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HR | FINANCE S U P P L E M E N T S Pages 9 - 12
D e c emb e r 12 , 2 011 , I s s u e 9 3 8
Why design professionals don’t earn more
T R E N D L I N E S
W e recently ran a couple columns in Structural Engineer magazine discussing why structural engineers don’t make more than they do. You should have seen the volume of email and letters that poured in as a result! There’s lots of anger and frustration, it seems, among all design professionals as to why they can’t seem to make what doctors, lawyers, accountants, and management consultants earn. One fellow mentioned that his son, who is practically fresh out of school and works for a major management consulting firm, bills at $375 per hour. Another talked about “the layers” that other professions, such as lawyers, have, something that allows them to charge $150 per hour for a junior attorney. And yet another reader who works in the power industry claimed he couldn’t come close to charging rates like the rest of the consulting industry. You get the point. It’s an age-old topic, but worth bringing up again. Here are my thoughts on why design professionals don’t make more than they (the majority) do: ❚ ❚ You like it so much you’ll work for free. Client doesn’t want to pay a good fee but it’s a neat project? No problem! You guys are ready to do it anyway because of the publicity you’ll get from it. Client has burned you in the past and been super slow to pay or refused to pay a legitimate bill? No problem. We don’t have anything better to do with our time and it will “keep our people busy.” This stuff kills you! ❚ ❚ Risk aversion. “Design/build is scary.” “At-risk construction? No way!” “Work in the Middle East? You have to be kidding.” I could go on, but you get the idea. Most design professionals really just want to get paid by the hour and design every minute they can and are completely comfortable trading off bigger reward potential for lower risk. It is part of the culture of the business. Mark Zweig points out the origins of the problem.
F I R M I N D E X GOP Limited........................................................... 4 H&A Architects & Engineers................................. 5 MBP, Inc........................................................... 4, 11 Merrick & Company............................................... 3 Morrison-Shipley Engineers, Inc........................... 4 Perkins+Will. ......................................................... 6 P.W. Grosser Consulting, Inc.................................. 9 Shive Hattery......................................................... 5 Winzler and Kelly. ............................................... 11 In another indication of how the A/E/P and environment consulting industry has been affected by the recent economic downturn, turnover rate has seen a steep decline in the last few years. In fact, the 2011 Financial Performance Survey finds that turnover rate – which indicates the annual percentage of employees who have left a firm compared to total employees – fell to a five-year low this year. While the median has remained steady from 2007 to 2009, it dropped from 14.7 percent in 2009 to 13.3 percent in 2010, and in 2011, declined to 10 percent. – Margot Suydam, Survey Manager
See Mark Zweig, page 2
Client doesn’t want to pay a good fee but it’s a neat project? No problem! You guys are ready to do it anyway because of the publicity you’ll get from it. This stuff kills you!
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Stay successful – Is it time to raise rates? Page 4
I N S I D E
xz top player: Employee-owned company thrives on passion. Page 3 xz fromthe chairman: Cash is king! Page 7 xz finance: Building a strong finance team. Page 11
T H E V O I C E O F R E A S O N F O R A / E / P & E N V I R O N M E N TA L C O N S U LT I N G F I R M S
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
A/E BUSINESS NEWS Construction spending up:
Mark Zweig , from page 1
generation and the cycle continues. This is one reason why I am going to be teaching a course this spring at the Fay Jones School of Architecture at the Uni- versity of Arkansas entitled, “What they don’t (usually) teach you in architectural school.” We’re going to be putting some super-successful architects and busi- ness people in front of these students as guest lecturers so they can show them what is possible and how. There will be more on this topic in future issues of The Zweig Letter . Thoughts or comments? Write me. Mark Zweig is the founder and CEO of ZweigWhite. Contact him with questions or comments at email@example.com . Successful firm survey: Even during the recent economic downturn, there are firms in the A/E industry that still report continued growth and increasing profits. How do the most successful architecture, engineering, and environmental consulting firms do business? What are they doing that you’re not? Find out with the 2011-2012 Successful Firm Survey of Architecture, Engineering, Planning & Environmental Consulting Firms. For more information or to buy a copy, call 800-466-6275 or log on to www.zweigwhite.com/zw-1114.aspx.
❚ ❚ You cut each other’s throats. “We don’t want XYZ to get this job and have a chance to steal our client from this point on – plus we need it – so we will buy it for one-and-half times raw labor.” This keeps you busy and keeps you from having the ca- pacity to do anything else that pays better. It also encourages cutting cor- ners because the project P&L looks so bad, which creates future liability problems. ❚ ❚ You haven’t sold clients on the benefits of what you do. Don’t deny the importance of this state- ment. Design professionals are not effective sellers. Many cannot give an elevator pitch on their firm (in 30 seconds, why a client should hire them). Most cannot clearly articulate what it is that makes their approach different or unique – therefore justi- fying a higher priced service. Those who get evidence-based design know what I am talking about. You need hard data to prove the worth of what you do. ❚ ❚ Not enough barriers to entry with resulting oversupply. It is just too easy to get an architecture or engineering degree and get reg- istered, and we are turning out too many of you right now. The more people we turn out with basic creden- tials, the less likely you will be able to get paid decently. It is a classic case of oversupply – especially today. You should see how difficult it is for a new architectural graduate with a five- year degree to get a job – it’s nearly impossible. The registration exams need to be tougher and the intern- ship requirements more rigorous if you want to reduce supply and raise prices. ❚ ❚ Not enough business education. No new news here. Most architects and engineers have little or no busi- ness education. This keeps them from understanding how to create a brand that commands a higher price, how to set prices, how to negotiate, how to build a business that has staying power over the long haul so they aren’t desperate for work, how to bill and collect, and so much more. The lack of business education is a killer. ❚ ❚ Not enough successful role models. Too many of those teach- ing design professionals were never successful design professionals. They pass on their distorted ideas about what is possible to the next
Construction spending increased for the third straight month in October as private activity strengthened while public spending shrank, the Associated General Contractors of America reported in an analysis of new Census Bureau data. Association officials cautioned that further declines in public sector activity may soon swamp gains in homebuilding and private nonresidential investment. “The apparent stability in construction spending data is masking conflicting trends,” said the association’s chief economist, Ken Simonson. “On one hand, private investments in construction are slowly accelerating, while public sector investments are declining at an even faster rate.” Simonson noted that total construction spending ticked up by 0.8 percent from September to October and inched down just 0.4 percent over the past year. He added that investments in private nonresidential construction increased by 1.3 percent for the month and 8.4 percent compared with October 2010. Private residential construction posted increases of 3.4 percent and 1.7 percent, respectively. In contrast, public spending declined by 1.8 percent last month and 9.4 percent from a year earlier. Vegas drama: Two subcontractors have joined the general contractor in fighting plans by MGM Resorts International to implode the unused Harmon Tower at CityCenter on the Las Vegas Strip, according to VEGASINC. The CityCenter casino-resort complex, half owned and managed by MGM Resorts International, says the 26-story hotel structure is unsafe because of construction defects. Operators are seeking approval to implode the tower from Clark County and in a Clark County District Court lawsuit, according to the article. The lawsuit is over the defects and money CityCenter has refused to pay general contractor Perini Building Co. and several subcontractors for what it calls flawed work on the $279 million building. The structure, where work was halted in early 2010, had been planned for 47 floors but was capped at 26 when the defects were discovered, according to the article. Perini insists the structure is safe and the defects can be repaired. The company is leading an effort to stop the implosion plans, according to the article.
38West Trenton Blvd., Suite 101 Fayetteville, AR 72701 Mark Zweig | Publisher firstname.lastname@example.org João Ferreira | Managing Editor email@example.com Christina Zweig | Staff Writer firstname.lastname@example.org Tel: 800-466-6275 Fax: 508-653-6522 E-mail: email@example.com
Online: www.thezweigletter.com Twitter: twitter.com/zweigwhite Blog: zweigwhite.blogspot.com Published continuously since 1992 by ZweigWhite, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/yr.). $475 for one-year membership, $775 for two-year membership. Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399-1900, ext. 139, or e-mail TheZweigLetter@TheYGSGroup.com. © Copyright 2011, ZweigWhite. All rights reserved.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
TO P P L AY E R
Employee-owned company thrives on passion
Hot Firm has grown by leaps and bounds, and burst borders. O ver the last 15 years Merrick & Company (Aurora, CO), transi- tioned from an employee-owned re- gional firm to an international power- house with offices in four countries. The man that led the transformation of the 475-person, $125 million engineer- ing, architecture, design-build, survey-
TZL: Do hold someone as a special mentor? How did this person influ- ence who you are? RC: My uncle Gene Farnen was my mentor growing up. He pushed me when I needed it. I sought out a couple individuals in the industry for advice in the early years of my career. TZL: What’s the one trait you most admire in people and why? RC: Attitude. It eats change for break- fast. TZL: Describe the most challenging thing you have ever done/the big- gest challenge you have taken on outside of work. RC: Moving across the United States, a day after getting married in Pennsylva- nia. My wife Susan and I knew nobody in Denver and had to start a new net- work of friends and associates. TZL: What question would you ask of another Hot Firm leader? RC: What is your vision of the industry in 10 years? TZL: What lesson learned would you pass along to a recent college graduate embarking on a career in the A/E/P and environmental con- sulting fields? RC: Stay positive, be mobile and be open to different job assignments. Call to 2011 Hot Firm leaders Is your firm a member of the exclusive The Zweig Letter 2011 Hot Firm List? Well, then you are a candidate for this space. Every week we feature the leader of a 2011 Hot Firm. This is your chance to showcase your firm’s success and your personal rise to the top. To receive a questionnaire, please contact managing editor João Ferreira at firstname.lastname@example.org. Return the completed questionnaire, along with a high resolution photo, and we will review and gladly publish your Q&A in a upcoming issue.
strategic plan. Personally, I got where I am through being open-minded to cross- training, taking risk, working hard and sur- rounding myself with many talented people. TZL: Do you remem- ber your first paid job? What did you learn then that still influences the way you work today? RC: My first job was a dish washer for 60 cents per hour in 1967. From this I said to my- self that I was getting a college education.
Ralph Christie, Chairman, President and CEO, Merrick & Company.
“You and your team need to be committed to success and to be flexible along the journey as the markets change.”
ing, and geospatial solutions firm is Ralph Christie, who is chairman, presi- dent and CEO. Under Christie’s leadership, Merrick has sustained its profitability over the past 10 years with growth in profitabil- ity exceeding its growth in revenues. Ah, Merrick has also attained a prom- inent spot on The Zweig Letter 2011 Hot Firm List, just outside the Top 10, at No. 11 – several spots bet- ter than its No. 24 placing in the 2010 Hot Firm List. In this interview Christie, who in 2012 will cede the president title to David Huelskamp (Christie will retain the chairman and CEO titles), talks about the rise of Merrick, how passion for the company helps it thrive and how the industry is evolving. The Zweig Letter: What does it mean to be a Hot Firm? Ralph Christie: It means that Mer- rick’s strategic plan, developed over six years ago, is getting and maintaining traction. TZL: How did you get where you are today? RC: A positive team attitude with members who were committed to the
TZL: What is it in your DNA that drives you to success? Is it audac- ity and risk-taking; a can-do at- titude and a relentless pursuit of perfection; something else more abstract? RC: A passion for our employee-owned company – Merrick – and a passion for our industry. TZL: In today’s difficult business climate, what does it take to suc- ceed? Is the spectrum of failure a motivator? RC: You and your team need to be committed to success and to be flex- ible along the journey as the markets change. TZL: Where do you see this indus- try in 10 or 20 years? What trends are influencing it? What about your company? RC: Our industry is as important, or more important, than many industries and will continue to be so in the future. We solve health, safety and security problems around the world. In 10 to 20 years Merrick will be larg- er, continuing to grow and be employ- ee-owned.
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
S U R V E Y
Stay successful – is it time to raise rates?
Fast-growth firms increase billing rates, while most other firms feel they are stuck between a rock and a hard place. By Christina Zweig Staff Writer T he economy has caused many firms in the A/E/P and environmental consulting industry to duke it out with the competition more than ever. Many firms have embraced rock-bottom rates to remain competitive, but this can be dangerous, especially for smaller firms that may quickly feel the effects of even a small decrease in revenue.
Lynn DeWolf, vice president of corpo- rate services, said that MBP generally reviews fees annually, “But what we are able to invoice is dictated by contract. Many clients have held rates flat for the past three years.” Morrison-Shipley Engineers, Inc. (Ft. Smith, AR), a civil engineering and land surveying firm with close to 50 people, has seen a resistance to price increases. Nevertheless, the firm has enjoyed success in the second half of 2011. Greg Shipley, president, notes that many of his firm’s clients are very cost- driven, even when desiring more ad- vanced technologies, such as building information modeling.
firm, said the firm re- views fees and billing each year. “In the past, fees were adjusted to reflect sal- ary and overhead in- creases. Our 2011 rates are $15 more than for 2009,” she says.
Donna Wirth, Partner, CFO, and Director of Marketing, GOP Limited.
Monitoring when to in- crease billing rates, and having a criteria or pro- cess for doing so, is a key to success, says ZweigWhite found- er and CEO Mark Zweig. The survey showed that 100 percent of fast-growth firms updated their billing rates annually. Seventy-eight percent of very high-profit firms updated their billing rates annually, with the remain- ing 22 percent updating rates every two years. Seventy-nine percent of all firms updated their billing rates annually, 12 percent updated every two years, four percent every six-months, and the re- maining six percent said “other,” or did not specify at all. Shipley says Morrison-Shipley updates fees annually. “We typically review our billing rates about mid-year once we have complet- ed employee evaluations and made any resulting pay adjustments,” he says. Wirth said 2010 saw some increases due to employee designations, but not due to overhead. “We typically strive to keep our over- head costs at a minimum and that has helped to maintain them over the past three years,” she says. “And luckily, in- creased overhead costs in some areas were offset by a decreased cost s in oth- er areas.” Looking toward the future, Wirth says GOP Limited’s fees will likely increase in 2012. “I don’t anticipate salary increases, yet I project our overhead for 2012, espe- cially healthcare costs, are increasing to the point that we need to consider a fee increase,” she says.
“We have seen some reluc- tance by clients to pay the additional fees that these projects can incur,” he says. “During ‘normal’ times, we would typically make slight adjustments to our rates to
“We have seen some reluctance by clients to pay the additional fees that these projects can incur.”
Billing rates are altered with consider- ation to multiple factors – inflation and changes in the economy, a need to cov- er cost-of-living, staff salary fluctua- tions, a desire to remain competitive in the market, and increases in insurance and other overhead expenses.
reflect increased salaries; however, for the past three years we have made NO adjustments to our billing rates, even though we have raised salaries some during that time period.” Charge more, grow fast. Ac- cording to ZweigWhite’s 2011-2011 Successful Firms Survey, fast-growth companies appear to be the only ones increasing their billing rates. Over the past three years, fast-growth firms in- creased billing rates by a median of 11 percent. Very high-profit firms’ medi- an increase was very modest – only 5 percent – and all other firms increased rates by 6 percent. The 2011-2012 Suc- cessful Firms Survey characterizes a “fast-growth firm” as one that has at- tained an average annual revenue and staff growth of 20 percent or more over the three-year period under analysis. A “very high-profit firm” is defined as a firm that has had an average annual profitability of 15 percent. When to increase. Donna Wirth, partner, CFO, and director of market- ing at GOP Limited (Cincinnati, OH), an 11-person structural engineering
Many of these areas have pushed cost-in- creases over the last few years, but many firms have not covered for the impact by rais- ing billing rates. Though MBP (Fair- fax, VA), a 270-per- son, multi-disciplined construction consult- ing firm, had a modest
Blake Peck, President and COO, MBP.
