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HR | FINANCE S U P P L E M E N T S Pages 9 - 12
N o v e m b e r 7, 2 011 , I s s u e 9 3 4
E D I T O R I A L
T R E N D L I N E S
People who succeed in this business Seven traits Hot Firm leaders display that impress Mark Zweig. W e’re wrapping up the The Zweig Letter 2011 Hot Firm Conference and Awards Celebration in Laguna Beach as I write this. What a great time and an absolutely amazing venue – The Montage was awesome! Ask anyone who was here – those of you who weren’t really missed out. While this event is starting to take on the characteristics of a third or fourth wedding (a relaxing affair with lots of old friends in a super-nice venue you could never afford for a first or second marriage), I always enjoy the people who attend. I find it fascinating to study them and what makes them successful. Why are some people so committed to growing
their firms in spite of all that goes with that? Why are some people just so doggone successful? Here’s some of what I see:
1) They believe it is possible to be successful. Nothing will be achieved if someone doesn’t think it is possible in the first place. Optimism and vision are qualities these folks have in abundance. 2) They are social and effective communicators. These people mingle with others. They make new relationships everywhere they go. They stay at the party. They go on the group outings. They are well-spoken. They have a presence. They can give a presentation. 3) They are relaxed. They just don’t get so stressed out. I once read that the average growth company CEO could handle stress as well as a military commander or pilot in a wartime situation. I think there’s a lot to this. 4) They are willing to experiment. They try new things: integrated project delivery; different ownership structures; different organization structures; new markets; new countries; and, much, much more. They are open to new ideas and technologies and want to take some risks and do some new stuff.
Per total staff
Per professional/technical staff
1 - 24 employees
25 - 49 employees
F I R M I N D E X Degenkolb Engineers........................................... 11 Dudek..................................................................... 6 EMR, Inc.. .............................................................. 3 GAI Consultants..................................................... 6 Matern Professional Engineering, Inc................. 11 Miyamoto International......................................... 2 MSA Professional Services................................. 11 Smith, Seckman, Reid, Inc..................................... 9 According to the 2011-2012 Small Firm Survey, net service revenue per employee is significantly lower for firms with one to 24 employees than for those with 25 to 49 employees. Firms with one to 24 employees report a median NSR per total staff of $108,529 and a median NSR per professional/technical staff of $131,786, while firms with 25 to 49 employees report a median NSR per total staff of $125,000 and a median NSR per professional /technical staff of $149,915. – Margot Suydam, Survey Manager
See Mark Zweig, page 2
I always enjoy the people who attend. I find it fascinating to study them and what makes them successful. Why are some people so committed to growing their firms in spite of all that goes with that? Why are some people just so doggone successful?
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Gehry to the rescue of the profession
I N S I D E
xz TOp player: EMR Inc., a Hot Firm ‘in the zone’. Page 3 xz best firm: SSR Inc. – Integrity in all they do. Page 9 xz finance: How much cash do you really need? 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 | NOVEMBER 7, 2011, ISSUE 934
A/E BUSINESS NEWS
Mark Zweig , from page 1
building practices. Founded in 1999, WorldGBC fosters and supports new and emerging green building councils by providing them with the tools and strategies to establish strong organizations and leadership positions in their countries.
5) They are versatile. These people can be a CEO one day, an accountant the next, a designer on another day, and even an investment banker on yet another day. If needed, they can fill all these roles on the same day. 6) They are healthy. They take care of themselves, watch their diets, go to doctors when they need to and stay active. 7) They keep learning. They read, go to events, get involved in associations, and seek out knowledge that they don’t have. I’m lucky I get to hang out and learn from such great people and am thankful to be a small part of this business! Mark Zweig is the founder and CEO of ZweigWhite. Contact him with questions or comments at firstname.lastname@example.org . Nothing will be achieved if someone doesn’t think it is possible in the first place. Optimism and vision are qualities these folks have in abundance.
Miyamoto on scene again: A team of earthquake and structural engineers fromWest Coast-based Miyamoto International left for Van, Turkey, shortly after the devastating magnitude 7.2 earthquake on Oct. 23 to support the disaster relief efforts. Engineers are supporting individuals, businesses, governments and communities to help ensure safety upon building reentry after the assessments have been made. Engineers will use the assessment data for subsequent repair and rebuilding efforts. “After a disaster, it is critical to identify which buildings are safe to occupy and which ones can sustain continued operations. That’s why we will be there,” said Kit Miyamoto, president and CEO of Miyamoto International. Meanwhile, questions are being raised about the quality of construction in the affected area, with some buildings having remained completely intact while those next door were destroyed, according to a report in The NewYork Times. The region is officially designated as earthquake prone, along with many other areas of Turkey that contain active faults. Fedrizzi to WorldGBC: Rick Fedrizzi, president, CEO and founding chair of the U.S. Green Building Council, has been elected chair of the World Green Building Council. The WorldGBC is a coalition of green building councils from 89 countries around the world. “I’ve watched in awe as the green building movement has grown on a global scale – as people from widely different backgrounds, countries and industries have united under a common commitment to building a healthier, more sustainable world,” Fedrizzi said. “I’m humbled to be a part of this massive movement, and honored to serve the WorldGBC and its global members.” Part of Fedrizzi’s plan as WorldGBC chair is to raise the global awareness of the WorldGBC as the voice of each country and region. “We will invite diverse multinational stakeholders to support WorldGBC and to have a voice in its development,” said Fedrizzi, who noted that he wants to be able to grow, mentor and nurture the individual green building councils across the globe. As the largest international organization working to transform the building market, the WorldGBC is globalizing environmentally and socially responsible
CALENDAR Leadership 2011: Most leaders in
architectural and engineering firms found themselves in leadership roles through serendipity; usually with little or no idea about what to do or how to do it. They founded the firm; they were promoted because they had found success in a client leadership role; or, quite simply, no one else in the firm wanted to take on the job. Confidently filling the shoes of a firm’s principal, CEO, president or vice president can be a daunting task requiring skills that are quite different than what made you successful as an architect or engineer. And there are few forums uniquely tailored to our professions. Generic leadership study and training just won’t cut it. ZweigWhite’s “Leadership 2011” seminar is designed specifically for architects, designers, engineers and environmental consultants, and provides a broad development strategy for current firm leaders and for the development of future leaders. Attendees will have the exclusive opportunity to learn from ZweigWhite Chairman Ed Friedrichs, one of the industry’s most highly regarded leaders, as he presents strategies and tactics to enhance both your personal success and the success of your firm. Upcoming dates are Nov. 16 in Los Angeles and Nov. 30 in Palm Beach, Fla. For more information or to register, call 800-466-6275 or log on to www.zweigwhite.com/seminars/ lea/index.asp. Build Boston 2011: The 27th Build Boston tradeshow and conference is coming to the New England city Nov. 16 through 18. As the largest regional event for the design and construction industry in the country, Build Boston takes its role as convener and innovator seriously. To that end, the conference program has evolved, organizing in distinct tracks that are timely, technically advanced and relevant across the AEC professions.
38West Trenton Blvd., Suite 101 Fayetteville, AR 72701 Mark Zweig | Publisher email@example.com João Ferreira | Managing Editor firstname.lastname@example.org Julie Kyle | 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.
For more information or to register, log on to www.buildboston.com.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
TO P P L AY E R
EMR Inc., a Hot Firm ‘in the zone’
By sticking to core values and having a sense of purpose, firm has attained success. C onnie Cook comes from a long line of strong-willed folks, all the way from a great grandmother to her father. It’s maybe no wonder she leads the No. 4 firm in The Zweig Let-
to buy two houses from saving extra money from baby sitting. She taught me the values of integrity and honesty . 3) My father was a third-generation lifelong rancher who raised a musician, a veterinarian and an entrepreneur with equal pride. He taught me the value of family. These are the core values that have gone unchanged in our 23 years of exis- tence at EMR. Everyone at EMR knows them and conducts business with these core values as guidelines. The net result is being able to go to work with a com- mon purpose – “to improve the lives of others.” TZL: In today’s difficult business climate, what does it take to suc- ceed? Is the spectrum of failure a motivator? CC: The business climate is forever changing. I can only put it in perspec- tive for what works for EMR. When we first started, we had many “experts” tell us to, “Stay focused on only a few very specialized services and don’t offer a broad range of services or no one will consider you an expert in anything.” However, we pursued more of a flexible, client-focused quality, and delivering a product with a sense of ur- gency. Failure is more of a motivator today than ever before. Customers are shift- ing more emphasis to price, so margins are going down. Thus, failure makes a greater impact on the company and risk aversion has more weight in go/ no-go decisions to even begin a project. TZL: Where do you see this indus- try in 10 or 20 years? What trends are influencing it? What about your company? CC: I started the company by taking a second mortgage out on my house and using the cash to pursue a belief shared by my family. The company immediate- ly gained contracts with a Fortune 200 company. Business entry is not that
procedures because of growth. 2) Adaptation to the changing business climate to keep relevant for our customers. 3) Adaptation to keep the same corporate core values well-known to all employees. TZL: Do you re- member your first paid job? What did you learn then that still influences the way you work today? CC: My first job was serving as a secretary to my local school dis- trict during the sum- mer months while attending college. I
Connie Cook, President, EMR, Inc.
“Running EMR is much like living life the way it was taught to me by people I most admired in my earlier years. It is our core values that are the glue
that binds all of us to a purpose in coming to work every day.”
ter 2011 Hot Firm List, 300-person environmental consulting, testing, en- gineering and construction services firm EMR, Inc. Founder of the 23-year-old firm based in Lawrence, Kan., Cook has built an organization on a strong values-based foundation. In this interview, Cook talks about that and much more. The Zweig Letter: What does it mean to be a Hot Firm? Connie Cook: In the zone! The or- ganization just seems to click together toward a common goal. Elite basketball players, baseball players, entrepreneurs and even organizations such as EMR can get “in the zone.” It takes a perfect match between opportunity and skill, a company-wide motivation that is brought on by matching the work with a sense of universal purpose, which in our case is to “improve the lives of oth- ers.” TZL: How did you get where you are today? CC: Twenty-three years of taking the organization through the evolutionary process of a three-person organization to a 300-person organization involved a lot of adaptation: 1) Adapting to different processes and
learned that it takes a team approach to successfully operate an organization and employees at every level need to be thanked and rewarded for their efforts. 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? CC: I didn’t start out, nor do I think about being the best company, taking unnecessary risk, becoming a worka- holic or do what no one else is capable of doing. In fact, running EMR is much like living life the way it was taught to me by people I most admired in my ear- lier years. It is our core values that are the glue that binds all of us to a pur- pose in coming to work every day. The origin of our core values can probably best be described in the following: 1) With her entire worldly possessions in a sack on her back, my paternal great grandmother walked from Texas to Nebraska to “homestead” in an area 35 miles from a town over 500 in population. She taught me the value of success through endurance. 2) My maternal grandmother was widowed at an early age, before Social Security and Medicare, and never owned or drove a car. Yet, she was able
easy today. So, to begin with: 1) Fewer A/E companies in existence and entering the
See top player, page 4
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
top player , from page 3
11) The more useful technology becomes, the more useless some engineers and architects will become without adaptation. 12) Global vision is mandatory because Africa and China are the fastest developing areas, yet they are supplying the cheapest labor in the world. 13) Global natural and man-made crises will change the business world and will continue to do so. Examples: Hurricane Katrina, Japan Tsunami, Chernobyl, BP oil spill. How we prepare and respond will affect us all. TZL: Do you hold someone as a special mentor? How did this per- son influence who you are? CC: I have been mentally and emo- tionally touched by two of the best per- sonal/business mentors. Bob Dunlap (PhD, business professor at the Univer- sity of Michigan and Carnegie Mellon), who was key to understanding business financial ratios; Ray Pitman (entrepre- neur, Kansas City business leader, in- ventor, multiple business owner), who was key to thinking like an entrepre- neur, human resources development, strategic networking, leadership train- ing and exit planning. Corporately, EMR has had two won- derfully successful A/E organizations through the Department of Defense mentor-protégé program that have helped us focus on relevant processes and procedures and marketing strate- gies: AECOM and AMEC. TZL: What’s the one trait you most admire in people and why? CC: I admire both the young and se- niors in our profession. The young I admire have a gift that is a mixture of energy, competency and worthy direc- tion. The more senior individuals I ad- mire have leadership, competency and enduring vision. If I had to choose a single trait I admire it would be endur- ing vision. TZL: Describe the most challeng- ing thing you have ever done/the biggest challenge you have taken on outside of work. CC: I don’t describe myself as a thrill- seeker or a huge risk-taker but I do like a challenge that fits into my value sys- tem. So I would have to say balancing a 38-year marriage, raising two great sons, taking care of a sick mother and being involved with three grandkids while running a successful company
is by far the most rewarding and most challenging. Climbing a mountain, jumping out of a plane, travelling the world or running a marathon doesn’t even come close. TZL: What question would you ask of another Hot Firm leader? CC: Will you be Hot next year or the year after? Why or why not? 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? CC: Recent grads may find competi- tion more difficult than they might be expecting to enter the workforce due to budget cuts and work slowdowns across the globe. However, American college grads are respected around the world, so keep your vision broad. Developing personal relationships is important in the consulting field. Cus- tomers have to like you as a person be- fore they buy your company servic- es from you. Choose wisely where you seek advice. Financial Performance Survey: Updated in a partnership with the American Council of Engineering Companies, the 2011 Financial Performance Survey of Architecture, Engineering, Planning & Environmental Consulting Firms contains more than 30 different major financial performance statistics so you can find out exactly where your firm stands among your peers. Use the data from the overall sample or take advantage of the details in the tables to compare your firm to others by type, size, region of headquarters, growth rate, and client base. Financial performance statistics are just the beginning of this comprehensive report – go beyond the revenue and profit data to chargeability, revenue factor, overhead rates, average collection period, backlog, staff turnover, and more to see which areas your firm could improve. Use the data on personnel expenses, rent and utilities, and professional liability insurance to see if your firm is spending more than necessary on overhead expenses. In addition to financial performance and spending statistics, the survey also shows data on top financial managers and finance and accounting staff percentages. For more information or to buy a copy, call 800-466-6275 or log on to www.zweigwhite.com/zw-1071.aspx.
market. EMR needs to consider consolidation/acquisitions as a future growth strategy. 2) Engineering will be quicker and done by technology. Training will be a constant cost and focus to stay relevant for EMR. 3) Architecture will be quicker and more adaptable to ecology and green concepts. Buildings become of a science project as a self-sustainable footprint. 4) Construction is faster with snap-together components. Growth is vertical in big cities because of wastewater is imperative. Every toilet that flushes in Minneapolis ends up in St. Louis, New Orleans, etc… Maybe zero discharge of wastewater in 20 years for many industries. 6) Mass transit a much greater influence to reduce energy, improve delivery time, put people to work and improve safety. This fits well for EMR because 50 percent of our revenues come from transportation. 7) Public/private partnerships managing utilities economically . But the PPPs will not become huge conglomerates because of the hostilities and disparities that exist between the wealthy and the poor. EMR is currently discussing PPPs with several entities and it may be a future direction for us to consider in the water/wastewater business. constrained infrastructure. 5) Recycling of water and get more abundant because government is not good at 8) As much as I hate to think about it, the whole concept of distribution of wealth is going to have a devastating effect on business unless job creation can be solved. Everyone needs a useful purpose in life and it is the government’s role to create equal playing fields, not redistribute wealth. Private business has to sense a feeling of governmental protection to conduct business that is fair and equitable. 9) Government will need to be faster to respond or adapt to voter expectations. Thus it will make A/E firms be faster to adapt or die. 10) Technology will exceed our ability to apply it humanly in many situations. For example, the cell phone and Internet have allowed us to see the world without having to experience it.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
I N N OVAT I O N
Gehry to the rescue of the profession
New venture aims to help solve some of the industry’s vexing problems through technology. By Julie Kyle Editor F rank Gehry is broadening the ho- rizons for Gehry Technologies, bringing some of his friends onto the board of advisors to advocate for the kind of process transformation that will help move the design industry for- ward in the 21st century. GT’s new board mission centers around the implementation of new technologies. The group also aims to provide thought leadership for the pro- fession, advising on industry challeng- es, and suggesting opportunities and ideas for services and software devel- opment. Considered by many to be a modern architectural icon, Gehry has tapped other acclaimed designers and think- ers of the day to serve on GT’s board of advisors, including David Childs, Zaha Hadid, Greg Lynn, Laurie Olin, Wolf Prix, David Rockwell, Moshe Safdie, Patrik Schumacher and Ben van Berkel. The group held its inaugural meeting in New York City in October. “We have a tremendous opportu- nity to be better and more efficient,” CEO Dayne Myers told The Zweig Letter . Myers has extensive expe- rience in management consulting and venture management, including more than 15 years as CEO of early-stage technology companies. “The building industry has been slow- ly but steadily moving toward mini- mizing individual responsibility and away from producing architecture that solves clients’ and communities’ prob- lems,” Gehry said in a statement. “I am dedicated to giving architects bet- ter control of the process so they can deliver the fruits of their imagination, which is what our clients expect. I have gathered a group of my friends togeth- er who believe in this mission as much as I do and who can help me find the so- lutions that will ultimately lead to bet- ter buildings throughout the world.”
nology to drive efficiency and eliminate waste – in both human effort and natu- ral resources. And getting rid of waste while improving quality is really the heart of sustainability.” GT will address these challenges through professional servers and soft- ware, Myers says. Myers points to GT’s proven track record of using technolo- gy and tech-driven processes to reduce project cost, waste, and time to com- pletion. For example, GT saved $50 million in costs on the One Island East project in Hong Kong. Gehry has never really marketed his services, and he’s not a big fan of public relations as a thing one “does.” Howev- er, GT’s board of advisors will test, use and support emerging GT innovations on high-profile projects while partici- pating in marketing and public rela- tions initiatives. In an unprompted support statement from the American Institute of Archi- tects, President Clark Manus pointed out that “as much as 30 percent to 50 percent of all time, money, materials and resources that go into a construc- tion project do not add value to the fi- nal product. Allied with Autodesk. Au- todesk, Inc., has made an equity invest- ment in GT to help AEC firms transi- tion to a BIM process. “This new business relationship with Autodesk is a key element of our growth strategy,” Myers says. “Our business relationship is designed to take advantage of our strengths as world leaders and will add additional momentum to the adoption of BIM as a process throughout the AEC industry,” said Jay Bhatt, Autodesk’s senior vice president of Architecture, Engineering and Construction Solutions. Autodesk will provide GT’s consulting division with extensive support and training in using Autodesk BIM solutions, in- cluding the Autodesk Building Design Suite, the Revit family of products, Au- todesk Navisworks, AutoCAD Civil 3D and Autodesk Vault Collaboration AEC. GT is privately held, with offices in Los Angeles, New York, Paris, Mexico City, Abu Dhabi, Hong Kong, Shanghai and Beijing.
Myers and GT’s Chief Technology Officer Dennis Shelden sug- gest that by applying new technology to old problems, this new al- liance can lead the pro- cess change that the AEC industry needs to confront future chal- lenges. “When this group
Dayne Myers, CEO, Gehry Technologies.
speaks, it’s going to carry a bigger weight than any of them individually, or just Gehry Technologies,” Shelden says. GT is trying to tackle a problem that impacts everyone in the design profes- sion: hugely wasteful processes. “They know there are technology and process solutions to these problems,” Shelden says. “They also saw that it was time for a holistic approach. The broad, international scope was also appeal- ing – it’s not only American architects for example – because design and con- struction projects increasingly don’t have national boundaries.” The group sees itself as defending the interests of the AEC industry – they want to see it improve for everyone. GT is unique in that it offers both very high level professional services with deeply experienced industry profes- sionals and also develops its own tech- nological solutions from problems it finds in practice. “The two together are a powerful combination,” Myers says. “We are also one of the very few tech companies that evolved directly from project work in design and construc- tion and knows all of those problems and opportunities intimately,” he says. Industry challenges. Global- ization, regulation, sustainability and increasing project complexity are all impacting design, Myers says. In par- ticular, more players with specialist knowledge are becoming involved with projects, and designers need to be able to communicate within this increasing- ly diverse project team. “Technology can help with that,” he says. “These new complexities also in- crease the risk for waste. One of the main goals of this board is to use tech-
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
F E E D B AC K
Another rambling thought
Letter , Oct. 10, 2011), Mark Zweig offered seven reasons why this happens in a difficult economy. Michael Siffer , senior project engineer at GAI Consul- tants (Homestead, PA), a 750-person multidiscipline engineering and envi- ronmental consulting firm, wrote: I enjoyed your editorial on grateful employees. Having lived in Ohio and still with a lot of friends there (I moved because I lost my job due to lack of work) I think a few public employees should read your article and take some time to reflect before stomping their feet.
