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SET THE TEMPO, from page 7
transition plan is critical to managing ownership and leadership transition. A solid, comprehensive plan will provide for all of the key components of effective ownership transition including valuation, funding, and a clear definition of the events leading to a required ownership transfer. We have also found that having a predictable transition model is key as this will provide opportunity to up-and-coming design professionals to assume key leadership roles. Like anything, the most important element to ensuring a smooth transition is communication and B&L has provided the appropriate level of transparency with regard to the operation of the CTO plan and the firm’s current and historical financial performance. The biggest pitfall to avoid in ownership transition is complacency – a firm’s ownership transition model needs to be continuously evaluated and examined to ensure that all of the necessary resources in terms of human and financial capital are available to make the plan viable for the long-term. TZL: Research shows that PMs are overworked, understaffed, and that many firms do not have formal training programs for PMs. What is your firm doing to support its PMs? JB: B&L has developed B&L University, also known as “B&L U.” B&L U is a training program designed for the professional and personal development of our employees. The program is structured with a tiered curriculum and specific courses are targeted for all levels of staff, from entry-level to management. Each curriculum includes mandatory and elective courses taught by a combination of internal experts and industry leaders outside the firm. The courses cover everything from software basics to leadership training. We recognize the importance of investing in our people and there is no better way than thoughtful and relevant training. TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO? JB: Conductor. As CEO, you have to control the tempo of many things in a company. Some strategic items need to be expedited while others need to be modified or held back until ready for the proper timing for release. The CEO is always looking to see what pieces to add or subtract to the ensemble to benefit the firm as a whole. You need to communicate and provide guidance to the firm leaders to help set the course and tempo for where the company needs to be in the future. TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around? JB: We feel that our diversity in practice areas, our culture, core values, and personal and professional growth opportunities provide our employees with all of the key ingredients for a long-term and rewarding career. We continue to invest in our people and our long-term strategic plan by way of competitive compensation and benefits packages as well as technology, infrastructure, and growth initiatives where they make sense. We work hard to stay “ahead of the curve” in these areas and hope that our employees recognize these key differentiators.
company overall. Using this method, you build consensus, allow for potential problems to be identified and corrected, and build a team of support to help implement and explain the change throughout the organization. Over the last three years, our employees have seen a significant amount of change at B&L including leadership transition, mergers and acquisitions, and policy and benefits changes. I think we have been successful in positively managing change in a way that is consistent with our family and business core values by providing motivation and inspiration. TZL: How often do you valuate your firm and what key metrics do you use in the process? Do you valuate using in-house staff or is it outsourced? JB: As part of our firm’s continuing transfer of ownership plan (CTO plan), B&L is valued on an annual basis as required by our shareholders agreement. The key financial metrics that are incorporated into the overall valuation include growth in book value, adjusted earnings, financial performance ratios, and transactional multiples of similar consulting engineering firms. Our annual valuation is prepared internally and reviewed by our outside CPA/ consulting firm. “The CEO is always looking to see what pieces to add or subtract to the ensemble to benefit the firm as a whole. You need to communicate and provide guidance to the firm leaders to help set the course and tempo for where the company needs to be in the future.” TZL: What financial metrics do you monitor to gauge the health of your firm? JB: There are a variety of metrics used to monitor the health and wealth of a professional service firm. First of all, working with our CFO, controller, and practice area leaders, I find it’s important to develop a firm-wide budget that provides a roadmap for the firm’s expected financial performance that can be monitored monthly. We budget staffing, utilization, and revenue factor by practice area which is then rolled-up to a corporate-wide budget which includes overhead and projected pre-discretionary profit. On a monthly basis, we track our performance to budget on a month-to-date and year-to-date basis looking closely at staff utilization, gross profit, revenue factor, overhead rate, and pre-discretionary net income. We also closely monitor billings and cash collections while keeping a keen eye on the pipeline of work coming in the door through project backlog. TZL: Ownership transition can be tricky, to say the least. What’s the key to ensuring a smooth passing of the baton? What’s the biggest pitfall to avoid? JB: Certainly, having a comprehensive ownership
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THE ZWEIG LETTER October 14, 2019, ISSUE 1316
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