“There is no question that after working as long as I have in the A/E industry with so many firms throughout the land, certain common undeniable truths present themselves.”
There is no question that after working as long as I have in the A/E industry with so many firms throughout the land, certain common undeniable truths present themselves:
- Firm owners say that hiring is their number one problem, yet most have little or no recruiting budget. This is something I do not understand. Businesses respond to most problems by spending money to fix them. But in this business, we act as if we cannot budget for and consistently spend money on recruiting. That is why it has been and remains a problem today for most companies. And we aren’t just competing with each other for the limited talent pool in many fields. We have to contend with both the public sector and larger industries recruiting architects and engineers. We need to be realistic about what hiring costs are and commit to spending the necessary cash to be sure we are successful with our efforts. And, in nearly every company I have observed or worked with, it is a lot more than we are currently spending.
- Business development is a poorly managed (or completely unmanaged) function in 99 percent of firms. My theory is that we have so many people out there selling who are not only not very good at it and don’t put in anywhere near the effort they should because we have no professional sales management. Sales management will require much greater numbers of calls, meetings, and work to refine sales techniques in business development people to advance the close. The only firms in our industry I have ever seen that have it are a few of the largest environmental consulting and materials and soils testing firms. When business development people report directly to those with no professional sales training or management themselves, it is no wonder the majority fail on the job.
- Pricing may be more critical than project management. I have long said there is only so much profit you can get through optimizing project management, as there is a limit to what process improvements can deliver and how much costs can be reduced. But there is no limit to what a firm can charge if a client is willing to pay it. Efforts spent to raise fees probably pay greater dividends than spending more on project management systems, training, and day-to-day management. Of course, this may mean more marketing dollars have to be spent to find different clients from those the firm currently has. And contracting authority limits as well as review procedures have to be in place to ensure individual managers and BD people aren’t giving the work away.
- Most firms wait too long to start ownership and leadership transition. All you have to do is look at the data Zweig Group has collected for years to agree that this is a problem. The data shows that most people have to wait until they are 40 or older to become owners in their firms, and most owners wait until they are 65 or older to start selling their ownership interests. The result is there is not enough time to effect a transition. Add to that little or no effort of individual firm principals to identify and train their successors and it’s no wonder most companies don’t survive their first generation. Transition has to start sooner and owners need more time to adequately train their successors before they assume their roles.
- Accountability won’t happen without widespread information sharing. This may seem obvious but the attitude of the majority of A/E firm owners is that they don’t need to share performance metrics beyond anyone they are measuring and themselves. As a result, peer pressure to perform is non-existent. Managers are told it is their job to enforce standards and insist on goal achievement, yet have no standards or goals that their teams or direct reports are aware of. On top of that, the solid majority of architects and engineers are non-confrontational when it comes to their communication styles, so they rarely deliver the message people need to hear unless the news is good. This is why we have always been big proponents of open-book management and widespread sharing of all performance metrics firmwide.
- A healthy culture can make ordinary people exceptional, but an unhealthy culture can quickly ruin great people. There was a recent article I read on this subject of how corrupt stock brokers can quickly corrupt new employees, but those with high ethical standards would result in more of the same in new brokers. The findings didn’t surprise me. They apply to A/E firms as well. One bad apple can spoil the whole bunch. A lot of bad apples can spoil the whole bunch even faster. The culture is defined by what types of behaviors are rewarded and what behaviors are punished. It is top management’s role to make sure that culture is healthy. If it is, average people will rise to become greater people. And that is essential to the business for so many different reasons.
- Boards of directors don’t know what their roles are supposed to be. A/E firms do a horrible job here. The reason is that all too often, the individual directors on the BOD are also the owners and managers and employees of the business. Which hat they are wearing at what time is often confused. The decisions of day-to-day management are frequently taken up at the BOD level, and BOD-level decisions are not made at all or are made in a much smaller group than the entire BOD as they should be. This lack of functionality as a BOD can be improved by adding outside directors who have experience on other BODs.
- Firms can (and should) work to build a brand for themselves. Having a solid brand that is recognized by all clients in the market a firm seeks to serve carries so many benefits. Those include the ability to charge higher prices, a better hit rate in proposals selected, and more incoming leads in the first place. But they don’t come quickly or for free – and they especially don’t come to firms with owners who do not believe building a brand as an A/E firm is even possible. It is in fact possible and necessary to maximize success in all areas. HOK Sport, CH2M, EYP Mission Critical, T.Y. Lin International, Gensler, Miyamoto International, and many more firms established themselves as undisputed leaders in their markets over the last 20-30 years. They have (or had) tremendous brands that make (or made) their firms more valuable than those that didn’t have the brands they had.
Do you have other undeniable truths about this business you’d like to add to this list? If so, drop me a line at mzweig@zweiggroup.com.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.
