TZL 1365 (web)

T R E N D L I N E S O c t o b e r 2 6 , 2 0 2 0 , I s s u e 1 3 6 5 W W W . T H E Z W E I G L E T T E R . C O M

Marketing staff

We can learn a lot about mission and vision through the context of some of America’s founding documents. America’s mission and vision

In Zweig Group’s 2020 Marketing Report of AEC Firms , marketing staff size relative to total firm size was analyzed in multiple ways. One way to do this is to divide the total staff size by the number of marketing employees in the firm. Overall, the typical firm has 27 full-time employees for every marketing employee. When analyzing this by staff size categories, we see this number increase with increasing staff size. Participate in a survey and save 50 percent on the final or pre- publication price of any Zweig Group research publication. F I R M I N D E X Bird+Bull, Inc.. ........................................8 Coastal Pacific Construction. ..................4 Dewberry..............................................12 Fleis & VandenBrink. .............................12 HOK. ....................................................12 Inventure Design.....................................6 Olsson. ...................................................4 V3 Companies, Ltd.................................8 Ware Malcomb........................................4 MO R E A R T I C L E S xz STACY CLOUSE: Driving success through feedback Page 3 xz Touchdown: Raymond Romero Page 6 xz MARK ZWEIG: Things you don’t do in your firm but should Page 9 xz BRIAN RICE: Is an ESOP right for your firm? Page 11

W henever I sit and write for this industry, I try to bring something that is interesting, relevant to elevating the industry, and usually try to deliver it with perhaps a little fun and humor while giving you something to take away. Before I begin this article in earnest, with everything happening in the world at the moment, there is one thing that I keep coming back to each time I reflect on our current state and the future. Aptly titled it is “The American Crisis” by Thomas Paine first published on December 19, 1776 in The Pennsylvania Journal . “THESE are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands by it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value. Heaven knows how to put a proper price upon its goods; and it would be strange indeed if so celestial an article as FREEDOM should not be highly rated.” This theme of the American founding will actually be a useful tool that will allow me to keep a promise I made in my last article in Civil & Structural Engineer Magazine (for those following my work). That promise was to discuss the changing landscape of strategy design in order to understand the underlying logic and return to the true power of a well- crafted, purpose driven, mission and vision statement. These two statements, in combination with your values, provide the foundation of your firm’s strategic plan. These statements articulate the why (vision), what (mission), and how (values) of our organization. It sets the bedrock for the culture you are attempting to build and eventually what sets you apart from other firms (competitive advantage). Let’s first talk about proper hierarchy. I suppose you could make an argument in favor of building this from the bottom up, but I think it flows most logically from the top down. I also think it communicates a sense of importance and value for each of these statements. It will be clearer for you in a moment, but the point I’d like you to take away is this: It is far more important, for a myriad of reasons, for your people to know the why than it is for them to know the actions, goals, strategy, or even how/ what. That is why the following hierarchy, starting from the top down, is generally how we help firms define who they want to be.

Phil Keil

See PHIL KEIL, page 2

T H E V O I C E O F R E A S O N F O R T H E A E C I N D U S T R Y

PHIL KEIL, from page 1 1) Why – vision statement 2) What – mission statement 3) How – values statements 4) Objectives 5) Strategy 6) Goal 7) Action

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1 PDH/LU

For this conversation, we will focus on defining the two highest levels of this hierarchy, the vision and mission. The vision statement is an aspirational description of what an organization would like to achieve or accomplish in the mid-term or long-term future. It is intended to serve as a clear guide for choosing current and future courses of action. In other words, a vision statement is an articulation of a view of the world that your company and your people are working toward (a just cause/purpose), not what they are expected to do now. It is a vivid picture of where you are headed to motivate others to take the journey with you. This is also something that you may never achieve, at least in your lifetime. Revisiting our theme, one of the strongest vision statements of all time can be found in the Declaration of Independence . Interestingly enough, the pursuit of happiness was originally derived from John Locke’s trinity, “life, liberty, and property,” however, the fear was that by including property it would give the proponents of slavery an argument that slavery was enshrined. Property rights therefore were assumed at the time and removing it further advanced many of the founder’s goal of abolition of slavery. Now, the following example is longer than we normally advise for the firms we work with due to some of the explanatory components of the statement. Providing the additional context is something, however, that we often encourage within the context of your website, certain project/client pursuits, or in how it applies to a number of other scenarios. “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness. That to secure these rights, governments are instituted among Men, deriving their just powers from the consent of the governed…” Moving along to the mission statement, this is our what. Properly crafted mission statements (1) serve as filters to separate what is important from what is not and (2) communicate a sense of intended direction to the entire organization. In other words, this statement is intended to describe what we are doing to achieve our vision. The difference in the two being that the vision is a description of an end state and the mission is what we are doing to get there. Just as the Declaration of Independence was a document intended to describe America’s why, the reason why governments are instituted in the first place, the Constitution describes what we are intended to do to get there. The mission statement can be found right in the preamble. “We the People of the Unites States, in Order to form a more perfect Union, establish justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” I hope that you find this information useful as many firms are entering the strategic planning and business planning season. If any of this is still unclear or you need help building a true legacy building/purpose led strategy, please give us a call. PHIL KEIL is director of strategy services at Zweig Group. Contact him at pkeil@zweiggroup.com.