increase in billed fee revenue in 2011, Blake Peck, president and COO, felt many of their clients wouldn’t support a major increase in fees. “We were challenged with respect to our bottom line. Much of this was due to the impact of the federal budget cuts on the public owners whom we are working for,” Peck says.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
OWN E R S H I P
Keep transition plans up-to-date
Assuring future leadership and ownership is essential, even in bad times. By Liisa Sullivan Correspondent A smooth leadership transition is in- tegral to an organization’s survival. It tests the company’s ability to evolve and to fulfill its mission in a changing environment. A successful leadership transition preserves an organization and allows it to grow and adapt to meet new challenges with a fresh outlook. Leadership transition plans. At Shive Hattery (Cedar Rapids, IA), a 300-person architecture and engineer- ing firm, President Thomas Hayden has a plan in place.
“With that kind of performance, we have no trouble whatsoever attract- ing new employee investors and having our owners continue to buy as much stock as we want to offer,” Hayden says. “More interestingly, perhaps, is that our ownership transition plans have been little impacted, even when we’ve had significant stress during prior re- cessions.” Hattery explains that the company had to make some shifts in employment among the various disciplines, but overall staff size is growing and leader- ship transition plans have not been im- pacted. Five key elements of a successful leadership/ownership transition plan ❚ ❚ Invest in people. The development of, and investment in, people who will likely step into key roles is paramount. “You must have people who deliver outstanding client service, fulfilling careers and professional satisfaction for our employees, and financial success so that we can reward ourselves and grow,” says Thomas Hayden, president of Shive Hattery. “Those are our very best performers. We’ve done that and it’s sure paid off in the past, and will in the future.” deal to be an owner in your company,” Hayden says. “Sure, we’ve had some lean years in the past, but we’ve never had a loss and we’ve also balanced those times with terrific success over the long term. And, I think spreading the ownership among a significant number of employees is important to assuring a ‘market’ for your stock. We think our ❚ ❚ Open book culture. “You must continuously show that it’s a great ownership should include about 15 percent more or less of our full-time employees. It could be more or less, but not 5 percent or 50 percent.” ❚ ❚ Stay on top of the plans. “It’s important to revisit plans to ensure that they continue to evolve as the company does,” says Patricia Davison of H&A Architects & Engineers. ❚ ❚ Ensure time is invested in mentoring/ training. ❚ ❚ Continuously observe candidates as they progress.
cupant, CEO, and hu- man resource director for competencies need- ed. Then, each candi- date is rated on each of those competencies,” Davison says. “A train- ing plan is developed to ensure that the can- didate is either trained or tested in the com- petencies of that po- sition. Candidates are not made aware of the
Patricia Davison, VP and HR Director, H&A Architects & Engineers.
consideration for a higher position. This way we do keep the plans fluid and they can change without disappoint- ing/de-motivating anyone.” Davison admits that, due to the slow- moving economy, their transition plans have not lately received the attention that they deserve. “We have had an increased focus on marketing,” Davison says. “However, this is changing, and human resources it the main driver. It is assisting with ensuring that training opportunities are identified and that plans remain updated.” Ownership transition plans. Shive Hattery is also focused on a smooth ownership transition for the company. Hayden says that the com- pany has an orderly required buyout of shares for all its shareholders at one third by each of the shareholder’s 64th, 65th and 66th birthdays. “So, we have dates certain for stock buyouts due to ages,” Hayden says. “We also buy out our shareholder’s stock if they leave the company or cut back to 3/4 time for any reason. “Payments are stretched out over six years, so the financial drain is manage- able. We’ve been doing this since the 1960s and wish I could take credit, but it was all set up by our predecessors,” Hayden says. A strong leadership plan won’t falter. Despite turbulent economic times, Shive Hattery has been having its best revenue and prof- its ever.
“We are always think- ing about leadership succession, but espe- cially the last five or more years due to the beginning retirements of the baby boomers,” Hayden says. “Replace- ment candidates are in place for key positions. In fact, within the last few years we had retire- ments of all of our cor-
Thomas Hayden, President, Shive Hattery.
porate shared services team leaders, in- cluding our directors of marketing; hu- man resources; and finance (our CFO). We had ideal replacements lined up and they will lead those teams for many years to come. Other key positions will be vacated over the next five or more years and we are prepared with internal candidates.” Patricia Davison, vice president and di- rector of human resources of H&A Ar- chitects & Engineers (Glen Allen, VA), a 257-person firm, agrees that a strong leadership transition plan is key to a company’s success. “We have succession plans that are flu- id in nature and have tasked each of the core positions to identify replacements (for immediate occupancy, just in case) and to identify successors. First, each position is analyzed by the current oc-
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
F E E D B AC K
Database of transparent materials available
Better terms on accounts payable You can request better or extended terms. I n the Nov. 28 issue of The Zweig Letter , we wrote about tactics can use to increase cash flow. Doug Rawson , president and CEO of Base Builders, had one more point to add.
