The utilization data of A/E/P and environmental firms over the last several years pretty much proves that if you keep everyone overloaded you can’t help but be profitable. That’s easily accomplished in a heated market where demand is greater than supply. It’s not so easy when things go the other way and supply exceeds demand.The latter is a condition that is developing in certain markets served by A/E/P and environmental firms. I believe that you will see a price paid in the form of greatly reduced profits for the firms that serve those markets if they have been relying on being chronically understaffed and keeping everyone extra busy to offset mediocre labor multipliers.So what can you do about it? It’s easy to say fire a bunch of people and get yourself back into a position of being understaffed. Just cut more people than your numbers indicate you should, and you’ll be there. But not so fast! What about the time and money you invested in those people to hire them and train them and let them form relationships with others in the firm? That’s a big investment. I do believe, however, that cutting can be healthy in some circumstances even if it is painful to go through. Usually the cuts aren’t that hard to come up with. Show me firms of 25 or more people that have been around a while and I can assure you they ALL have some dead wood. There seems to be a direct correlation between how long the firm has been in business and how large it is and how much dead weight they are carrying. Older firms and bigger firms have even more of it (dead wood) than younger and smaller firms.It’s also interesting to go through an exercise where you poll your principals on who they see as the rising stars in the company. When we force firms to go through this, we often find out the rising stars are not those who are in the next level down in the firm’s hierarchy— they are instead often way down in the hierarchy and those immediately below principal are made up of people who are stuck and who aren’t going to move up the ladder. When we probe into the “whys” of who is offered up for the “to be fired list” or why those who ostensibly should be on the “rising star list” but aren’t, inevitably there turns out to be some sort of communication skill deficiency or motivational deficiency or some other soft skill deficiency the person has that’s hard to put a finger on. How do these people (those lacking in ALL of the attributes for success in this business) ever get into the company in the first place? They get in when demand for what the firm does exceeds supply. They get in when no one else is identified as a job candidate who has the required design/technical skills/licenses and who also has these other softer skills. They get in when the firm’s principals and managers don’t have a common idea of the type of people that the firm hires and the type the firm would never hire. In short, they get in for a variety of reasons, most within the firm’s control (if the firm wanted to spend some time on this issue).What’s the alternative to spending the time it takes to properly plan for openings, to systematically recruit qualified candidates for all openings in the firm before the needs are critical, and to doing whatever it takes in the hiring process to establish a high degree of confidence that you have someone who ultimately will make it there? I guess it’s hiring and firing as the wave of opportunities to do projects swell and subside. And praying a lot for good luck and that you end up with a staff of high achievers. While I do believe in the power of prayer, I think I’ll opt for good planning! I’d rather hire right and not be forced into frequent layoffs than I would to hire carelessly and cut fast at the first signs of a cloud.Originally published 12/09/2002.
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.
Choosing a selection results in a full page refresh.