Readers react to Mark Zweig’s thought-provoking editorials. I n his editorial “Miscellaneous ram- blings” ( The Zweig Letter , Oct. 3, 2011 issue), Mark Zweig wrote on many topics, ranging to manage- ment tips to catching snakes. Frank Dudek , president of Dudek (Encini- tas, CA), a 220-person environmental and engineering firm, wrote a miscella- neous rambling of his own in response:
ing difference this year in the politi- cal hype. For many years, the ASCE has been rating our infrastructure con- dition as mostly if not totally Cs, Ds and Fs. And, as far as I could tell, no one other than other engineers real- ly cared or paid any attention, except when a bridge collapses every once in a while. Lately, however, I hear main- stream politicians repeating and ref- erencing those dismal figures, mostly supporting spending on infrastructure for JOBS. I won’t hold my breath, but it is new that anyone but ASCE or APWA is paying any attention to our aging in- frastructure problem.
Mark Zweig responds:
Ha! Indeed. Thanks for writing, Mi- chael!
In his editorial “Why your employees are not more grateful” ( The Zweig
Speaking of miscellaneous ramblings, I’ve noticed one possible encourag-
Industry to remain flat in 2012 N EWS
Housing and commercial building construction starts may improve, but will be offset by weakness in the public works and institutional building sectors. M cGraw-Hill Construction released its 2012 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning, which predicts that overall U.S. construction starts for next year will remain essentially flat. The level of construction starts in 2012 is ex- pected to be $412 billion, following the 4 percent decline to $410 billion predicted for 2011. “The construction industry has struggled to see recovery take hold over the past couple of years. After plunging 24 percent in 2009, new construction starts leveled off in 2010 and have hovered within a set range during 2011,” said Rob- ert Murray, vice president of Economic Affairs, McGraw-Hill Construction. “The backdrop for the construction indus- try is the fragile U.S. economy, which continues to see slow employment growth, diminished funding from federal and state governments and pervasive uncertainty. In 2012, the top-line numbers are not expected to show much change, but there will be variation within the major construction sectors, with some gains predicted for housing and commer- cial building, assuming the U.S. economy avoids recession.” Based on significant research and in-depth analysis of mac-
ro-trends, the 2012 Dodge Construction Outlook details the forecasts for each construction sector, as follows. Single-family housing in 2012 will improve 10 percent in dollars, corresponding with a 7 percent increase in the num- ber of units to 435,000 (McGraw-Hill Construction Dodge basis). This is still a low amount, as the excess supply of homes due to foreclosures continues to depress the market. Multifamily housing will rise 18 percent in dollars and 17 percent in units, continuing its moderate, upward trend. Commercial building will grow 8 percent. Warehouses and hotels will see the largest percentage increases, but improve- ment for offices and stores will be modest. The institutional building market will slip an additional 2 percent in 2012, after falling 15 percent in 2011. The tough fiscal environment for states and localities will continue to dampen school construction, and the uncertain economic environment will limit growth in healthcare facilities. Manufacturing building construction will increase 4 per- cent, following the 35 percent gain in 2011, as the low value of the U.S. dollar continues to support export growth. Public works construction will drop a further 5 percent, af- ter a 16 percent decline in 2011, due to spending cuts and the absence of multiyear federal transportation funding for highway and bridge construction. Electric utilities will retreat 24 percent, following a 48 per- cent jump in 2011. The report can be ordered at http://analyticsstore.con- struction.com/dodge-2012-construction-outlook.html.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
F ROM T H E CHA I RMAN Minding the store What should be on your financial performance dashboard? W hen I was CEO of Gensler I was often asked how I kept track of it all. At the end of my tenure, we had 2,400 people in 25 offices around the world, so we had to come up with some methodologies and metrics to keep us all informed – a dashboard of sorts. Ed Friedrichs
also a great tool to communicate to our staff how much it costs to run a business – made people a little more frugal about how they chose to spend the firm’s money. It “personalized” the cost side of our business. xz Direct expenses. Costs for which we were reimbursed by our clients – I wanted our folks to think of these charges as if they were coming out of their own pocket, so we made reprographics and
messenger charges visible to project managers, so they would be a little more careful with how we spent our clients’ money. Our clients appreciated it. A meaningful and useful dashboard is only helpful if, at a glance, you and your colleagues can quickly gain a sense of how you’re doing and what you should be doing to enhance your fiscal performance. xz Accounts receivable. I was a bird dog about collections. Our contracts called for our bills to be paid by our clients within 30 days of receiving our invoice, so getting the bill into the clients’ hands early in the month was a whole lot better than the end of the month. Every day that a bill sat on a project manager’s desk, rather than on the client’s desk, represented dollars that we had to add to our capitalization – the funds it takes to bridge the time gap between the date by which we had to pay salaries and rent and the time our clients’ checks made it into our bank account. Every dollar we had to add to our retained earnings cost us nearly two dollars by the time we paid taxes for the privilege of keeping it. I wanted to know which project managers were “sitting” on our invoices. xz Collections. I also wanted to know which clients were paying their bills in a timely fashion, so I monitored invoices by days outstanding: 0-30 days, 30-60 days, and so forth. I wanted my team to start calling our clients as soon as bills were sent: “Did you receive our bill? Was it prepared properly for you? Do you have any questions?” If we didn’t receive a payment within 30 days, I treated it like a bad report card and expected the client relationship manager, whether it was the principal, project manager or designer, to call the client to find out what we were doing wrong. If the answer was, “nothing,” then the next question was, “Is there any reason why you can’t pay our bill right away?” After all, it’s our money and I’d far prefer it to be in our bank account than theirs. These are some ideas about what I watched and what I expected our folks to pay attention to. This is what was important to make our business run well and be profitable Sound like it takes a lot of time? Not nearly as much as it does to keep a poorly performing business afloat or trying to collect invoices after they’re over 90 days in arrears. EDWARD FRIEDRICHS, FAIA, FIIDA, is ZweigWhite Group’s chairman and the former CEO and president of Gensler . Contact him at firstname.lastname@example.org.
At ZweigWhite, we publish an annual Financial Performance Survey of A/E/P and Environmental Consulting Firms that our clients find enormously helpful in monitoring their performance relative to their peers and competitors. We use a series of metrics that provide you with a snapshot of what your peers think are the most important metrics in monitoring performance; things like your firm’s various revenue sources, direct and indirect labor and expenses, your effective multiplier, aging receivables and, of course, profit, all of which are important and helpful. But sometimes these numbers are hard to get your arms around; a little like reading tea leaves. A meaningful and useful dashboard is only helpful if, at a glance, you and your colleagues can quickly gain a sense of how you’re doing and what you should be doing to enhance your fiscal performance. Here’s what I wanted to know: xz Labor costs. My biggest concern was how much billable time we were generating compared to time we were paying for. That means knowing the ratio between time we could invoice to our clients for work actually under contract (and expected to be collectable) versus overhead hours (administrative staff or technical staff time that didn’t generate a bill to a client, such as vacation, illness, training, research and so forth). You’ll have to generate your own metrics because each firm measures time a little differently. I know of no magic number to give you to know how you’re tracking. I can only suggest that you start monitoring your ratios at your current level of profitability in order to understand where you are today and to develop a sensitivity to trends in your billability. Labor is your highest cost. Small movements in your ration of billable time will have a disproportionate impact on your profitability. Monitoring and comparing your effective multiplier is interesting and helpful but it won’t help you develop that feel for where to push to enhance your financial performance. xz Indirect expenses. With multiple offices, gross numbers for rent or telephones didn’t help me much, so we converted our numbers to a “cost-per-person” by office in each category in our chart of accounts. This allowed me to scan across multiple offices to look for best practices versus offices that could learn something about managing things like their reprographics or the budget for their holiday party. It was
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
G U E S T S P E A K E R Collaborative forest The understanding of integrated project delivery needs to change for its success. H as anyone, acting as both judge and jury, ever proceeded to sentence you to the island of “You Don’t Darren Smith
trust begins with familiarity of team members through past experience or familiarity with their body of work
Whew, I did it. The three elements that aid a collaborative environment come from Daniel Pink’s book, Drive. He states that creative people simply want latitude (autonomy), the opportunity to do something really well (mastery) and the opportunity to be part of something greater than self (purpose). You’ve heard some in construction casually state “you only need trust” in an IPD project. This assumes trust is something you can simply turn on or off. Well, trust is organic and grows over time. Before you can have trust, you need to show you can collaborate by demonstrating collaborative skills and behaviors that don’t come naturally to most people. You need to design and build a collaborative environment consisting of autonomy, mastery and purpose. The output of collaboration is everyone wears the same uniform. Creativity is uncorked, or churned-out from unexpected places, to achieve project goals such as removing large chunks of waste. An example would be waiving all claims among team members and eliminating redundant and excessive project insurance costs expended by all parties. That’s the value of IPD. Working from the inside-out. In this definition of IPD, there is an operating phrase for creating collabora- tion called “working from the inside-out.” Currently, own- ers are not buying in to IPD quicker for several reasons, one being, the AEC community is mostly selling IPD from the “outside-in.” The AEC community is out there selling IPD and when they stumble upon an opportunity, they turn on the trust light switch with whatever firms they will be working with. They whip together an “IPD project team” and then they might make some effort to string togeth- er existing IPD elements in their organizational culture to support the project team (whatever that means). Sound fa- miliar? To owners, this feels riskier than current options. What we need to do is work from the inside-out. Here is the suggested path: xz IPD has to help you achieve your business strategy xz Win support from senior management xz Choose IPD as your culture, not just one of your delivery methods xz Choose an IPD champion xz Complete an IPD readiness assessment xz Design and execute training on how to behave at an IPD standard xz Use a large amount of carrot and some stick xz Pilot an IPD project
Know What You’re Talking About?” A colleague of mine thought he knew enough about integrated project delivery to certify (figuratively speaking) those who claim to know something about IPD. Well, who’s certifying this certifier? Once a definition is established, we tend to become dangerously stuck on it and fail to see the collaborative forest for the IPD trees. Our industry may be at that point. Wikipedia defines IPD as: “A collaborative alliance of people, systems, business structures and practices into a process that harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication and construction.” Can anyone explain what this definition means? I still don’t know what I’m going to receive if I use IPD. Some sort of upfront costs (at least extra work) are clear and the benefits (at the end of the project) are vague. If I’m an owner, it sounds like more risk on the face of it. I propose a more practical definition of IPD, not construction-related at all; one that more people (owners, design professionals, suppliers and users) can relate to and act upon easily. The Wikipedia definition is technical, product- and process-focused in the vein of BIM and LEAN. IPD is none of those. IPD is simply a behavior standard. A colleague of mine, Alan Weiss, wrote recently: “People don’t want to have to interpret a