It’s Pruning Time!
Jan 27, 2003
You know what? Turnover is not always so bad. Sometimes people just don’t keep up with the firm. There are all kinds of reasons for it. Maybe they got tired. Maybe they got turned off. Maybe they weren’t the right people for the job in the first place. No matter. The bottom line is after the year ends and the holidays are over it’s a good time to think about doing some pruning. And we’re not talking about pruning the trees in your yard— it’s the least productive members of your staff I am talking about! Some people working in A/E/P and environmental firms are clearly excellent in the performance of their duties. Some people are acceptable (even if not outstanding) performers. And some people fail to meet expectations entirely. It is these last two groups where the firm needs to focus its pruning efforts. The difference in high performers and low can be illustrated by the following example. Consider Workgroup “A”. With a team leader or department head and eight additional staffers, this workgroup has an average raw labor rate of $28/hour and an effective multiplier of 3.0 on all work they perform. They are 72% billable. They create an annual income for the firm from their output of 9 people x 2,080 hours x .72 x $84 = $1,132,185. Another way to look at it is $125,798 per employee. Now let’s assume that the firm does not have problems finding work for these people. But by most standards, their utilization (as a group) is low. Perhaps the manager is someone who is so busy managing he or she isn’t working on jobs. Or perhaps the manager is someone who is strictly a 9-to-5 person; therefore no one else works harder than that. Or perhaps the manager is a great doer and quite billable him- or herself but does not hold his/her people to the same standard and many of them are slackers. In any case, someone is not (or some ones are not) doing what they need to do. Let’s look at Workgroup “B”. This group also has a team leader or department manager and eight additional staffers. But this group’s leader is highly motivated. He loves his work. It’s not a chore but instead a way of life. His people feel that they are winners. They love what they do as well and challenge one another to see who can put out the most. The entire team looks for ways to do things faster and better. This workgroup has an average pay rate of $30 per hour. They have an effective multiplier of 3.07 on their work. They are 80% billable. They create an annual income from their output of 9 people x 2,080 hours x .80 x $92.10 = $1,379,290, or $153,254 per employee. The difference between Workgroup “A” and Workgroup “B” in this case is $27,456 per employee per year in income, or $247,108 total annually! And this is just for a single nine-person workgroup! You can argue with me if you want about the numbers in my example, but I can assure you that this kind of difference in performance of similar workgroups inside planning, design, and environmental firms is something we witness everyday. And it can be attributed directly to the people— the leader and the worker bees. And that brings us right back to pruning. If you don’t push yourself and your managers for excellent performance, you will have all kinds of workgroups performing at Workgroup “A” levels when what you really want are workgroups performing at Workgroup “B” levels. Why are you tolerating this mediocrity? How long will you tolerate it? Are you too nice? Are you letting friendships get in the way? Do you have warped ideas about human resources management that say all turnover is bad? Do you want to run a country club or a company that grows and makes profits? Do you really care about the people who are killing themselves trying to make the firm successful, or do you care more about those who say the right things but don’t act the right way? Maybe NOW is the time to finally do something about your marginal or poor performers and take a chance on finding some new, energized, committed, passionate people. Originally published 1/27/03
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.