Perkins+Will project aims to increase awareness. C hicago-based Perkins+Will has launched the built environment’s first free, universally accessible data- base aimed at creating greater transpar- ency into building materials containing substances that are publicly known or suspected to be associated with an ad- verse finding in relation to human and environmental health. The database can be accessed at transparency.perkinswill. com. The database is the result of over two years of review of governmentally pub- lished scientific papers, which identi- fy “precautionary” substances that are known or suspected to cause harm to humans and the environment. The in- tent of the list is to encourage the build- ing product marketplace to become more transparent from extraction to end of life for all points of contact, from manufacturers to de-constructors, so that people are further empowered to make informed decisions about speci- fying, maintaining and disposing of the products in their buildings. Perkins+Will, a 1,700-person architec- tural, urban and interior design firm, originally offered a truncated list in 2009. The new site includes further pub- lications which delve into topics perti- nent to the industry. These publications are targeted toward enhancing the de- sign profession’s knowledge of how ma- terial selection has the potential to im- pact human health by focusing on areas where publicly available information is presently limited. Included in the site is an “asthma list,” a list of substances that are known or suspected to be common asthma trig- gers and asthmagens sourced from gov- ernmental lists. The firm hopes that this asthma list will raise awareness of the pervasiveness of substances with sus- pected links to asthma and the need for research on this topic. Additionally, a “flame retardants list” has been added
to the site, featuring original research by the Green Research Policy Institute. The list addresses the historical lack of research on the substances that make up some or all of the content of flame re- tardants by cataloging these substances and their known or suspected health and environmental impacts. A white pa- per entitled “Fly Ash in Concrete” is also available for download in the resources section of the site. This publication is a primer, and a consolidation of many of the diverse opinions regarding the safe- ty and ecological implications of using this controversial building material. All of these publications are provided as a resource to aid the design professional, the end user, and the public in their in- dividual review of published sources so that they can continue their research and form their own opinions. “Many of the materials we address in the Transparency Site have been opaque to the industry,” Peter Syrett, associ- ate principal at Perkins+Will, said in a statement. “As architects, we should thoughtfully consider the social and en- vironmental impact of our professional activities, and while there are no perfect building materials, we hope this Trans- parency Site will aid the building prod- uct marketplace in making choices that support the highest ethical intentions.” The Transparency Site is designed so that as additional resources become available, they can be continually added, building an invaluable asset for those concerned with how our time in build- ings from homes, hospitals, and schools, to the workplace may affect our health. “To design holistically, human and en- vironmental health are top priorities,” said Peter Busby, managing director of the Vancouver office of Perkins+Will. “Promoting education and disseminat- ing information about the makeup of construction materials is the right thing to do. By making this research publicly available we empower ourselves, our cli- ents and the industry to make informed decisions about the health of our build- ings.”
One quick tip to help keep your cash flow positive is to get extend- ed terms on your accounts payable. Most vendors will ask for payment terms of net 30 or less.
Doug Rawson, President and CEO, Base Builders.
Depending upon the vendor you may be charged late fees or interest if you do not meet the due date. However, this does not mean that you can’t request better or extend- ed terms. If you are billing your client for re- imbursable expenses wouldn’t it be great to pay for those expenses when you get paid by your client? If you simply contact your vendor and request extended terms quite often the vendor will oblige. Of course for this to be most effective you need to do well in advance of the due date. I hope that this tip will help you manage you cash flow. Do you have something to say about an article you read in The Zweig Letter? Send you feedback to João Ferreira at email@example.com.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
Cash is king! As in the family business, stay close to your clients… and don’t fear asking for payment.
figure out the big idea: “If I don’t collect my bills, my family won’t eat and I can’t pay the rent. If I stay close to my customers, know a lot about what makes them happy, what scares them, when to be a friend, I’ll eat very well.” Not a bad strategy for improving cash flow. It’s time we got everyone in our firms more closely connected with our clients, what they’re up to, how they’re doing… and what the triggers are for when they do or don’t pay their bills. We aren’t delivering bread and pastries, but we do see our clients frequently. There’s certainly no reason (other than our own personal discomfort) not to turn up your empathy with your client and present the bill personally. If you were renting your computer, desk, office space, secretarial and other support services – then selling your architectural or engineering services to a client – and your family’s diet depended on your ability to get your bill into your client’s hands and to collect it in a timely fashion, I suspect you could learn how to be an open and empathetic listener and friend to your clients. Funny how easy it can be to change your personality. There’s certainly no reason (other than our own personal discomfort) not to turn up your empathy with your client and present the bill personally. Some ideas are transferable, like presenting the bill personally. Others are not. And since we don’t run our businesses this way, how do we create a condition that would instill the same sense of personal urgency and attention to our cash flow? Here’s my suggestion: Think of the payment for your services as your report card when you were in school. If you turn in your test late (don’t get the bill in your client’s hands in a timely fashion), you won’t get your report card. Mom and dad will start pestering you and you’ll have to fess up. They’re not going to buy your story that the dog ate it, are they? Who in your circle of friends and business associates can be mom and dad? Your family? Care to share this game with them? If you have kids, it’s a great way to teach them about cash flow. They’re certainly not learning it by playing computer games. Think about the check you receive as your report card. Submitted your invoice in a timely fashion? You should have every reason to expect a check in 30 days. It’s late? You’re getting a bad report card and need to sit down with your teacher (client) right away to find out why. A smart employer would withhold your paycheck until you picked up that “report card.” And your family might provide you with a little added incentive to get your homework in on time and check in with your teacher frequently to see how you’re doing. I have a pretty good notion that this is what my father meant when he said, “Cash is king.” EDWARD FRIEDRICHS, FAIA, FIIDA, is ZweigWhite Group’s chairman and the former CEO and president of Gensler. Contact him at firstname.lastname@example.org.