strange language. (‘We operate in the sales space, focusing on connectedness and authority with subordinated client needs.’) “People want to know what’s in it for THEM. This is not a bad philosophy for social, civic and family relationships, as well. But it is vital and essential for business.” The definition of IPD is strange language. It is not concise or pithy and it doesn’t convey what’s in it for the reader. Up to now, I’ve used anecdotes to define IPD because I’ve not been able to find language that satisfies. I will make a death-defying leap over the cadre of certifiers I’ve encountered and define IPD. Here it goes: IPD translated to simple English means collaboration. Collaboration = a collaborative environment (autonomy, mastery and purpose) + demonstrated collaborative skills and behaviors skills include powerful questioning, critiquing and listening behaviors include demonstrating respect toward others by using their names, setting tone and speaking in terms of how what you want helps the other person get what they want + trust
See the collaborative forest for the IPD trees now?
Darren Smith is the CEO of Cima Strategic Services. He produces the IPD Academy, which includes the IPDAssured Program. He can be reached at email@example.com.
© Copyright 2011. ZweigWhite. All rights reserved.
HR A SUPPLEMENT OF THE ZWEIG LETTER
NOVEMBER 7, 2011, ISSUE 934
B E S T F I RM
SSR Inc. – Integrity in all they do
While firm has grown in size, its commitment to employees remains the same.
of collaboration and en- trepreneurial energy that shouts, ‘We can accomplish great things as a team!’ Ad- ditionally, it’s the sense of family and security that is evidenced from the top down, and exampled by the many perks staff enjoys as a part of the SSR environ- ment,” he says. “Some of the notable perks include flexible hours, excellent benefits and current tech-
By Bryan Sullivan Correspondent
I n 1968, Tom Seckman, Andy Reid, Lester Smith and Bobby Smith gath- ered in a house in Nashville, Tenn., to draft their magna carta for a new com- pany. It was then that the foundation was set for success and Smith, Seck- man, Reid, Inc. , was born. And, in the 40-plus years since their start, while almost everything, includ- ing the tools that they use to get their jobs done, has changed, their core val- ues have not. With a diversified fo- cus to provide consulting services to some of the country’s most prestigious healthcare, infrastructure, sports and entertainment, education, commercial and industrial projects, the SSR team is thriving. The founders wanted to create a firm where they could share knowl- edge, experience, rewarding work and rewards; they succeeded. Now with of- fices in eight states and 508 employ- ees, this large firm creates trust within a family environment. SSR is the No. 3 Best Multidiscipline A/E Services Firm to Work For in 2011 and the No. 1 Best Large Firm To Work For. From the top down. Some- times when things get too big, every- thing turns to numbers and bottom lines. This is not the case at SSR. Rich- ard Morris, executive vice president for its Southwestern division says, “I have been here since 1990 and what first at- tracted me to the firm were the lead- ership and the people. The energy in the office was positive and there was a strong sense of inclusion and connec- tion from leadership and peers, which created a compelling reason to join the firm.” Morris shares what he feel makes SSR a top place to work for. “It’s the spirit
nology, but the most important perk is transparency, allowing staff to know what is going on in the firm.” SSR’s most valuable tools – people. In any business today, tools are of utmost importance. Communi- cations systems, computers, software, high-tech gadgets, you name it… To be competitive, you’ve got to have it. But, without the people to run a business, you’re lost, no matter how great the tools in your box. Terry Compton, vice president and team leader at SSR, has almost 28 years of tenure. “SSR’s great- est resource is its employees,” she says. “SSR is successful and provides the best place to work as a result of the employ- ees that make up SSR.” Planned retention. When hir- ing and building a team, retention of team members is an important vari- able in the formula of a company’s suc- cess. Finding the right people to fill the right job is not easy, no less keeping them in place. Jessica Nyce, senior hu- man resources partner, has been with SSR for four and a half years and illus- trates how the firm accomplishes this challenging task. “SSR’s turnover rate is significantly lower than the industry average and is declining overall. With 508 employ- ees and only a 10 percent overall turn- over (which is well below industry stan- dard), we have done extremely well in keeping our staff,” she says. “Our re- tention efforts can be described as ‘fo-
cused retention’ or ‘planned reten- tion.’ We hire many new college gradu- ates and expect them to look around at some point in their careers. However, each year we have many highly quali- fied employees who return to work for us after having left. It’s not about keep- ing every employee, it’s about keeping those employees who are productive and bring value to SSR. In the event that an employee is not the right match for our culture, our goal is to transition that person to a place where he or she can be more successful. Each of the SSR perks is intended to create a positive workplace environment and a sense of belonging to a caring firm – this creates a desire to stay.” projects, disciplined growth and involved employees. It offers opportunities to its employees to make an impact at work and in their community. And, it is employee- owned, which means that employees can benefit directly from their own hard work. SSR at a glance What do they do? Across the country, facility builders and owners turn to SSR for high-quality engineering design and facility consulting services. The work the firm does is as diverse as its clients and projects, but one thing remains the same: Its close-to-the-client approach results in responsive, lasting relationships and effective, appropriate solutions. Why SSR? It’s a dynamic firm that has maintained a caring and family workplace. It boasts good people, strong values, satisfied clients, innovative
THE ZWEIG LETTER | NOVEMBER 7, 2011, ISSUE 934
GUEST SPEAKER Reducing
environment and are so often neglected.
