CEO of ATI (Hot Firm #43 for 2018), a California firm rooted in philanthropy, and with a bright future on the horizon.
By Liisa Andreassen Correspondent
“One of the greatest programs that we have put in place for our most senior leaders that are nearing retirement is a program to work on an ever-decreasing schedule until a comfortable point is reached for them to retire,” DiDonato says.
A CONVERSATION WITH PAUL DIDONATO.
The Zweig Letter: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
Paul DiDonato: There’s always an exciting hum of activity here as we strive to maintain the best environment for our employees to create and work in. We are dedicated to life-long learning, work-life balance, and building a strong team. Last year, we doubled our Sacramento office space to accommodate our expanding staff. We also recently expanded our leadership team with the promotion of three principals and three associates.
Additionally, we offer benefits such as professional membership reimbursement, tuition reimbursement, various development programs, community and charitable outreach opportunities, and more. Finally, we embrace a complete transparent work environment. We regularly update our staff on company progress, risks, opportunities, finances, and more. We believe that this promotes trust which is paramount to success.
TZL: Internal transition is expensive. How do you “sell” this investment opportunity to your next generation of principals? How do you prepare them for the next step?
PD: Preparing the next generation of leaders has been a key element of ATI’s ongoing succession planning initiatives. Through this process, we developed a direct line of succession for all of the senior leadership nearing retirement age and established a springboard for younger staff to reach more senior positions within ATI.
Our leadership team includes managing principals, senior principals, principals, senior associates, and associates. Each year, the leadership team goes through a nomination process to add additional eligible employees who are evaluated against a highly defined criterion to determine who is eligible to become a company associate. Nominees are then voted upon and final determination is made by ATI’s senior leadership team. Once an employee becomes an associate, they are placed on a Leadership Board with collateral responsibilities for various strategic action plans and other company-wide improvement initiatives. Regular reports are first presented to the senior leadership team and then to the entire company. This has been a great way to challenge junior staff to reach new goals for themselves through professional and personal growth.
TZL: Do you tie compensation to performance for your top leaders?
PD: Yes. We have multiple business units with profit and loss responsibility. Each unit is operated by a managing principal with subordinate principals, associates, and project managers. Each managing principal is accountable for the success of their unit and is compensated accordingly. They’re also responsible for the management of their team’s compensation, including salaries, bonuses, and other perks that are directly tied to the success of those units.
TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your professional life?
PD: Nearly 30 years ago, I was a founding principal of ATI. I will carry those memories with me forever. The best of those memories are commemorated and shared with the ATI’s team as folklore. I’ve also experienced the survival of two major recessions: 2001 and 2008. Recovery from the Great Recession has been the most remarkable and has resulted in the most memorable. That recovery resulted in a tipping point for us by creating space to recruit the greatest team of individuals in the history of ATI, across all three California offices, and has allowed me to shift my energies to the fun part or our business – spending more time with clients, pursuing strategic opportunities, and mentoring.
There have been many hallmarks in my career, but the most rewarding was the successful acquisition of ATI by AC Martin Group, a 113-year-old, renowned Los Angeles firm. The honor of being valued by such a prestigious firm and team of people simply reinforces the incredible success we had in building a multi-discipline, multi-office enterprise. With the acquisition, we now have the capability of leveraging a staff of more than 200 employees with expertise in multiple markets. Most importantly, the acquisition has further energized the entire ATI team with the prospects of securing larger, more pre-eminent projects.
TZL: Describe the challenges you encountered in building your management team over the lifetime of your leadership? Have you ever terminated or demoted long-time leaders as the firm grew? How did you handle it?
PD: A truism for the AEC industry is that not all great practitioners have the full breadth of skills needed to successfully run portions of the enterprise. Our profession has a natural progression to a point where each teammate is faced with the decision to become the ultimate practitioner or move into management. Over the years, we’ve seen many of our staff choose one path only to find they would have been happier with an alternate route. When that happens, we’ve helped some move from management into their areas of expertise where they can be most fulfilled and, in other cases, we helped some exit gracefully. Those who haven’t recognized their mistake in choice and continued to underperform have been exited.
Leaders of companies must know when a management level employee is contributing in all aspects of their job responsibilities and be able to make the right and sometimes difficult decisions to make changes as needed. One of the greatest programs that we have put in place for our most senior leaders that are nearing retirement is a program to work on an ever-decreasing schedule until a comfortable point is reached for them to retire.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
PD: Leading with integrity, trust, and confidence.
TZL: What happens to the firm if you leave tomorrow?
PD: It has taken me decades of trial-and-error to create a company that is self-sufficient. This is partially due to the amazing transformation of ATI’s leadership structure since May 2013. The beginning of ATI’s senior leadership transition began when I became the single majority shareholder and its new CEO. Since then, the company has repositioned itself to achieve greater market share growth with improved profitability.
We have worked tremendously on the leadership and execution team, strengthening it with a broader level of ownership by minority shareholders. Additionally, an extraordinary investment took place in retaining key employees, recruiting and developing a stronger execution team, strengthening ATI’s brand in its primary business and geographic sectors, and continuing development of ATI’s superior reputation. Without me, I’m confident in our team’s ability to continue its strategic pursuits and long-term viability.
TZL: If the worker shortage continues, do you see wages increasing to encourage more talent to enter the AEC space, or will technology be used to counter the reduced workforce?
PD: We do see pressures on salary increases. We also see technology as a key to higher productivity which has resulted in higher revenue per employee. Revenue per employee has doubled in the last 15 years, in fact, more than doubled while working relatively normal working hours. We believe that compensation, while important, is not as important as retaining the best and most talented. At ATI, we work on team quality, work and challenges provided, weekly ongoing mentoring and training, and quality staff supervision. These are all hallmarks of retention.
With regard to compensation, the market is very competitive, but we are not of the mindset that more money results in better candidates. We use several salary guides, including Zweig Group’s salary and compensation surveys, to determine the market rate and also take into account standard of living cost increases in our office regions.
To ensure a proper fit for the company, we engage a large number of participants in interviewing candidates and use personality profiles to assist in the decision-making process. This provides certain assurances that the new hire is in alignment with ATI’s culture and expectations. In addition, in times of short-term support needs, we use our wide range of part-time consultants and staffing agencies for outsourced services. This has been an effective way for our team to monitor short- and long-term backlog against company-wide staff capacity, so that we can assess what our staffing needs will be months in advance and assure that our recruitment is in alignment with the timing of hires. With an eye toward the future, we are constantly evaluating practices, hiring trends, and the latest technology to determine if they are a good fit for ATI.
TZL: There is no substitute for experience, but there is pressure to give responsibility to younger staff. What are you doing to address the risk while pursuing the opportunity to develop your team?
PD: In short, baby steps. We mentor our younger staff by providing them an opportunity to get experience, develop their client management and presentation skills, and take calculated risks. Each step of the way, our supervisors and their colleagues are there to provide support and mentor along the way.
TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program?
PD: We follow the seller-doer model because it’s proven to be effective in our firm. We’ve learned this the hard way over the years. We grew from a business-oriented practice and then transitioned to a practice-oriented business. Success in this delivery has been the development of a project management model that overlays the seller-doer team. When deployed effectively, our seller-doers have full accountability to meet the commitments made to clients during the selling process.
We also employ a disciplined approach of PEER review, cross discipline review, and Principal level Technical Quality Review. Providing an unmatched client experience requires that we deliver what we promise – and do it well. This model becomes even more important as we grow and expand our staff. Involving everyone in the company to become “partners” with our clients is not just lip service. Each person plays a vital role in developing a strong, long lasting relationship, even if that interaction is minimal.