TZL 1286

T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M M a r c h 4 , 2 0 1 9 , I s s u e 1 2 8 6

Value/net service revenue

Branding mistakes AEC firms make every day

“When it comes to branding for an AEC firm, I wouldn’t look to other AEC firms. Frankly, we make a lot of branding mistakes in this business.”

W hen it comes to branding for an AEC firm, I wouldn’t look to other AEC firms. Frankly, we make a lot of branding mistakes in this business. Stuff that we think is normal would never happen in a consumer products company or national financial services firm where they have more knowledge of what to do and what not to do. Here are some ways we often go wrong, branding-wise, in this industry: 1)Do-it-yourself graphic design. I’ve said it before – just because you have a graphic design software package and someone who knows how to use it doesn’t mean you have good graphic design. Just in the last 12 months I have seen good companies – make that great companies – in our industry launch new lo- gos that looked beyond horrible. So bad I was amazed. I had to look at them on a computer to be sure my phone hadn’t somehow dis- torted them. Get someone good to design your logo and script. It’s money well-spent. 2)The wrong colors. As part of point number one above, pick your colors with some sensi- tivity. I’ve seen some really boring stuff used recently. Do your colors make you look hip and trendy? Or do they make you look safe and ultraconservative? Colors are critical to your brand and image. Picked properly, they can be used on your vehicles, company shirts, sig- nage, and even office decor. And they should be used consistently, every time! There’s a reason “Coke” is always red and white. It is im- mediately recognizable. Your colors should be the same.

According to Zweig Group’s 2019 Valuation Survey of AEC Firms , yearly trends for the value per net service revenue ratio were analyzed to better understand the market. As one of the least volatile value ratios calculated by Zweig Group, the value per net service revenue ratio is a quick way for firms to assess their relative value. Value per net service revenue steadily increased from 2014 to 2017, nearly reaching 0.55 in 2017, but has since dropped to almost 0.53. Don’t forget! Participate in a survey and save $320 on any Zweig Group research publication. Visit bit.ly/TZLsp to learn more. F I R M I N D E X KDM Engineering..................................12

Mark Zweig

MORE COLUMNS xz RECRUITING NOTES: A lost art Page 3 xz GUEST SPEAKER: The AEC ‘factory’ Page 9 xz GUEST SPEAKER: Employee engagement (Part 2) Page 11

Sanborn Head. .....................................10

SSOE Group...........................................6

Woolpert.................................................2

Key successors: Bob Howell See MARK ZWEIG, page 2

Page 6

T H E V O I C E O F R E A S O N F O R A E C F I R M S & M A N A G E M E N T C O N S U L TA N T S

BUSINESS NEWS WOOLPERT EARNS LIDAR LEADER AWARD FOR OUTSTANDING ENTERPRISE ACHIEVEMENT Woolpert has received the 2019 Lidar Leader Award for Outstanding Enterprise Achievement, presented by the International Lidar Mapping Forum and Lidar Magazine . Woolpert was honored for its many high-level, pioneering contributions to the lidar industry in service, management and development since the technology was introduced. The award was presented in Denver during Geo Week 2019, which hosted the three largest annual geospatial conferences in ILMF, the American Society for Photogrammetry and Remote Sensing Conference, and the MAPPS Winter Conference. The award criteria cited many of the firm’s industry accomplishments, including that Woolpert: ❚ ❚ Acquired and processed more than 350,000 square miles of lidar data in support of the U.S. Geological Survey’s 3D Elevation Program, including providing data for several statewide programs. ❚ ❚ Acquires and processes airborne, mobile and terrestrial lidar data for multiple departments of transportation. ❚ ❚ Rapidly acquires and processes lidar data for federal agencies for post-storm emergency response. ❚ ❚ Was contracted by the USGS to evaluate Geiger mode and single photon lidar technologies for 3DEP, leading to the USGS considering these technologies viable. ❚ ❚ Conducted the largest commercial single photon lidar acquisition in North America in 2017. ❚ ❚ Continues to develop automated tools to extract intelligent data from lidar point clouds.

Jeff Lovin, Woolpert senior vice president and director of Government Solutions, accepted the Lidar Leader Award on behalf of the firm. Lovin, who also was inducted as president-elect of ASPRS at Geo Week, thanked ILMF and Lidar Magazine for the honor. “This honor reflects the hard work of many individuals on our team over the last 20 years,” Lovin said. “I am so proud of all of them. However, all of the successes and important milestones we have achieved in the science and application of lidar technology would have not been possible for us to achieve without opportunities created by strategic partners like USGS, JALBTCX, NOAA, NGA, the manufacturers, and many other key stakeholders who worked with us to move this important technology forward over the years and complete some really cool projects.” Woolpert is the fastest growing architecture, engineering and geospatial firm in the country, delivering value to clients in all 50 states and around the world by strategically blending innovative design and engineering excellence with leading-edge technology and geospatial applications. With a dynamic research and development department, Woolpert works with inventive business partners such as Google and Esri; operates a fleet of planes, sensors and unmanned aircraft systems; and continually pushes industry boundaries by working with advanced water technologies, asset management, building information modeling and sustainable design. The firm, which is 95th among ENR’s Top 500 Design Firms, supports a mission to help its clients progress and become more progressive. For more than 100 years and with 28 offices across the U.S., Woolpert serves federal, state and local governments; private and public companies and universities; energy and transportation departments; and the U.S. Armed Forces.