F unny words; ones I remember my father saying about his bakery business. He had a couple of hundred bakery truck drivers who knocked on doors selling bread, cakes, pastries and cookies. A customer would order the occasional birthday cake and, for that special occasion, a wedding cake. At Christmastime, we sold great fruitcakes – if you like that sort of thing. I think most of his customers soaked them in bourbon for a couple days – made them slide down the throat more smoothly. The drivers had regular routes and a “book of business”: a neighborhood full of customers (clients, really, since the driver knew what their standing order was, knew the family, knew about the birthdays and special occasions). Like any business, a bill was delivered each month with great expectations that it would be paid promptly. In this case, the driver delivered the bill; it wasn’t sent from the bakery. I always thought that personal touch of looking the customer in the eye as you hand them bill was a pretty effective way of reinforcing the personal nature of your relationship. Most of the time, it was paid on the spot. Funny how many other times the homemaker wasn’t at home on the day the bill was to be presented. The pursuit would ensue, with the driver knocking on the door over the next several days until he collected. My father’s business model was an interesting one. It wouldn’t be such a bad idea to adopt
it in our professions. His drivers were, for all practical purposes, in business for themselves. They rented the truck, bought and resold the merchandise for a profit and, most importantly, submitted and collected their own bills for merchandise delivered and, in its own way, a service rendered. If their bill sat in the truck instead of being handed to the customer, their personal cash flow deteriorated quickly. If they didn’t knock on the door, and hunt down Mrs. Jones, they wouldn’t be able to pay for the merchandise they’d sold or the rent on the truck. Some drivers were better than others; always came in with enough money at the end of the month to meet their obligations and take home a sufficient amount to pay their bills, feed their family and put some away in their savings accounts. Others were a little less diligent or had a neurosis about asking for the money. But it didn’t take them long to
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
Know all the buyers Four-part selling process requires knowing all the parties involved. P eople who want to succeed in selling in the present climate need to understand buyer psychology. One of the best books on this sub- ject is The New Strategic Selling, part of a series by Robert Miller and Stephen Heiman.
to a faceless company, owner or institution that is unified in what it wants. The fact is that people buy from people. And decisions are made as much on emotional factors – attitude, body language and chemistry – as they are on résumés and numbers. Perhaps there isn’t enough time to learn fully how decisions are made and what each decision-maker cares about, but don’t neglect to do the homework. Who holds the greatest influence in the buying process and what can you find out about the person’s hot buttons and personality? Is that person relational or get-to-the-facts? Is the person passionate about sustainability or convinced that it’s a gimmick? More knowledge translates to better preparation and great- er chances of winning a project. Match personalities. Don’t bring a principal archi- tect who likes to wax eloquent to a meeting with a crusty facility manager. Know the buyers involved to do a better job of matching people to their style and personality. Soft-spoken engineers can be a better choice in an inter- view if there is awareness beforehand that the buyers hate aggressive sales types. Alternatively, an architect may want a passionate and articulate mechanical engineer to really sell the job. People like to buy from people they have some connection with. Take time to think about who are the best people are to make those critical connections. A coach is key. Save a lot of time in this process by find- ing someone who knows already what to avoid and what people care about. In fact, locate someone who can present a CliffsNotes version of buyer psychology. And pay back the favor, regardless of the result. Change is not always good. One of the most en- lightening chapters of The New Strategic Selling is about how different people view change. Change can be a new building, a system upgrade or a renovation. It’s natural to assume that the project, whatever it is, is considered a good thing by the people making the decisions. A campus president may be excited about an opportunity to build a net-zero building. But a facility manager may be worried about figuring out how to incorporate a new HVAC system. And an in-house construction project manager may be concerned that a large construction firm could make him look bad. The point is that different buyers often have dif- ferent responses to a project. Take time to put yourself in each person’s shoes and then determine the appropriate approach. Effective selling requires understanding that the purchase decision is often complicated and split among more than one buyer. Take time to understand who the main buy- ers are, what they care about and how connections can be made. Leo MacLeod is a new business coach and a strategic consultant. Contact him at email@example.com.
Miller maps out a four-part selling process, which I’ve adapted in my work for the local ar- chitecture, construction and engineering indus- try. Miller describes selling not as a one-time event, but as a process of preparation. The Mill- er-Heiman approach looks at all the “buyers” in- volved in a sale, rather than just one person. Particularly in larger pursuits, there are people who hold most of the buying authority (econom- ic buyers); those who have to live with the build- ing after the punch list is complete (user-buy- ers); those who actually know what “MEP” is and will be involved in the project (technical buyers); those who screen out firms calling to find out the inside scoop on a request for proposals (gate- keeper-buyers); and people outside the process who can provide critical information (coaches). I added a fifth “partner-buyer” for AEC. Partner- buyers are the architects or prime consultants who receive pitches from subconsultants seeking to join the team. For many consultants, selling the partner-buyer is more important than selling the owner.