Solid financial management is crucial to the success of any company, and firms in the AEC industry are no exception. This short course provides an overview of business financial management – specifically tailored to our industry – to help firm leaders make informed decisions that drive results.

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THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

O P I N I O N

A t Olsson, we work purposefully to keep clients with us for the long haul. Our firm- wide commitment to putting the needs of clients first consistently turns new customers into long-term partners, a fact borne out by our repeat-business rate of 94 percent. Clients appreciate the opportunity to sit down, free from distraction, and candidly discuss what is going well and where there is room for improvement. Driving success through feedback

Stacy Clouse

Many variables factor into our success at building solid client relationships. The list includes timely deliverables, quality projects, the expertise of our employees, and our ability to truly understand the needs of the customer. Client feedback is vital to that last factor. Olsson long ago broke the mold of the everyday survey to focus on the deeper qualitative feedback a one-on-one discussion can provide. We call it our Client Experience program. For more than 20 years, Olsson has focused at least one employee specifically on client experience. Today, we employ three full-timers who listen to, understand, and bring the voice of our clients to our technical staff. Over those years, we have seen how our client experience process helps set up our projects for success. We typically engage with clients throughout the

life of a project. Mid-project check-ins make sure the expectations set forth at the beginning still make sense or whether they need adjustment. Have opinions changed? Has the process gone differently than anticipated? Are we delivering on the promise we made when the partnership began? Ultimately, we want to know what ways the client’s experience with Olsson can improve. By the same token, we also want to know in what ways we have excelled so we can further emulate high performance and duplicate successful outcomes. Frankly, clients are blown away by the process. “I like that you’re taking this time talking with

See STACY CLOUSE, page 4

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

BUSINESS NEWS WARE MALCOMB ANNOUNCES COMPLETION OF SEB PROFESSIONAL NORTH AMERICA SHOWROOM IN TUSTIN Ware Malcomb , an award- winning international design firm, announced construction is complete on the addition of a new SEB PROFESSIONAL North America showroom within the company’s offices located at 15501 Red Hill Avenue, Suite 200 in Tustin, California. Ware Malcomb provided interior architecture and design services for the project. Headquartered in Tustin, California, SEB PROFESSIONAL is the No. 1 market leader in premium automated coffee and espresso solutions. The company is part of Groupe SEB, which sells more than 350 million products each year. SEB PROFESSIONAL’s new state- of-the-art showroom, the first of its kind in the United States, is specifically designed to showcase the company’s products – including its WMF, Schaerer and Curtis brands – and provide an engaging experience for visiting customers. Located on the previously undeveloped first floor of the building, visitors can browse SEB PROFESSIONAL’s newest products on the showroom floor, then head to a demonstration and tasting bar to experience them in action. Adjacent to the showroom is an R&D and training lab where employees develop and test SEB PROFESSIONAL’s latest products. The first floor also includes employee amenities such as a fitness center and large break room. SEB PROFESSIONAL’s existing office space is located on the second floor of the building, and

modifications to this space include a remodel of the executive suite, lobby, and break room. Designed to be a flagship showroom, the project pays homage toSEBPROFESSIONAL’s European roots, with clean and modern lines reminiscent of the company’s overseas showrooms. Softer elements like wood accents help create a high-tech yet inviting space. An arbor over the coffee bar adds a cozy, hospitality-like experience for visitors during tastings and demonstrations. The cumulative result of these design features is an immersive experience, where visitors are drawn to explore the showroom by varying planes and experiential visuals such as digital displays and a branded company history wall. “The new SEB PROFESSIONAL showroom reflects the modernity, ingenuity and innovation of our three brands in a contemporary and inviting setting,” said Ray Peden, president of SEB Professional Americas. “The facility is purpose-built to accommodate more than 20 pieces of equipment, each connected to power and water to facilitate customer coffee tastings. This combination of design and functionality will allow SEB PROFESSIONAL to demonstrate our market-leading equipment and coffee competence like never before. And as offices open back up, we will follow strict protocols to ensure our customer experience visiting our new showroom is as safe as it is memorable.”

“The goal of this project was to set the bar for all SEB PROFESSIONAL showrooms worldwide, reflecting the company’s deep history of technological excellence and dedication to the highest quality products,” said Mary Cheval, principal of Ware Malcomb’s Irvine, California, office. “It was important that the showroom look as sleek as possible, minimizing visual distractions so the focus would be on the products and the experience within the showroom. Through custom detailing, branded graphics, and unique interior architecture, this cutting-edge showroom reflects SEB PROFESSIONAL’s position as a leading provider of high-end coffee and espresso machines.” The general contractor for the project was Coastal Pacific Construction . Established in 1972, Ware Malcomb is a contemporary and expanding full service design firm providing professional architecture, planning, interior design, civil engineering, branding and building measurement services to corporate, commercial/residential developer and public/institutional clients throughout the world. With office locations throughout the United States, Canada, and Mexico, the firm specializes in the design of commercial office, corporate, industrial, science and technology, healthcare, retail, auto, public/ institutional facilities and renovation projects. Ware Malcomb is recognized as a Hot Firm by Zweig Group.

STACY CLOUSE, from page 3

process. They appreciate the open and honest way feedback is delivered, and they use the information to maximize their potential and grow as professionals. At Olsson, our number one tenet is “We exist for employees, first and foremost.” Client Experience helps us set up our employees for success so they can embody our second tenet: “Our employees put our clients’ needs first.” “It is valuable for Olsson employees to receive these client visit reports. We may think we already know our clients well, but our client experience team members are able to dig deeper and gather feedback that allows us to understand where we need to make improvements. Of course, positive feedback about how great we are doing is always nice to hear but the real value in this is when we receive constructive criticism. It can be humbling but that is how we continue to grow and become better,” an Olsson team leader said. I’d like to emphasize that our commitment to excellent client service is not something our employees relegate to the Client Experience team. Everyone at Olsson understands and accepts the responsibility to deliver great client experience. And it’s something our clients have come to expect from us. STACY CLOUSE is director of client experience at Olsson. Contact her at sclouse@olsson.com.

me as a client representative to ask how you’re doing. That’s very good. That’s how you get better,” an Olsson transportation client told a member of our Client Experience staff. “Many variables factor into our success at building solid client relationships. The list includes timely deliverables, quality projects, the expertise of our employees, and our ability to truly understand the needs of the customer. Client feedback is vital to that last factor.” Clients appreciate the opportunity to sit down, free from distraction, and candidly discuss what is going well and where there is room for improvement. Time and again, these discussions have shined the light on talented employees, sparked internal discussions for process improvement, and ultimately strengthened relationships. Because of the trust the Client Experience team builds within the walls of Olsson, our employees trust the

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

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THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

P R O F I L E

Touchdown: Raymond Romero Managing principal at Inventure Design (Houston, TX), a firm that transforms the client experience in design and architecture by creating smart, human-centered spaces.

By LIISA ANDREASSEN Correspondent

R omero is a technical problem solver who leads with a vast knowledge of the industry. Where many architecture firms focus on projects from the outside in, he believes in designing from the inside out. He says that he chases after exceptional design, his four kids and their chickens, but admits that the order varies. “’Designing from the inside out’ has been a reminder to design around people first,” Romero says. “I learned early that people are a company’s number one asset. If you put their needs on an equal level to corporate space needs, budgets, and schedule, you can satisfy both while providing inspiring design.” A CONVERSATION WITH RAYMOND ROMERO. The Zweig Letter: Can you explain what “designing from the inside out” means? Raymond Romero: My main focus in design has been corporate interiors and architecture. I love learning about

and helping other companies. Traditionally, architecture is celebrated and admired from the outside. Just look at most architecture magazines – you maybe get one or two pictures of the interior, and very little shared in the print. So, “designing from the inside out” has been a reminder to design around people first. I learned early that people are a company’s number one asset. If you put their needs on an equal level to corporate space needs, budgets, and schedule, you can satisfy both while providing inspiring design. TZL: How has COVID-19 impacted your firm’s policy on telecommuting/working remotely? RR: It hasn’t affected our policy on remote work, other than forcing us to formalize our policy. We had been building toward a “work from anywhere” model for the past couple of years. We have invested in our team and our technology by providing the best hardware, software, applications, and training – ramping up over the past year

