By Mark C. Zweig
We have come a long way in the A/E/P business over the last 30 years. Not only is it OK to market to clients, we even have computers on every desk and auto attendants to answer the phone when the receptionist isn’t there.
While these things may sound “normal” to our younger readers, they were subjects of great debate in A/E/P and environmental firms at one time.
But there are still some other archaic management practices in our business that refuse to die— but need to. Here are a few of them:
1) No open book. With all the research out there on this subject, it’s hard for me to understand why every firm does not share its numbers with employees. The more familiar people are with the gauges that reflect the firm’s performance, the better. Open book firms grow faster and are more profitable. Trust your people have the capacity to understand the numbers and share them.
2) Annual bonus. The majority of firms (over 90%) pay bonuses (or potentially pay bonuses) once a year. Why not more often? This is too long to wait if you really want firm performance linked to pay. Monthly or quarterly bonuses are so much better.
3) Salary tied to performance appraisal. Tying pay to job performance as indicated by the formal performance appraisal seems to make sense on the surface. But in practice it’s quite a different story. Doing this pretty much ruins any discussion about performance with the employee. All they care about is whether or not they are getting a decent raise, not what your criticisms are of their performance. Also, there are many factors that go into pay. Scarcity of talent, how critical a specific individual is to the firm, longevity with the firm, ownership status, subjective factors, etc., all can impact pay and cannot be ignored.
4) Book value stock sales. Why firms still use book value for internal valuation is beyond me. I don’t see how it makes any sense to value a firm on its assets minus liabilities when its real value lies in its future earnings stream, its brand and name recognition, and its people. Not to mention the fact that book value for internal stock sales encourages your owners to strip profits every year. Who wants to leave a dollar in the till today just so you can get a dollar back in 20 years? Makes no sense at all.
5) Mass brochure mailing. Why do firms send out brochures with no call to action? I have heard more than once from a firm when I suggested a postcard series or design bulletin series that they would rather do “one good piece” and send that out instead of having a multi-pronged, direct-mail campaign. This just does not work! It would be like Coca-Cola saying that they won’t waste their time with all those little commercials and instead buy all ads on the Superbowl once a year. Won’t work too well. Learn from other industries that know how to market!
6) Timesheet sign-off. Huge waste of time. Do you really think your managers know how much accumulated vacation their people have? Or do department heads really understand what Sue did on PM Joe’s project for four hours that week? Nothing happens with this process other than time wasted. Send the timesheets directly to accounting and review reports later to make changes if needed.
7) All internal BOD. Not having any outsiders on the BOD is normal for firms in the A/E/P and environmental business. But it makes no sense! How can the BOD hold the CEO accountable for firm performance when that very CEO is most likely their boss on a daily basis? It’s impossible. Outside directors are one of the ways you can bring in the expertise and marketplace connections you need and could not attract or afford on a full-time basis at a super-low price.
8) No smartphones for ALL employees. It is hard to believe that in 2011, there is still resistance to this idea. The IT people tell you it’s too much trouble. The bean counters tell you it’s too expensive. But they are both wrong. If giving a smartphone with e-mail on it to everyone costs you $150/month per employee and your average billing rate is $85/hour, you will make the cost back in less than two hours a month.
I could go on and easily come up with a list three times this size but I am out of space. The bottom line is that we have come a long way in this business but still have a long way to go. More movement into our business from others outside this industry is needed. We’re too inbred.
Editorial: Not-so-great management practices that won’t die
Mar 30, 2011
By Mark C. Zweig
We have come a long way in the A/E/P business over the last 30 years. Not only is it OK to market to clients, we even have computers on every desk and auto attendants to answer the phone when the receptionist isn’t there.
While these things may sound “normal” to our younger readers, they were subjects of great debate in A/E/P and environmental firms at one time.
But there are still some other archaic management practices in our business that refuse to die— but need to. Here are a few of them:
1) No open book. With all the research out there on this subject, it’s hard for me to understand why every firm does not share its numbers with employees. The more familiar people are with the gauges that reflect the firm’s performance, the better. Open book firms grow faster and are more profitable. Trust your people have the capacity to understand the numbers and share them.
2) Annual bonus. The majority of firms (over 90%) pay bonuses (or potentially pay bonuses) once a year. Why not more often? This is too long to wait if you really want firm performance linked to pay. Monthly or quarterly bonuses are so much better.
3) Salary tied to performance appraisal. Tying pay to job performance as indicated by the formal performance appraisal seems to make sense on the surface. But in practice it’s quite a different story. Doing this pretty much ruins any discussion about performance with the employee. All they care about is whether or not they are getting a decent raise, not what your criticisms are of their performance. Also, there are many factors that go into pay. Scarcity of talent, how critical a specific individual is to the firm, longevity with the firm, ownership status, subjective factors, etc., all can impact pay and cannot be ignored.
4) Book value stock sales. Why firms still use book value for internal valuation is beyond me. I don’t see how it makes any sense to value a firm on its assets minus liabilities when its real value lies in its future earnings stream, its brand and name recognition, and its people. Not to mention the fact that book value for internal stock sales encourages your owners to strip profits every year. Who wants to leave a dollar in the till today just so you can get a dollar back in 20 years? Makes no sense at all.
5) Mass brochure mailing. Why do firms send out brochures with no call to action? I have heard more than once from a firm when I suggested a postcard series or design bulletin series that they would rather do “one good piece” and send that out instead of having a multi-pronged, direct-mail campaign. This just does not work! It would be like Coca-Cola saying that they won’t waste their time with all those little commercials and instead buy all ads on the Superbowl once a year. Won’t work too well. Learn from other industries that know how to market!
6) Timesheet sign-off. Huge waste of time. Do you really think your managers know how much accumulated vacation their people have? Or do department heads really understand what Sue did on PM Joe’s project for four hours that week? Nothing happens with this process other than time wasted. Send the timesheets directly to accounting and review reports later to make changes if needed.
7) All internal BOD. Not having any outsiders on the BOD is normal for firms in the A/E/P and environmental business. But it makes no sense! How can the BOD hold the CEO accountable for firm performance when that very CEO is most likely their boss on a daily basis? It’s impossible. Outside directors are one of the ways you can bring in the expertise and marketplace connections you need and could not attract or afford on a full-time basis at a super-low price.
8) No smartphones for ALL employees. It is hard to believe that in 2011, there is still resistance to this idea. The IT people tell you it’s too much trouble. The bean counters tell you it’s too expensive. But they are both wrong. If giving a smartphone with e-mail on it to everyone costs you $150/month per employee and your average billing rate is $85/hour, you will make the cost back in less than two hours a month.
I could go on and easily come up with a list three times this size but I am out of space. The bottom line is that we have come a long way in this business but still have a long way to go. More movement into our business from others outside this industry is needed. We’re too inbred.
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.