The Miller-Heiman process uncovers what isn’t known about each buyer and a seller’s position. The work, then, is for a seller to cover the bases by finding out what each buy- er cares about. Educating the different buyers and develop- ing relationships well before the RFP is key to a solid busi- ness development strategy. For a community college, for instance, the bond manager (economic buyer) may hold the final say, but the campus president (user-buyer) may weigh in. There may be an in- house project manager or facility manager (technical buyer) who also is part of the decision-making. The procurement person issuing the RFP is the gatekeeper. A structural en- gineer may be part of the architect team (partner-buyer). A facility manager (coach) at another community college may provide insights into how purchase decisions are really made. This process, when done correctly, requires a consid- erable time commitment that most firms simply don’t have. It makes sense when the lead time is significant and the contract amount is large enough to justify the business de- velopment investment. There are, however, a few key strat- egies that any firm can use in pursuit of projects. Sell to the people. Stop thinking that sales are made
Article originally published in the Daily Journal of Commerce.
© Copyright 2011. ZweigWhite. All rights reserved.
HR A SUPPLEMENT OF THE ZWEIG LETTER
DECEMBER 12, 2011, ISSUE 938
B E S T F I RM
PWGC is about life paths for employees
Enviable perks and workplace practices make them a Best Firm. By Bryan Sullivan Correspondent P romoting a positive workplace sounds like typical corporate jar- gon. However, when a company ad- dresses the real issues that affect em- ployees – such as health care, time off, adequate work environs, retirement plans, housing costs and more – it’s more than talk. P.W. Grosser Consulting, Inc. (Bohe- mia, NY), a 58-person civil engineering and environmental engineering servic- es firm, believes the above is a win-win approach to business. That belief has help make PWGC the No. 7 Best Civil Engineering Firm to Work For in 2011. Success is all about taking care of your team, says Paul Grosser, PWGC found- er, president and CEO. “PWGC’s exceptional workplace prac- tices are effective and creative; they im- prove and strengthen employee rela- tions and loyalty, and promote a posi- tive workplace culture,” Grosser says. “We have institutionalized a high lev- el of teamwork and communication and offer rich healthcare benefits, paid 100 percent by the firm, which include: medical, dental, prescription and life insurance for all employees and depen- dents at no cost to any employee.” PWGC also provides a generous time off program where employees receive 18 paid days off after three months of employment, plus 10 paid holidays. A 401(k) plan with a company-match of 3 percent is offered, along with the abil- ity to participate in the “Employer-As- sisted Housing Program” with Long Is- land Housing Partnership and Suffolk County. “To date we have successfully assisted five employees with the purchase of their own home with our $5,000 net
PWGC Fast FAQS How many employees? 58 Location: Bohemia, N.Y. Number of offices/ locations: Four (Bohemia, New
The PWGC team.
contribution that was turned into up to $37K in down payment assistance and $35K in rehabilitation,” Grosser says. “In addition, we provide tuition assis- tance, payment of all professional reg- istration fees, and dues for professional organizations.” And if all this isn’t enough, PWGC con- tributes to the Long Island communi- ty through charity donations, fundrais- ers, high school mentoring and shad- owing programs, a high school schol- arship program, and generous summer internship program. “With fewer issues on an employee’s mind, the more productive a team member, he or she becomes,” Grosser says. Recruiting made easy. When a company puts its money where its mouth is – good things generally hap- pen. And, keeping a strong benefits package makes finding and keeping staff easier. Deanna Lantieri, director of HR, has been with PWGC for five years. She says that, “PWGC’s benefits pack- age makes my job, when recruiting, a very easy one. The benefits and fami- ly-friendly culture, along with a coop- erative atmosphere, truly makes this a sought-after firm to work for. We also review employees and provide pay in- creases twice a year. PWGC thinks out- side the box when it comes to career paths, but more importantly life paths.” Have a presence. So, what has driven senior management to create this type of work culture? In a nutshell,
York, and Syracuse, N.Y.; and Seattle). What do they do? PWGC is an environmental engineering services firm providing environmental and engineering project management. Areas of practice are diverse – water and wastewater, contamination investigations, remediation, environmental compliance,
permitting, and sustainable energy services for clients in government,
commerce, industry, private/public sector. PWGC sums up its corporate culture as: Flexible and client focused.
it’s the desire to be proud of their work and to contribute to society. Additionally, a strong leader is key and Grosser is just that. He is a recognized authority in the field of civil, environ- mental, and geological engineering among his peers and within the indus- try. With more than 30 years of experi- ence, his extensive knowledge and valu- able expertise helped establish a solid reputation for PWGC. He is responsi- ble for the firm’s business and technical operations and has served as principal on far more than 1,000 projects. Grosser has been a major presence in the regional engineering community and is a dedicated engineer who advo- cates for best practices in civil engineer- ing and promotes superior standards of professionalism within the engineer- ing community. He stresses the impor- tance of information exchange among professionals, businesses and the com- munity, allowing for multi-level collab- oration.