THE ZWEIG LETTER OCTO

RR: Listen first. Take responsibility for your actions. Take work off their plate. Treat their money like your own. Be humble, but always remember that you are hired to be an expert at your craft. Have a voice when tough decisions need to be made. Deliver great design. “There are also many ways to contribute to the firm’s success beyond the numbers. Leadership and experience are where a lot of our value lives.” TZL: Are you using the R&D tax credit? If so, how is it working for your firm? If not, why not? RR: Yes, we are. It has worked great. We have worked with an outside consultant to help us navigate our opportunities for the past couple of years. I would recommend more design firms to take advantage of this credit. TZL: Your company seems to embrace a culture that is collaborative and fun. What are some key ways you maintain and nurture those characteristics? RR: We have a lot of ambassadors in the office who help maintain and protect our culture. And our office space has a lot to do with it. From my first day, it was described as equal parts lab and workplace. We like to experiment on ourselves. And we are getting better at celebrating the little things! Team meetings celebrate anniversaries, birthdays, accomplishments, and milestones. Our project gong sits in a prominent location in the studio and is a fun way of announcing wins. Our founding principal has even sent one to the home of our director of business development so the tradition can stay alive as we work from home. Zoom happy hours are the new norm. We have also started a new “10/10/10” meeting. It is a voluntary set of meetings where people can virtually meet with their peers and share how they are doing personally, professionally, and how they think the company is doing – on a familiar scale of 1 to 10. Someone even started a book club. I am constantly amazed at the ideas to keep our team connected. TZL: It is often said that people leave managers, not companies. What are you doing to ensure that your line leadership are great people managers? See TOUCHDOWN, page 8

as we brought most of our technology strategy in-house. As a result, we didn’t have an “all at once” shock to our systems. I truly applaud our founding principal (and chief innovator) and our technology director for being ahead of the curve. I think our next move is to really reach out individually to our team and see what pieces they are missing for the best work- from-home setup. TZL: How far into the future are you able to reliably predict your workload and cashflow? RR: Right now, six to nine months. But with a heavy portfolio of corporate and healthcare interiors and interior architecture work this has been the norm for the past five years. Those projects just have a shorter life than typical ground-up architecture projects. TZL: How much time do you spend working “in the business” rather than “on the business?” RR: It’s about 50/50 right now. Some weeks the hours tilt one way or the other. It’s mostly my fault because some of my best clients have been collaborators for six plus years and I like working on their projects. When you find great friends in your work, you tend to hold on to them tightly. I’m learning though! “Be humble, but always remember that you are hired to be an expert at your craft. Have a voice when tough decisions need to be made. Deliver great design.” TZL: What role does your family play in your career? Are work and family separate, or is there overlap? RR: There has always been an overlap. Although my wife is an educator now, we met in college and have the same design degree. So, it’s been nice to have someone who gets what the profession demands. And the kids have always been interested in what I do. They love to see me draw at the home office and join me from time to time. I’ve adopted the notion of looking for work- life harmony and not work-life balance. One can consume the other pretty quickly and I have loved ones that know when I’m forgetting about the other. TZL: Trust is crucial. How do you earn the trust of your clients?

HEADQUARTERS: Houston, TX NUMBER OF EMPLOYEES: 48 YEAR FOUNDED: 1997 OFFICE LOCATIONS: ❚ ❚ Houston, TX ❚ ❚ Dallas, TX ❚ ❚ Tulsa, OK ❚ ❚ Nashville, TN THEIR WORK: ❚ ❚ Workplace ❚ ❚ Health and science ❚ ❚ Architecture and design ❚ ❚ Experiential design THE ESSENCE OF DESIGN: People VALUES: ❚ ❚ Respect ❚ ❚ Good stewardship ❚ ❚ Opportunity ❚ ❚ Curiosity ❚ ❚ Excellence MISSION: To transform the client experience in design and architecture by creating smart, human-centered spaces achieved through a dedicated partnership with its expert team.

OBER 26, 2020, ISSUE 1365

TRANSACT IONS BIRD + BULL JOINS V3 V3 Companies, Ltd. and Bird+Bull, Inc. announced that the two firms have merged, increasing V3’s presence in central Ohio under the leadership of Brian Coghlan and Andrew Gardner. The combined firms now provide a full suite of engineering, surveying, landscape architecture, and natural resources services to the private development, public works, and power and energy markets. “We are thrilled to continue our growth and commitment to serving our clients throughout the Great Lakes Region by joining forces with Bird+Bull, whose rich and long history in Ohio provides a tremendous foundation to build upon. As one company, we will continue to thrive under our shared approach to how we treat our team members and our clients – one rooted in respect, support, and service,” said Rob Petroelje, V3 founding principal.

