This week, I thought I’d dedicate my column to answering some of the recurring questions we are asked about the A/E/P and environmental consulting industry. Here goes:Should salaried people be paid for overtime? I don’t think so. I believe this encourages a blue collar work ethic— e.g., “I only do what I get paid to do.” I also believe that the most successful firms routinely get more than 40 hours of work per week from their salaried people because their people enjoy being there and feel they will be rewarded for their effort in the long term. This type of culture is required if a firm is to be profitable over the long haul in this industry. Will mid-sized firms become a thing of the past? No. There will always be small firms, large firms, and mid-sized firms. Most large companies that didn’t get where they are by being acquired were at some point in their evolution a mid-sized firm, and I see no reason why this won’t be the case in the future. I do believe, however, that if the term “mid-sized” really refers to a generalist firm that does everything for everyone in a geographic area, then they will go by the wayside. But in reality, generalists can be small, mid-sized, or large— size has nothing to do with it. Which works better: technical seller-doer-closers, or business development people? Neither. I believe that clients, for the most part, want to deal with someone who understands their problem and who can help solve it. That eliminates most sales people, unless all we are talking about is price and speed of delivery. Sales people can be effective in very mature or declining service areas such as low-end environmental or lab work. They don’t do so well selling complex, multi-discipline design projects. On the other hand, technical people are most often lousy cold-callers. They close well, but they don’t initiate. My marketing theory is that if a firm does all within its power to really position itself as a leader in the market sectors it chooses to focus on, the leads will come in and the technical people will close. In lieu of the positioning-type marketing approach, sales people will be needed to drum up leads, and technical people will have to close.Who puts out the best project cost accounting software? This is a toughie. Many are good but they all have weaknesses. Big firms tend to be on Harper and Shuman or BST, small firms on Sema4, Wind-2 or Timberline. Environmental firms that do a lot of government work are often on Deltek. The problem with using any of these packages lies in the start-up and support. Most companies don’t make good decisions on the front end about what they will track, how profit centers will be set up, and so on. They delegate this stuff to the wrong people who really don’t understand the firm’s big-picture strategy or how the information will be used. Too much data is tracked and the critical information is lost in the confusion. Also, these systems usually have problems with the hardware and network configuration, which are not really the domain of the software providers. And if these two issues are not dealt with effectively, it leads to an unsuccessful implementation of the software. What markets are hot? Vertical facilities such as schools, prisons, office buildings, multi-family housing, and hotels are hot. Health care and retail are a little slower. Anything to do with recreation or entertainment is hot. Transportation is hot, though the capacity of providers to that sector has risen greatly in the past five years. Multi-site development for private clients is hot. Water/wastewater is big, but not growing a lot. Most environmental markets are slower.What regions are hot? Most everywhere is doing well. For example, here in Massachusetts we have an unemployment rate in the 3% range, with the western suburbs where we live in the 2% range. Texas, Florida, Arizona, Nevada, and Washington state are really hot. California still lags the rest of the country, particularly the LA area, but it will be back. What business books should I read? None of them (unless we publish it, of course!). Most of what’s out there today seem trendy to me. It’s TQM this week, ISO 9000 last week, management by wandering around the week before, and getting close to the customer the week before that. None of this stuff lasts. All the books devoted to Japanese management are a good case in point: our economy is killing theirs today, yet for the past 20 years we put them on a pedestal. I try to avoid reading all this stuff because I don’t want it to pollute my perspective, which is based on working with firms in this industry as a consultant and seeing what’s really working and what isn’t working, management-wise.What should the requirements be for new shareholders? There probably shouldn’t be any requirements other than that these are the people you want to keep. That means to me that potentially any employee could be an owner in the firm. We still tend to get ownership and management far too confused in our industry, particularly in smaller firms. Ownership should be a good investment, and everyone, owner or not, should be held accountable for doing their job. And no one— not even the CEO— should have a job for life (unless he or she owns the company in its entirety). What are some quick ways to raise morale and boost productivity that firms are actually using? Giving everyone summary financial data is always good— it educates the people and makes them feel that management treats them with respect. Providing free food and drink is another way to get more hours out of people, especially the younger folks. In-house exercise facilities are appreciated. Making sure that everyone can see natural light from their desk is something that I am convinced is far more important to productivity and morale than most people realize.What’s the best organization structure for a firm in our business? Don’t organize around disciplines and don’t organize around geography. Organize around market sectors or client types. Why? That’s what clients want from their service providers. They are hiring firms based on how well they understand their business. Instead of just trying to sell yourself as experts in the client’s business and then doing their work like every client is the same, it’s better to actually dothe work the way you sell it. That means your employees should work for the same client (or client type) continually. What’s new in our business? Internet recruiting is gaining popularity. Shared client databases that anyone in the firm can interact with are proving to be very valuable. Publishing sales data monthly, weekly, or even daily, emphasizes that getting work is important. Getting into new service areas not traditionally part of the A/E/P and environmental consulting business, such as management consulting and strategic planning, is becoming more common. Design-build is gaining acceptance as a project delivery method. The entire industry is becoming more aligned with construction.Of course, many other questions come up, but I’ve run out of space. If you have a question you’d like an answer to, put it in writing, and e-mail or snail mail it to me. I’ll try to respond ASAP, either personally, through one of my associates, or in the future pages of The Zweig Letter.Originally published 3/10/1997
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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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