Turnarounds

Oct 26, 1998

Believe it or not, as good as things are in the A/E/P and environmental industry, there are still some firms out there that need to be turned around. These firms just can’t make a profit. And I suspect that if the overall business climate gets worse, we’ll be seeing more of them. It sure makes sense to me to do what it takes to stay out of trouble, because it’s never easy to fix one of these companies. Every turnaround I have ever been involved with shared some common elements. It goes far beyond having costs that are too high. That’s obvious. The high costs and resulting low profits are symptoms of deeper problems in the organization. Here are a few of them that you need to be on the lookout for: A preoccupation of the top owners with getting out. Whether the top people have too many outside interests, have gotten too successful, or are just plain going through a mid-life crisis, the bottom line is the same. They’d rather be doing something else. This is a real problem for the organization, because when this happens, these people are usually taking out more than ever and yet doing less than ever. This certainly leads to financial problems if there are too many of these people and the gap between what they take and what they produce is too great. Too much time spent solving the same problems over and over again but never solving the right problems. It’s like these crazy, weekly four-hour scheduling meetings where manpower is allocated to projects. Then everyone goes back to work and forgets who is supposed to do what. It often degenerates into a free-for-all over the talent pool, with he or she who holds the most stock or has the greatest position authority commandeering the best talent from the design or technical groups every time. Far better would be to spend this time talking about why that is happening and do something to solve it— like creating a new organization structure, perhaps. Do something that solves the problem once and for all instead of dealing with it week in and week out, wasting countless person-hours and dollars! Boards, executive committees, and management committees. There are too many of them, there are too many people on them, and they meet too often. The net result is wasted time and money. I find that most often these boards and committees start to meddle in the affairs of the individual office, division, department, or project managers. They (the boards and committees) need something to do, they need to justify their existence, and this meddling is often the result. I have never done a turnaround without shrinking the size and scope of the Board of Directors— you just don’t need 13 people on a Board for a $10 million company. Yet this is not altogether uncommon. Nor does the Board need to meet monthly. Once a quarter is usually adequate, or perhaps every other month. Ditto for the five-person executive committee (usually a substitute for a weak president/CEO/COO (especially in small to mid-size firms). A lack of purpose. It’s darned hard to get everyone in this business excited about making money. I don’t know if this is unique to architects, engineers, scientists, and planners, because I haven’t worked in any other industry! But it doesn’t change the fact that if you are running this kind of firm, there better be a higher purpose or goal or vision that you espouse, because the intelligent, creative, and sensitive (for the most part) folks working in our industry need more than just money to feel good about themselves. When all of the talk is centered on money, some of these people turn off, which exacerbates the problem. I could really go on and on. I guess if (and when) the recession returns, I’ll have more than ample opportunity! Originally published 10/26/ 1998

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