show up! xz Clarify the ultimate purpose or goal of any discussion and why the input of all participants is central to a successful outcome. xz Acknowledge each individual’s unique skills, experience and perspective , not just to yourself, but publicly. xz Make the ground rules for communication explicit and gently remind people when they’re not following them. Those at the top should also acknowledge when they fall short. xz Do not get into a “Don’t Tell The Kids” mentality. Share information even when there’s nothing to share. There are way too many secrets in the workplace. If you trust your employees, they will trust you. Fear is bred from uncertainty, and uncertainty is a result of being kept in the dark. A way to alleviate fear is to create an environment in which information is openly shared, discussed and understood. It will allow employees to ask questions, to be given feedback and to share concerns. A challenge worth taking so that fear will be greatly reduced. If you really want to make progress in eliminating fear, take the leap and create a blame-free and gos- sip-free firm. It’s easy to understand and hard to do. Blame-free is based on the notion that it doesn’t matter who is to blame. What matters is what’s not working gets fixed. You may ask if that makes employees less accountable. I’m happy to report that it makes them more accountable. They’re much more willing to admit mistakes if the environment isn’t punitive. Gossip-free organizations means that we talk to people, not about people. If folks need to vent, that’s fine, but the listener should respond, “How can I help you figure out how to talk to him or her?” Gerri King, Ph.D., is a social psychologist and organizational consultant who often works with A&E firms. She is president of Human Dynamics Associates.
Conditions and behaviors that are evident in a fearful workplace: xz Avoidance results from an atmosphere where employees are reluctant
fear in the workplace It is at an all-time high, but there is something firms can do. I was recently interviewed and asked what I see most often in organizations these days. Without hesitation, I answered, “Fear.” In all my years of consulting, I have never witnessed so much anxiety and trepidation, even in organizations that have assured their employees that they won’t be downsizing. We are living in an uncertain world. Fear has increased and – even if unwarranted – it has spilled into the workplace. Fear is the perception, thought or assumption that an external threat to one’s well-being exists. And it’s not just scary information that feeds it. A lack of communication can have even more dramatic ramifications because fantasies are often worse than reality. Fear robs people of their potential and is a barrier to high performance, while threatening their loyalty and spirit, both of which are necessary to compete in the marketplace. Those organizations that manage fear successfully experience lower turnover, lower absenteeism, fewer filed grievances and better communication and coordination. Employees spend less time on defending against real and perceived threats and more time on improving processes, engaging in innovation and performing at high levels. There are two ways firms can help: 1) Those at the top can promise to keep employees apprised of their financial and market potential and, indeed, do so.
to bring up problems with those who can remedy the situation for fear of retribution and retaliation. xz A hierarchical structure where communication is primarily top-down may result in a tremendous loss of information for people at all levels. xz Organizations that foster an environment where management is elitist, distant, mistrustful, capricious, or secretive and fails to explain decisions have serious trust issues. xz Environments where respect is not promoted exacerbate fear. xz Policies that lack equity and sensitivity, are not explained or have a double standard of application encourage suspicion. xz Fear increases in an environment where there is a reluctance to question management practices and there is a perception that management doesn’t care. xz There is a reluctance to speak up when there is the feeling that verbal employees will be labeled as troublemakers and agitators. Reduce fear by promoting dialogue. “When dialogue is present, fear is more likely to be absent.” xz Leaders should practice being more emotionally expressive. Reveal what they feel, value and care about, and evidence their desire to know others in the same way. xz Make it comfortable to acknowledge mistakes. Leaders can model that by doing the same. xz Acknowledge the diversity of people, opinions, skills and experience. Make explicit that differences contribute to the organization’s success. xz Those at the top should be extremely visible and have many one-to-one conversations with people. Walk around, hang out and
2) And, they can eliminate other sources of fear that creep into the
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