“This merger maintains focus on the people which are the heart of our organization. I firmly believe that Bird+Bull and V3, together under the V3 name, will be a stronger organization with tremendous potential to grow our operations and provide unlimited opportunities for our people to experience personal and professional growth and fulfillment. I feel a personal sense of responsibility to our clients and I have every confidence that this merger will increase client satisfaction with the expanded service offerings, the additional expertise, and the improved efficiencies that come from being part of a larger organization,” said Coghlan, Bird+Bull, Inc. president. “I am thrilled that Bird+Bull is joining forces with the V3 Team. Client service, quality, and integrity are core values I have been committed to throughout my career. V3 shares those values and I believe together we will do great things for the Ohio community. This

merger will bring new opportunities for growth to our employees and provide greater breadth of services to our dedicated clients who have been with us for so many years. Bird+Bull has a 70-year history in central Ohio, and I am looking forward to continuing to build on that history as V3,” said Gardner, Bird+Bull, Inc. vice president. V3 provides consulting services in civil, ecological, environmental, landscape architecture, planning, surveying, and transportation engineering as well as contracting disciplines. V3 has offices in Illinois (Chicago and Woodridge), Indiana (Indianapolis and Carmel), Ohio (Columbus and Cincinnati), Missouri (St. Louis), Canada (Sherwood Park) and Haiti (Port-Au-Prince). Founded in 1950, Bird + Bull is a firm with a long history in central Ohio specializing in land development consulting, municipal services and surveying.

TOUCHDOWN, from page 7

for the project. Every decision can impact a client’s bottom line. We find ways to improve efficiency in the workplace, maximize existing assets, improve culture which helps with employee attraction and retainage, and how to bring their services/products to market quicker. TZL: Ownership transition can be tricky, to say the least. What’s the key to ensuring a smooth passing of the baton? What’s the biggest pitfall to avoid? RR: Our founding principal started early. Going back to trust, that has to be the key in letting go, but also in knowing you have the support behind you to lead in your own way or speak your mind. We are as transparent as we can be with about 99 percent of our financial information, all of our banking relationships, and firm operations. The biggest pitfall that I have seen is waiting for “the right time” or waiting for one person who can do all things. Second- and third-generation leadership are usually best shared as the firm has to morph into a new, larger version of itself to remain viable and desirable for the next group. TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s? RR: This is only one of five qualities we evaluate for someone to become a principal in the firm. Leadership, promotion of the industry, technical competence, and personal development round out our list. This list is also ever evolving as the world around us changes. To get technical, we have an associate principal in her 30s and soon will have a couple more shareholders in their 30s. TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO? RR: Fullback. I don’t mind doing the dirty work and clearing a path for others. Occasionally I even score a touchdown.

RR: Inventure has always been a flat organization. This can be refreshing and challenging depending on the people. To help overcome some of the challenges, we have started a formal mentoring program in the firm. This has helped set aside dedicated, focused time to engage our next leaders – no matter where they are in their career. It is a program open to all. “I love the mix of competition, accountability, and support we have in our leadership. You don’t want to be the lowest on the revenue spreadsheet, but you will always have someone there to pick you up if you have a slump.” TZL: How do you handle a long-term principal who is resting on his or her laurels? What effect does a low- performing, entitled principal or department head have on firm morale? RR: Thankfully, we do not have this problem. I love the mix of competition, accountability, and support we have in our leadership. You don’t want to be the lowest on the revenue spreadsheet, but you will always have someone there to pick you up if you have a slump. There are also many ways to contribute to the firm’s success beyond the numbers. Leadership and experience are where a lot of our value lives. TZL: Can you provide an example of how Inventure has positively impacted a client’s bottom line? RR: With the joy of corporate architecture there are a couple of early phases of discovery that have always grabbed me. Discovery is full of questions and answers, tours, and finding the future vision. It’s during this discovery that we tend to have the ability to help set goals

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

O P I N I O N

F orty years. That’s “four zero.” And it’s how long I have worked in, owned, studied, and observed A/E firms. It’s a long time. There are 10 things practically every firm in this business should do but won’t. If you try these things, your firm will be more successful. Things you don’t do in your firm but should

