“Are you making decisions as quickly as you should, or is this a problem that you keep facing over and over again? Just like all problems in this business, there’s always something you can do!”
Whenever you run a business – regardless of what kind it is – being able to make decisions and act on them in a timely manner is crucial to your survival and success. Especially today, when we all work in competitive fields in a rapidly changing business environment.
Yet, my experience after nearly 40 years in the AEC business is that there are a lot of things working against timely decision making. Here are some of them:
- Information. If the information used as gauges for the performance of the business is old, how can you expect to make timely decisions? Yet this is so common. So many firms can’t even produce a timely financial statement for any number of reasons. April’s statement may not be done until July. Even simple things like revenue for the month aren’t known until billing is complete and that can take weeks after the period is over. This is even more critical when it comes to cash flow. If no forecasting is done or the forecasting is so general or done so sporadically or on such a long schedule, the firm may not be aware of a problem until it is unable to meet its commitments. Financials should be done within a week of the period ending. Billing should be forecasted and re-forecasted continuously, and take no more than 48 to 72 hours to get out. Cash flow should be forecasted weekly. Not doing these things in your firm? Expect to be late in your decision making.
- Organization structure. Some firms have organization structures that make timely decision making very difficult. Roles are unclear. There are too many layers of approvals to go through. I have seen 100-person AEC firms with structures that would rival that of General Motors. I have seen firms where only owners or partners can speak with a client. Some companies take all discretion on certain types of decisions away from anyone who isn’t a vice president. These kinds of structures and role definitions are counter forces to timely decision making.
- Governance. One time, I was asking one of our consultants some questions about a new client Zweig Group took on and the role of their CEO. He told me the firm was “run by a board.” Red flags immediately went up in my mind when I heard this. How can a firm make timely decisions if everything has to be discussed by a group of people? How often does this group meet to make decisions? How well does that work? Not to mention what happens when someone in the firm gets a response they don’t like from one member of this board so they go to someone else who gives them a different answer? Confusion abounds. Decision making slows down.
- Culture. There are some firms in this business whose owners pride themselves in never making a quick decision. They think slow decision making is a virtue. They even speak disparagingly about anyone who does make a quick decision, referring to them as “hip shooters.” When this becomes the organization’s culture, you can be sure opportunities will be missed and problems will go unaddressed.
- Specific individuals. Some people just cannot make a decision, and some of these people end up as leaders and managers in AEC firms because they get promoted based on technical competence instead of managerial abilities. When managers always need more information – when they second-guess every recommendation – when they are afraid to disappoint or alienate anyone – they become paralyzed. Critical decisions don’t get made.
So, how does your firm stack up on this issue? Are you making decisions as quickly as you should, or is this a problem that you keep facing over and over again? Just like all problems in this business, there’s always something you can do!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at email@example.com.