What to Do?
Jun 06, 1998
Raymond Stodge, managing principal of “Stodge Engineers and Architects,” was depressed. How would he get the firm’s executive committee to start taking action on the issues that had plagued the firm for years? And now time was running out. Stodge had been to his doctor’s office and heard bad news about his health. Some recent tests he had taken didn’t look good, and all he could think was, “How can I be out of work right now when there are so many problems to solve?”
No one was stepping up to the plate to succeed him. His eldest son, Ray Jr., a civil engineer like his father, just didn’t have the fire in his belly. “He’s soft because we gave him too much,” Stodge regularly told his wife, Margie, when she asked why Junior wasn’t moving up faster at the office.
Their daughter, Rosemary, had the brains and the guts to lead the firm. But she wasn’t an engineer, and beyond that, she just had her first child and didn’t want to work full-time.
Of the executive committee members, “Old Joe” Thompson, the chief engineer, could never do the job. Stodge was the only firm Old Joe had ever worked for since he left the highway department back in 1962. He was a follower, not a leader. Ditto for Sally Weaksister, the marketing director. Even though she was a transportation planner by education, Sally walked around like she was scared of her shadow. And Phil Brightsmile, the head of municipal services, was just too young. Even though he was clearly the hardest worker, had the best track record, and was the most determined to make Stodge competitive, he ruffled too many feathers.
The problems wouldn’t go away. Backlog was high, but profits were scarce. The place cleaned out by 5:30 every day and no one was ever there on a weekend (other than the senior Stodge and occasionally Brightsmile). Morale was low, young people didn’t stay more than a year or two, and it was impossible to hire anyone. Stodge couldn’t pay the salaries offered by firms like HNTB or Carter & Burgess, and the truth was, Stodge didn’t have much to offer in the way of career opportunities. Revenues had declined some since their peak back in ‘93. The other problem was capital. They hadn’t even put a computer on every desk, and the only network was for CADD. Everyone else was still running around with floppy disks when they needed to print something! The accounting system needed an overhaul, too. The 1981 software they used on the old System 34 was so ancient the company that developed it didn’t even support it any longer. But Stodge couldn’t afford to pull the plug and move to something modern.
Stodge stepped into his 1973-furnished office, sat down at his desk (piled high with papers, of course), and put his head in his hands. The way he saw it, he had only two options: Sell the firm as quickly as he could or put Brightsmile in charge and pray he would be smart enough to turn things around.
That next Monday, Stodge got moving. The first thing he did was clean his office. He dumped all the junk on top of his desk and clogging his file drawers into boxes and threw them in a closet. Then he started making phone calls to the business brokers and management consultants who would be the most likely to help sell the firm. Of course, the brokers said they were sure they could help— all Stodge had to do was send them a check for $20,000 and they would find a buyer, at which point he could pay them the rest of their $250K to $300K fee. But Stodge knew better than to trust these smooth talkers.
The consultants, on the other hand, didn’t seem real hopeful. “We can go through our process,” they told him, “but we’re concerned about getting results. There just isn’t a lot here to sell. You don’t have a credible second-tier management in place. Too many decisions run through you. And your firm isn’t growing. To tell the truth, the atmosphere is kind of morgue-like.” That last point really got under Stodge’s skin. “I’ll show those S.O.B.s,” he thought.
Stodge’s test results came back showing everything was O.K. after all “Utopia” though he had to change his diet and exercise more. Now his resolve to make things better at work was even stronger. Stodge disbanded the executive committee and made Brightsmile executive vice president. Of course, this got Old Joe Thompson and Sally Weaksister riled up. But they were team players and decided, albeit reluctantly, to stick it out. Brightsmile immediately made changes. He eliminated paid overtime for salaried people. He filled a few key positions from the outside. He talked Stodge into an incentive plan that would pay out 25% of the cash basis profits each quarter. He pulled Old Joe out of the chief engineer spot and put him in charge of transportation. He eventually hired a new vice president of marketing for Sally to report to— someone who really understood the importance of process marketing and positioning. He lit a fire under accounting and told them to get the bills out and get them paid in 45 days, period.
Things started turning around. A year later, profits improved and revenue was up by 10%. The next year, revenues leaped by 24% and profits were up to 18%. Weaksister moved on and Thompson retired. One day, Brightsmile came to Stodge with an offer to buy the firm. He already had bank financing arranged and the deal was too good to pass up. Stodge quickly closed the deal. He sold his house, and with the cash from the sale of Stodge Engineers, he went out and bought a little bicycle rental shop in Newport, Rhode Island. In the winter, Stodge and his wife stay in the condo on Sanibel Island. I hear he’s still doing well today, looking more fit and relaxed than ever. He took back control of his firm...and his life!
Originally published 6/06/1998
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.