenge. It takes a balancing act to be able to adequately reward those folks who constantly beat the norms and yet keep in perspective that there’s strength in numbers and diversity. One way to look at it is this— are you better off having a 25-person firm that makes a 25% profit or a 250-person firm that makes a 10% profit? The answer lies in how long it takes to get there. If you can grow quickly and maintain a decent profitability, the value of your investment in the company will rapidly outstrip what you can extract from it annually as a much smaller enterprise. Therefore, you need to do what it takes to make it grow— not just pay lip service to that idea. Plus, life is easier when everyone cooperates! Originally published 8/16/1999

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Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.