Fast (and problematic) growth

Apr 15, 2019

If you’re like the rest of us, your firm is busy. But as the projects and revenue pour in, so do plenty of problems that you’ll have to deal with.

We waited 10 years for business to be booming again, and now that it is, most of our problems have gone away, right?

In reality, we just have different problems, and for some firms, more problems. That is because as we grow and add more people, offices, services, clients, and projects, we have so much more complexity to deal with, and potentially more risk. This can lead to a feeling of chaos. Even with a solid infrastructure in place, it can feel like it is broken when everyone is moving 100 miles an hour all the time.

Recent industry financial surveys show that the average firm is growing at 10 percent increase in revenue per year, but profits are leveling off. This is because the cost of salary and benefits are increasing faster than fees.

Most firms have revisited their strategic plans in the last year, recognizing that changes in technology and competition are driving a more strategic and streamlined approach to running a profitable AEC firm. Recent assessments we have conducted with executives of small, medium, and large AEC firms have identified the following three issues as the primary sources of stress, and the biggest constraints to growth:

  1. Difficulty finding and retaining top talent, especially in the mid-range of eight to 15 years’ experience. Being so busy gives prospective AEC professionals more options, driving salaries up and threatening succession plans and client relationships through attrition. This shortage also forces us to settle for less talented staff for more money, which has the potential impact of lowering profit margins over time if jobs take longer to do and fees do not escalate at the same rate as salaries. With more baby boomers expected to retire in the next few years, this problem will continue to be the major issue facing AEC firms’ growth and profits.
  2. Lack of accountability across the organization fueled by the fast addition of new employees, silos, acquisitions, and failure to get the firm’s culture adopted. This causes a great deal of inconsistency in project execution and client service and hinders the leaders’ ability to implement new processes and get employees to use and update data in key enterprise systems. As firms grow, it is essential to put business best practices in place to control quality, reduce risk, ensure safety, and provide consistency essential to ensuring excellent client service and repeat business. Getting employees aligned with these best business practices is a key culture challenge that many firms battle with as they grow.
  3. Lack of leadership and project management competencies to enable growth in business units, offices, and teams. With the fast growth and high backlogs comes the need to be better organized, and implement best practices that ensure high quality. But when everyone is so busy and you are adding new people faster, it is harder to ensure that your project managers and senior leaders have the skills, oversight, and processes in place to ensure their success.

Rather than trying to grow to reach specific revenue or employee targets, you might consider that a better goal is to work towards being the best. This sets the bar high and actually may slow down growth because decisions about hiring and taking on marginal projects will lean towards the side of being more selective.

Being highly selective means that you don’t take projects that are not A+ projects with highly desirable clients and high fees. It also means that you don’t knowingly hire an employee who does not have the potential to be on your “A” team.

Focusing on employee performance, getting great clients and projects, and implementing effective best practices will quickly transform your firm and culture, and take much of the strain off of having to keep up with crappy projects and put up with lower performing staff.

There is a lot to be said for growth if it ends up being successful, profitable and fun. If it only adds additional risk, stress, and problems, then growth in itself is not a good thing for your firm.

Profits, rather than revenues, are a much more effective indicator of success. The top performing or “Top-Tier” firms in the industry have developed strategies based on being better, not bigger. This means elevating the skills, performance, and effectiveness of every employee – not just hiring more of them.

By investing in your team and giving them what they need to be successful, you will increase employee retention, client satisfaction and, ultimately, your bottom line.

June Jewell is the author of the best-selling book Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms. She is president of AEC Business Solutions, helping progressive AEC firm leaders transform their cultures, increase project profits and boost employee performance. Connect with her on LinkedIn and learn more about how to improve your project financial performance at

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.