We’re talking to a lot of company CEOs who aren’t the least bit concerned about the effects a recession would have on their firms because they serve government clients. But my experience is, if the economy softens up and demand slacks off in the private sector, it’s going to make it tougher for every firm, regardless of market specialty. There will be more firms going after less work, and that’s bound to drive fees down for all types of work at some point.Regardless of whether we have a downturn or not, competition in the A/E/P and environmental industry is bound to heat up. This business is just too lucrative. Think about it— the average firm in this business generated a 46.3% pre-tax, pre-bonus return on equity, with fast-growth and high-profit firms generating 59.1% and 87.0% annual returns on equity, respectively! There aren’t many businesses that can claim those kinds of numbers.What it means to me is that new capacity will be added, there will be more competition, and pricing pressures will again be put upon us. But none of this means that any one particular firm has to have problems. You can overcome just about any obstacle the marketplace throws in your way if you get everyone in your company focused on winning. It’s the extra edge, the secret weapon that costs little or nothing, and it’s available to any CEO or president (or other manager) who wants to use it. Here’s how to make it happen:Get your second tier of managers to build a plan and focus on growth. Always have the people who work for you set the goals, but you can give them some guidelines. One of those, as far as I am concerned, should be a certain minimum growth in volume. That makes them think about how they will achieve the growth. Better marketing, better service, new stuff to sell— they all have to be there. It also means that if the market is flat or declining, growth is going to have to come at the expense of a competitor. The planning process gets everyone in the firm to understand just how critical the growth is and where it comes from. Done properly, it will help the team focus on what has to be done to make it happen. And it may make them feel a little more willing to go after the jugular in a selling situation because every sale means more.Promote the achievement of goals and every single victory. We have written many times in The Zweig Letter that every sale should be promoted to all employees, at least those at a certain minimum fee level. For all but the largest firms, this is easy to do. But even in larger companies, it could be done within an office or unit. The point is to give accolades to those who are bringing home the bacon. Make them feel special. Make the selling process and the recognition that comes from being successful addictive. One caution: Be sure to give credit to all those who contributed, but don’t give credit that’s undeserved. I would also show the goals (always quantitative, of course, but that’s the subject of another article) and the percentage achieved graphically. Send this out to everyone. Have the top managers comment on it. Again, use goals and positive feedback to motivate your people.Get your rewards systems in line with what you want. Most companies pay people strictly based on profit (through their incentive schemes). This is not the answer. Sometimes growth is more important. Sometimes just doing something at a break-even point is critical because it allows you to get work that is five times more profitable than your normal margins somewhere else in the firm. Sometimes keeping an old client happy is what’s important right now. Sometimes stealing a potentially huge client away from your toughest competitor is what’s important. You better have ways to take care of people other than paying everyone about the same thing and then giving out a bigger share of a profit-based bonus. This means more raises and radical differences in base pay for certain people with ostensibly the same credentials or responsibilities, ownership or long-term compensation opportunities that not everyone else gets, and again, lots and lots of recognition. Don’t forget participation in key decisions that need to be made (but we tend to overdo this in the A/E/P and environmental consulting professions!).Be a winner yourself. Don’t walk around with a hangdog look on your face. Never be “so-so” when someone asks you how you are. Move fast. Project confidence. Know when you are right, and stick to your guns. Hit your own goals. I think these things are all critical to supporting the culture of winning that you are trying to create in the firm. Nobody wants to work for a loser. Your own behavior as the leader has a great deal to do with the expectations of your staff.An unwavering commitment to being the best at what you do, being number one in your markets, and winning any and all contests that you go into is invaluable in uncertain times. Think about what I am saying and resolve yourself to make it a reality in your firm this year. You can do it!Originally published 1/22/01.
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.
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