As you get your A/E/P or environmental firm ready for 2003, you may be patting yourselves on the back. The fact is that while overall, 2002 was not as good as 2001, a lot of firms still had a darn good year. As a group of companies, the best A/E/P and environmental firms are moving ahead and advancing the state of management for our industry. We are learning and getting better every day. The firms that are doing things right are only going to do better in a bad market. The question is, “Do you really know why your firm does well?” No firm’s success is entirely market dependent. Even in the best market there are firms that are much more successful than others. In any event, it’s important to know why you have been successful. If it’s under your control, you want to be sure to preserve whatever elements of your culture or processes that help you make money. If you don’t know what these are, you may find that despite having good intentions, you could inadvertently mess things up.For example, one firm may be incredibly successful because it has great margins. Its specialization and name brand in the markets it focuses in allows it to get effective multipliers on raw labor of 4.0 or 4.5 or even higher in some cases. The key to its success is great pricing and a niche market. It is not great project management, however, because if you dig into that you will find that it may be very inefficient. On the other hand, perhaps it is this inefficiency that leads to its success in some ways. Being able to design and redesign something many times over may cost a lot when you look at the budget, but it may be the reason the firm has such a high level of repeat business with clients who pay its high prices. But can you imagine if this firm took this approach when working with clients who won’t pay high prices…ones that don’t see the value in this company’s specialization? It would be disastrous. It would lose money on every job. It needs to be very conscious of this when exploring alternative services and markets.Another firm may be incredibly successful because its employees work really hard. Its labor multipliers could be weak, but the employees work so hard it doesn’t matter. At the end of the day (or should I say “at the beginning of the next day?”), its bottom line is fat anyway because they work hard. There are a lot of companies out there like this. Until you plot out all of their numbers you just don’t realize that the reason they are so successful is there isn’t any fat, everyone works, and everyone works a lot of hours. This is a fine formula as long as the demand is there. Even if it’s not, this formula can bring great performance to the company if, and only if, the company moves quickly to adjust staff to workload if workload drops. That’s hard for firms in this business. We just aren’t that merciless when it comes to our people. Firms that are successful because they work hard better be conscious of how detrimental any requests for extra work can be to morale, how much their employees despise meetings, and how easily the wrong person could quickly get burned out working in that environment. Yet another firm may be incredibly successful because they have star power. This company has big backlogs and gets good fees because it has one or more “stars” that clients will clamor to hire. This can be great as the right star will bring in a lot of work to the firm. Of course, stars require a lot of care and feeding. They want high rewards and they need attention. Sometimes keeping their light shining consumes everything else around them. Firms that are star-dependent better know that’s why they are successful because if they start trying to institutionalize their success in an effort to please their non-star employees and get more socialistic in terms of rewards and credit they may snuff out the very star that got them where they are. There is much to be learned from thoughtful introspection, be it about your company or yourself.Originally published 12/16/2002
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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