Over that time, I have given out lots of advice to literally thousands of firm owners and managers. Anyone who knows me will tell you that I don’t provide “stock” advice. I never liked boilerplate and every situation is different. That said, there are 10 things practically every firm in this business SHOULD do but won’t. If you would just listen to me and do these things, I have no doubt you and your firm would be more successful. These are NOT things that most firms are doing and there will be lots of reasons you and your partners can tell me why they won’t work. But trust me – you are wrong! Here are those 10 things: 1) Overhaul your bonus program. Most bonus programs in this business are purely subjective. It’s also conventional wisdom that “good” people get more bonus money than duds. Makes sense on the surface – give your best people the most and your worst people little to nothing. But what that really accomplishes is it lets your managers off the hook. The real problem is someone isn’t performing, not

that the rewards are going to the wrong people. They need to do their jobs as managers. By having a formula-driven plan that rewards everyone for the firm’s cash basis performance, the rules are clear. If you are there (working for the firm) you share in the spoils. If you get a share and don’t deserve it, you either reform or get run off. The goal is a high performing staff – period. 2) Pay out bonuses monthly or quarterly. Once a year is not often enough for the program to motivate people. There’s too much time between the action and the rewards. The less time that elapses between the performance and the rewards, the better. Understand this and listen to me! 3) Throw out your performance review process. Performance appraisals are generally awful. No one likes them – not the employees who are the recipients, nor the managers who have to do them. What does it tell you when an employee has a 5.9 out of 7 on “attitude?” Nothing. And you cannot tie salary changes to performance appraisals.

Mark Zweig

See MARK ZWEIG, page 10

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

ON THE MOVE PAUL HARRY JOINS DEWBERRY TO LEAD MEP LABORATORY DESIGN GROUP Dewberry , a privately held professional services firm, has announced that Paul Harry, PE, LEED AP, has joined the firm’s mechanical, electrical, and plumbing group as a senior project and client manager in its Raleigh, North Carolina, office. Harry will lead the firm’s laboratory growth initiative within the MEP group. Harry, who has more than 30 years of experience, spent the last five years with Brady/ Building Clarity. His expertise in design-build, building assessments, energy performance improvements, and management will provide

Dewberry’s laboratory and healthcare clients with the necessary solutions to their biggest design challenges. “We are thrilled to welcome Paul to Dewberry,” says Dewberry Senior Vice President Shepard Hockaday, PE, LEED AP. “Paul’s background in the healthcare and higher education research laboratory markets will be an asset to our clients as they pose unique challenges, especially our laboratory clients who often require occupied renovations.” Harry earned his bachelor’s degree in architectural engineering from Pennsylvania State University (1986). He is a member of

the American Society of Heating, Refrigerating and Air-Conditioning Engineers. Dewberry is a leading, market-facing firm with a proven history of providing professional services to a wide variety of public- and private-sector clients. Recognized for combining unsurpassed commitment to client service with deep subject matter expertise, Dewberry is dedicated to solving clients’ most complex challenges and transforming their communities. Established in 1956, Dewberry is headquartered in Fairfax, Virginia, with more than 50 locations and more than 2,000 professionals nationwide.

MARK ZWEIG, from page 9

ownership payments from every single paycheck to make those payments. The problem with ownership payments being tied to bonuses is that if the firm is not performing, management will most likely allow those payments to slide. That’s a big mistake. 8) Double or even triple your marketing budget. When it comes to marketing budgets, I don’t talk percentages of net service revenue like most people do. The reason is that percentage will vary widely based on the type of A/E firm. Structural engineers who do all their work for architects will have a very low marketing budget. High design firms that do a few landmark projects will spend three times what the interpro engineers do. But here’s my point. If your value is tied to revenue and more specifically, revenue growth rate, it is completely unrealistic to expect to do better than all of the other firms while spending the same amount on marketing and promotion that they do. That’s why I advocate making an off balance sheet investment of two or three times what the average firm in your market sector and discipline typically spends. Do this for a year or two and tell me if it didn’t help you. 9) Share every single sale of new work with all employees as they come in. This is so important yet almost no firms will do it. Ring a bell. Bang a gong. Send out a company-wide email. Don’t tell me you are doing this and then I find out it is only on a monthly marketing report that is only available to top management. That is NOT the same thing as frequent reminders that new work is coming in and a wide variety of people are responsible for it and deserve recognition! 10) Stop requiring managers to review timesheets. It’s a huge waste time. Slows everything down for no good reason. Most firms have so many jobs and so many people charging to them that reviewing a weekly timesheet will tell them nothing. Even if all they care about is time off, do they know how much PTO each employee has banked? I doubt it. They probably don’t even have access to that information. Just because you always did something doesn’t mean you should keep doing it. Managers can always review job reports or other reports that show much more relevant info about where time is going. Have them do that instead. I could add to this list of things you should do but probably won’t. Prove me wrong and do them! Then come back and I will give you 10 more things to do that will help make you more successful. MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

