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.
Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.
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:
