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6 keys to building a profitable culture There’s a big difference between corporate culture and profitable culture; here are six key elements to ensure that your firm has the latter O P I N I O N
I ncreased competition in the A/E industry is driving down fees and making it feel like a buyer’s market. This is putting a squeeze on A/E firm profits, and forcing many firms to re-evaluate their strategy including how they go to market, what services they offer, and how they can run more efficiently. I am seeing a trend where firms look at how they can increase project profit margins with a strong emphasis on project management success. The old ways of doing business are being challenged, and along with it, the long established practices stemming from the firm’s entrenched culture.
June Jewell
very satisfying and motivating, and making clear, steady progress can be easier to accomplish than big, time-consuming initiatives. A small increase of 1-3 percent in a few key metrics can mean a big increase to the bottom line. I recommend you look at some of your key metrics, such as your win rate, utilization, and project profit margins, and calculate a small increase in each one as a starting point to determine how much money is at stake. Assessing status quo. Understanding where your firm is now is a critical step toward improvement. Very often leadership has some idea about improve- ments they would like to make, but it may seem overwhelming without a detailed plan. Taking the time to understand the patterns of thinking and behavior of your staff is a great first step for mov- ing toward a profitable culture. Is it your front-end sales processes that are causing issues? Is scope creep causing budget overruns? Is cash flow a big problem? In my book Find the Lost Dollars , I lay out a plan to assess your business in nine areas broken See JUNE JEWELL, page 8 “Most employees will resist change, and very often it is because leadership has failed to address their primary concerns. It is not only critical to explain why changing the culture is important, but the expected value to both the firm and the individuals. Resistance to change is a normal reaction by employees, and preparing for it in advance can go a long way toward getting needed buy-in from your staff.”
So, what does it mean to build a profitable culture? I have developed a definition, which may require a radical shift in thinking and behavior, and could be a game changer for organizations willing to take a critical look at the long-held beliefs and practices that work against the firm, in order to maximize profitability. While the business school definition of corporate culture is, “Patterns of accepted behavior, and the beliefs and values that promote and reinforce them ,” I believe that a profitable culture is distinctly different. It requires that people, processes, and systems be geared toward optimizing profitability. I would define it as, “Every employee behaving in a way that promotes the firm’s financial success.” This is a big difference from the way most employees think these days. The average technical staff has little training in business concepts, and my research shows the majority of employees do not even make the connection between their timesheet and their paycheck. Transforming this cultural paradigm requires effort to change both your employees’ mindset and behaviors. Here are six keys to starting the process of building a profitable culture in your firm: Leadership. The first step to implementing trans- formational change is getting the consensus, com- mitment, and support of your firm’s leaders. Some- times this can actually be one of the most difficult things to do. I have found that money talks – figure out how much more profit your firm could be gen- erating and develop a strategy to increase profits. Sometimes all leaders need is a clear understanding of the amount of money at stake in order to increase their commitment to change. Determine desired outcomes. Without a clear idea of desired outcomes and goals, it will be difficult to get your team inspired and determine if you are making progress. Achieving small victories is often
THE ZWEIG LETTER DECEMBER 7, 2015, ISSUE 1130
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