Everyone knows that if you do tie raises to appraisals, what the raise is or isn’t is all the individual employee cares about. They hear little else. Plus there is a lot more to raises than how someone performs in their job. The best performing janitor is only worth so much but the worst performing California SE might be worth a great deal even if they’re not a great performer. Be honest about it and admit you can’t set salaries strictly based on performance reviews. And by the way, your reviews are not helping you when it comes time to fire someone. In fact they are typically so positive they only give fuel to the idea that the employee was wrongfully let go. 4) Share your financial information and other business metrics with every single employee. No, I am NOT suggesting everyone knows what everyone else is earning. That would be a disaster. But there is little else they should not know. Certainly seeing all the financials and learning how the business makes or doesn’t make money is critical to training a future generation of managers. And studies have repeatedly shown that when you don’t share financial performance information with your employees, your people will always think you are either doing much better than you actually are or much worse than you actually are. 5) Get the input of every single employee for your business plan, and share it with everyone. The business plan should not be a secret. And the people who actually “do” the work of the firm need to be consulted and listened to. It just makes sense. Yet most firms won’t do it. And by the way, if your plan “gets out,” does it really matter? I think not. 6) Fire the bottom ranked 5 percent of your staff. If you want a high performing team you must accept the fact that not everyone who wants to be is going to be on the team. The lowest performers literally define the least acceptable standard in your firm. Why not move some of them out and take a chance on someone new who could end up being a top performer? And while you are at it, get rid of most of your job titles. The more titles you have the unhappier everyone will be. Simplify! 7) Make all new owners pay for their ownership and deduct the payments from every paycheck. Many companies still give their ownership away which is a horrible idea. People don’t appreciate it nor act like real business owners when it doesn’t cost them. But if you do make your people pay for their ownership you probably make new owners pay for their ownership out of bonus payments. But that is not what I advocate. I’m talking about deducting

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

O P I N I O N

Is an ESOP right for your firm?

D uring economic expansion, owners of well-managed firms see their company’s value grow significantly. The jump in firm value, however, can make the prospects of a fair-market-value internal ownership transition difficult. If your firm has the following characteristics, the more likely an ESOP is a good and viable option for your firm.

Next-generation owners may be unprepared financially for a significant ownership stake. That hurdle often results in an outside sale to fully capture a firm’s value. Over the past few decades, an increasing number of companies including AEC firms, have addressed the financial challenges of ownership transition with an employee stock ownership plan. ESOPs are federally regulated trusts, similar to a 401(k) trust. At Fleis & VandenBrink Engineering, and other AEC firms, ESOPs have proven effective in maintaining ownership “in-house.” We created our ESOP in 2004. It was designed at the time to accumulate assets as our firm grew for the eventual buyout of significant owners. In our case, the ESOP assets come in the form of the match the company makes to the 401(k) plan. The match goes into the ESOP account for each employee and is held in cash, bond, and other investments until stock is available to purchase.

As our growth increased the value of our firm, an internal transition would have been very difficult without an ESOP. ESOPs are generally designed to fit the culture and long-term goals of a specific company. Generally, ESOPs purchase stock from selling owners. The value of the ESOP is then distributed as “ESOP shares” to a large number of employees, who are often referred to as “employee-owners.” Profits of the firm are shared with the ESOP’s employee-owners in the form of distributions to all shareholders including the ESOP. The value of the ESOP grows tax-deferred both from on-going profit distributions and increases in the value of the company. ESOPs, however, lose value if the company share value falls. Is an ESOP right for your company? It depends

Brian Rice

See BRIAN RICE, page 12

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

ON THE MOVE TAMARA CLARKE JOINS DEWBERRY’S ARCHITECTURE PRACTICE Dewberry , a privately held professional services firm, announced that Tamara Clarke, AIA, LEED AP BD+C, WELL AP, joined the firm’s Sacramento, California, office as a principal and market segment leader for the justice architecture group. With more than 30 years’ experience, Clarke brings expertise in various project types, including adult and juvenile detention and correctional facilities, courthouses, customs and border protection facilities, emergency operations centers, forensic laboratories, and public safety centers. In her role as a market segment leader, Clarke will be responsible for overseeing projects and clients across the state/local and federal markets. Prior to joining the firm, she worked with HOK in San Francisco. A few of her notable projects include the LEED® Gold San Mateo County Maple Street Correctional Center in Redwood City, California; and San Francisco Police