THE ZWEIG LETTER | DECEMBER 12, 2011, ISSUE 938
ON THE MOVE Rettew promotes: RETTEW (Lancaster, PA), a 280-person transportation, environmental, planning, surveying, and engineering consulting firm recently named Brian Engle vice president of land development and survey services and Suhail Khan vice president of technology and facilities. Engle previously served as RETTEW’s director of land development and survey services, and Khan as director of information technology. “Brian and Suhail have done an excellent job leading their respective service areas,” said Mark Lauriello, president. “As vice presidents, they will be able to better support RETTEW’s commitment to providing clients with stellar service and service delivery.” As vice presidents, Engle and Khan are responsible for furthering RETTEW’s external collaboration and relationship-building with clients and business partners. They maintain high levels of client contact and identify ways for RETTEW to leverage its resources and strategically broaden its portfolio of services to increase client satisfaction. They are also charged with mentoring and coaching staff on effective client relationship management, and they will identify areas of expertise that RETTEW will look to develop or acquire to meet present and future needs in a wide variety of markets. KCCT principal appointed: Karn Charuhas Chapman &Twohey (Washington, DC), a 15-person architecture, planning, and interior design firm, announced that Principal John Chapman was recently appointed to the U.S. Department of State, Bureau of Overseas Buildings Operations Industry Advisory Panel representing the American Institute of Architects. Formed under the Federal Advisory Committee Act, this panel of nine ensures that the U.S. Department of State employs the best possible methods for safety, security, and functional facilities at U.S. diplomatic missions overseas. Over the two-year term, members of the panel share their knowledge and expertise on industry concepts, best practices, and ideas related to acquisitions, building facilities, and property management. As principal-in-charge of KCCT’s international studio, Chapman has designed 10 new embassy compounds, six new diplomatic office buildings, 20 major embassy renovations, and restored 15 historic buildings overseas – four of which are listed on the Secretary of State’s Register of Culturally Significant Property. Over the past decade, Chapman has focused on improving the design/build execution of new construction and building renovations and has completed 34 diplomatic projects abroad with 10 different design/build contractors. Yu appointed: Degenkolb Engineers (San Francisco, CA), a 170-person earthquake and structural engineering firm, Principal Kent Yu starts his two-year term as Chair of the Oregon Seismic Safety Policy Advisory Committee this month. In this role, Yu leads disaster recovery and preparedness planning in the state of Oregon for OSSPAC. OSSPAC promotes earthquake awareness and preparedness through education, research and legislation at the federal, state and local levels. The organization consists of an 18-member commission, representing the fields of engineering, transportation, education, housing and emergency response among other professions. Yu’s focus on resiliency, the ability of an earthquake-struck region to bounce back quickly, is especially timely given recent events, such as the devastating Tsunami in Japan this March and the October earthquake in Van, Turkey. On April 18, 2011, the Oregon House of Representatives unanimously passed HR 3. The resolution directs OSSPAC to deliver an Oregon Resilience Plan to the legislative assembly by Feb. 28, 2013, with the
goal of saving lives and preserving economy and communities from a Cascadia mega thrust earthquake and tsunami. “I am very proud to hand off the duties of OSSPAC Chair to Dr. Yu,” said outgoing OSSPAC Chair Gerry Williams. “Dr. Yu was appointed to the Commission by Governor Kulongoski in 2008 to represent the Structural Engineering community in Oregon on the Commission. He is an outstanding engineer and probably knows more about effects of earthquakes on buildings and other structures than any other person in the state. Dr. Yu is uniquely qualified to lead OSSPAC in crafting of the Oregon Seismic Resiliency Plan mandated by the legislature.” The last time Oregon experienced a major earthquake was more than three centuries ago. The majority of the buildings and transportation lifeline structures here were built long before our current understanding of seismic hazard as reflected in the building codes. Many of these buildings will not be functional and many may collapse following a major earthquake, severely limiting the state’s ability to respond quickly and recover economically. Many of the coastal communities are at risk due to the very short amount of time available (generally around 20 to 30 minutes) to allow the residents to evacuate to high ground in the event of a coastal earthquake generating a tsunami. Japan has thousands of tsunami vertical evacuation structures – there are none in Oregon. “We are making great progress on these fronts,” Yu said. “A couple of years ago, I was involved in conceptual design of the Cannon Beach City Hall as a Tsunami vertical evacuation building, the first of its kind in the U.S. Certainly we have the technical capability to design and build a very robust building to resist a tsunami and save lives.” When Yu was in Japan this June as part of a NSF Rapid team, he visited a number of these evacuation structures. Most of them performed very well. As a member of the Tsunami Loads and Effects committee of the American Society of Civil Engineers, Yu plans to incorporate the many lessons his team learned from Japan into Oregon’s National Tsunami Design Standard (expected to be complete within the next 18 months). The resilience plan as envisioned by Yu will focus on three areas: 1) Life-safety and usability of schools and other critical facilities; 2) Life- safety and property protection in the coastal communities affected by Tsunami; and 3) operational critical lifeline facilities such as energy, water and transportation for quick recovery. HR BRIEFS Green injuries: A new study revealed that LEED-certified buildings expose workers to greater risks during construction. The study, “Identification of Safety Risks for High Performance Sustainable Construction Projects,” published in the Journal of Construction and Engineering Management, aimed to identify and evaluate the safety and health risks associated with the design elements and construction management practices implemented to achieve LEED certification. Results indicate that: 1) workers on LEED construction projects are exposed to work at height, with electrical current, near unstable soils, and near heavy equipment for a greater period of time than on traditional projects; 2) workers are exposed to new high risk tasks such as constructing atria, installing green roofs, and installing photovoltaic panels; and 3) some credits result in a positive impact on construction worker safety and health when low VOC adhesives and sealants are specified. Study authors expect that these results can be used by practitioners to focus attention and resources on new high risk work environments.
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