Killing your profitability

Jun 03, 2015

Highly profitable firms differ from others in 5 main areas; how does your organization stack up?

When you see some A/E and environmental firms making record profits right now – and others still barely breaking even – you have to ask yourself: “Why?” The truth is, there are some MAJOR differences in how highly profitable firms operate, how their people feel, and even how you feel when you walk in their doors, as opposed to the operations and feelings associated with firms that aren’t highly profitable. Here are some of those differences:
  • Highly profitable firms are NOT slaves to conventional wisdom. They don’t constantly look outside their firm to other mediocre-performing firms for management and marketing practices of that they can imitate and implement. They have confidence in their own abilities and instincts and instead only do what is best for their own firm. For example, just because many firms have a 12-to-one staff-to-owner ratio, doesn’t mean they automatically strive to have a 12-to-one staff-to-owner ratio.
  • Highly profitable firms eliminate unnecessary activities. How many times have I written that too many meetings kill productivity and morale? Highly profitable firms get this idea. They know more people involved doesn’t necessarily improve the quality of decision-making. They respect everyone’s time and don’t call meetings for things that don’t require a meeting. Those big marketing meetings to discuss potential projects, for example, are usually a waste of time. Why have them? Ditto for formal performance appraisals. Tell people what they’re doing well and poorly as it happens. And, why review time sheets before entry to the system. These and many other needless activities can be eliminated, and everyone can go back to work.
  • Highly profitably firms have strong leaders who focus on their clients and markets. The less profitable firms focus on internal matters and politics. Every highly profitable firm I see has someone(s) acting like competent leaders. These leaders minimize distractions for their people so everyone can stay on task and focused on what’s really important. In unprofitable firms, ineffective leaders are constantly distracted with some minor problem or side-tracking opportunity or another.
  • Highly profitable firms know their numbers. They have good accounting that quickly closes out the month, cleans out the WIP, bills, and collects, and gives everyone in the firm the information they need to make good decisions for the present situation and the future. The numbers are so incredibly important and the profitable firms have good CFOs and Accountants who “get it” and are valued. The less profitable firms are in a constant state of confusion and debate about what’s working and what isn’t.
  • Highly profitable firms won’t tolerate non-performance from their people. Everyone is productive – moving up – or, if not, moving out. The unprofitable firms have tons of dead weight – most often in the highest levels – that their leaders resolve themselves to carrying until the end of time in the name of “family” or some other nonsense. Highly profitable firms know you are only as good as your weakest link AND that good people absolutely hate being dragged down by duds.
So, where do you stack up? Are you highly profitable and enjoying these high times, feeling good about your future and that of your employees? Or, are you missing out? Maybe it’s time to do things differently. Mark Zweig is president and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com. © Copyright 2015. Zweig Group. All rights reserved.

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.