Department Traffic Company and Forensic Services Division Facility in San Francisco. “We are thrilled to welcome Tamara to our growing California practice,” says Dewberry Associate Principal Erica Nelles, AIA. “Our justice clients require unique subject matter expertise and commitment to creating environments that support both rehabilitation of inmates and retention and the health of officers and staff. Tamara is the right person to lead these efforts.” “I am very excited to join Dewberry’s architecture practice,” says Clarke. “My design philosophy of creating beautiful civic buildings that enhance the environment while producing restorative, healing spaces that serve the humanity of our communities complements Dewberry’s mission of creating responsible and innovative solutions.” Clarke earned her bachelor’s degree in design, architectural studies from Arizona

State University. She is an active member of numerous professional organizations, including the American Institute of Architects, American Jail Association, American Correctional Association, and the California State Sheriff’s Association. Clarke has been featured in multiple publications, including Correctional News, Arizona Woman, and The Arizona Republic. Dewberry is a leading, market-facing firm with a proven history of providing professional services to a wide variety of public- and private-sector clients. Recognized for combining unsurpassed commitment to client service with deep subject matter expertise, Dewberry is dedicated to solving clients’ most complex challenges and transforming their communities. Established in 1956, Dewberry is headquartered in Fairfax, Virginia, with more than 50 locations and more than 2,000 professionals nationwide.

BRIAN RICE, from page 11

financial performance. Minimally, this performance is shared annually with the announcement of changes in ESOP value. However, employee-owners can better impact the bottom line if there is a culture of openly sharing key financial information. This includes understanding what financial metrics they directly influence and how those metrics are currently doing. At F&V, core financial information is shared with all employees at least quarterly and a more in-depth analysis is shared annually at an all-staff breakfast. ❚ ❚ Your firm organizes as a subchapter S-corporation. The power of an ESOP shines in S-corporation firms. “S-corps” do not pay federal income taxes. Instead, the individual owners of an S-corp pay the companies federal income tax with each owner paying tax on their percentage of ownership. However, federal income tax is not paid on company stock held in an S-corp ESOP. This is significant when an ESOP owns 100 percent of the S-corp. ❚ ❚ Your firm is sized to properly administer the ESOP. Attorney Justin Stemple, who specializes in ESOPs at Warner Norcross + Judd, LLP (Grand Rapids, Michigan), says successful ESOP ownership typically happens with at least 25 employees. It is possible to have an ESOP with fewer than 25 employees, but smaller companies may struggle with certain IRS compliance tests, particularly those seeking to be 100 percent ESOP owned S-corporations. According to Stemple, if you are below this number, you may find the administrative costs of the ESOP (e.g., annual valuation, administrative, and legal fees) are too burdensome to generate enough profit to cover day-to-day company needs and fund growth opportunities. For firms that have the right culture, staff, and motivations, the time and resources needed to design and sustain an ESOP are dwarfed by increased engagement and creation of wealth for employee-owners. If you think an ESOP is right for your firm, do your research and work with experienced professionals to design one to fit the culture and vision of your firm. BRIAN RICE is a principal and manager of the Environmental Services Group at Fleis & VandenBrink. He can be reached at brice@fveng.com.

on your situation. In my experience, the more a firm holds true the following characteristics, the more likely an ESOP is a good and viable option. ❚ ❚ Your firm has a track record of profitability. Nothing increases the likelihood of a successful ownership transition like solid profits. They are essential for a company to provide enough working capital to reward staff, maintain quality work environments and keep up to date with training and equipment. However, when a transition of ownership is added into the equation, enough profits must also be generated to accumulate cash for a future transaction, or to service debt to fund a current transaction. While profitability is key for most transactions, it is magnified when an ESOP is involved because employees have a direct ownership stake. “For firms that have the right culture, staff, and motivations, the time and resources needed to design and sustain an ESOP are dwarfed by increased engagement and creation of wealth for employee-owners.” ❚ ❚ Your firm commits to ESOP education. It is important that participants in an ESOP understand their role in creating a successful employee-owned firm. Ali Jamshidi, CFO of CTL Engineering, Inc. based in Columbus, Ohio, reports that employee-owner ESOP education at his firm has been ongoing for nearly two decades. This includes annual ESOP education and discussions at the 12 CTL offices located in five states. Annual ESOP education details the rights and responsibilities of CTL’s nearly 300 employee-owners. The firm finds this education helps employees identify methods to cut costs and increase revenue while keeping client satisfaction high. ❚ ❚ Your firm shares key financial information. While most employees at an ESOP company are not involved in the day- to-day management, all are directly impacted by company’s

THE ZWEIG LETTER OCTOBER 26, 2020, ISSUE 1365

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