1200 North College Ave. Fayetteville, AR 72703 Chad Clinehens | Publisher cclinehens@zweiggroup.com Richard Massey | Managing Editor rmassey@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Sara Parkman | Editor and Designer sparkman@zweiggroup.com Liisa Andreassen | Correspondent landreassen@zweiggroup.com

MARK ZWEIG, from page 1

3)Alphabet soup. Why do some companies have names like Zweig Group or “Schlock- meir, Briggs, and Rosentein,” and then routinely refer to themselves in internal and external communications as ZG or SBC? Even worse is when the initials become the company name. The firm loses much of the goodwill it has built over the years, and it also makes it indistinguishable from all the other alphabet soup names in this business. Use one name and use it everywhere – inside and out – every time. 4)Different names in different places. I see this a lot. “DEF Associates” decides to do a marketing newsletter. But instead of using it to promote “DEF Associates,” it has its own catchy name, like “Site Lines” or “Great Workplaces,” which completely defeats the purpose of doing the newsletter in the first place. It’s akin to a great TV commercial that you can remember, but don’t recall what company or product the commercial was for. 5)Signage that doesn’t match up with the brand/logo. Why do people do this? They should be the same. I’ve seen a million examples of signs on buildings or signs on proj- ects that don’t match up with the brand. Not good! So, tell me – do any of these problems sound like ones you have in your firm? If so, address them! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

Tel: 800-466-6275 Fax: 800-842-1560

Email: info@zweiggroup.com Online: thezweigletter.com Twitter: twitter.com/zweigletter Facebook: facebook.com/thezweigletter Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year) $250 for one-year print subscription; free electronic subscription at thezweigletter.com/subscribe © Copyright 2019, Zweig Group. All rights reserved.

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

O P I N I O N

A lost art

It’s easy to send texts and emails, but to make a great and lasting impression, frequent phone calls throughout your network are essential.

W e’ve all been there. You’re sitting in the office thinking about the next job you’re going to win, the next key hire your team needs, or making sure your active projects are getting done on time – and you’re having a staring contest with your phone. Maybe you haven’t had your cup of coffee yet. Maybe your favorite team lost the night before. Regardless, you don’t feel like talking to anyone and you’re having a tough time picking up the phone.

John Bray RECRUITING NOTES

Due to challenges in the labor market, traditional recruitment methods often fall short of a company’s needs. Keeping in touch with friends and business partners is a great way to keep your ears on the ground to see if your friend or someone in their net- work is in a position to make a career change. ❚ ❚ New work. In our industry, many firms fall victim “In today’s society, where it feels like most issues can be solved with a simple text message or email, why would you ever need to talk to someone on the phone?”

It’s no secret that the internet and social media have made it easier to connect with your network now more than ever before, but they have also created an environment where real human connections are often lost. This represents a fantastic opportunity for you and your firm to stand out. In today’s society, where it feels like most issues can be solved with a simple text message or email, why would you ever need to talk to someone on the phone? Here are a few reasons why it’s still important to be intentional about calling people on a daily basis: ❚ ❚ Recruitment. Recruiting and retention are the big- gest challenges facing design firms today, according to our 2018 Principals, Partners & Owners Survey .

See JOHN BRAY, page 4

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

BUSINESS NEWS AMES & GOUGH APPOINTS MATT GOUGH AND BRETT GOUGH AS EXECUTIVE VICE PRESIDENTS Ames & Gough, a leading insurance broker and risk management consultant specializing in serving design professionals, law firms, associations/ nonprofits and other professional service organizations, announced the appointments of Matt Gough and Brett Gough as executive vice presidents. Among other firm-wide management responsibilities, they will lead the firm’s operations in Washington, D.C., and Boston, Massachusetts, respectively. “These promotions are much deserved recognition of the hard work and commitment to excellence that Matt and Brett have shown throughout their careers in serving clients, growing Ames & Gough and in recent years helping lead the firm as members of the Operating Committee,” said Dan Knise, president and CEO, Ames & Gough. “As they take on expanded leadership responsibilities, we look forward to their contributions to the firm’s continued growth and ongoing commitment to superior client service.” Matt Gough, who will lead Washington, D.C. operations at Ames & Gough, had been a senior vice president of the firm and partner. In his new role, he succeeds Dan Knise, who continues as the firm’s president and CEO. Gough joined the firm in 2001 in the Boston office and transferred to the Washington, D.C. office. In addition to working directly with many large and mid-sized design-firm clients, he has been responsible for new business development and for managing the insurance broker’s contractors professional liability insurance program. A graduate of the University of South Carolina, Matt Gough is

something. You will be surprised by how this resonates with them and how it could lead to a long-lasting friendship, or even a new project. ❚ ❚ Resolve issues before they spiral out of control. As a leader or principal of your firm, these may be internal. It may be a branch office that is not operating very well, or a disgruntled employee who is wreaking havoc on a team. As a PM, issues always arise from scope, schedule, or budget. Reach out to those with problems to prevent the issue from becoming more serious. ❚ ❚ Good friends are hard to come by. We all build relationships through our work, whether they are through consultants, contractors, or co-workers. Picking up the phone and giving an old friend a call might just make it a great day for both of you. Don’t settle for complacency. Pick up the phone. Help your firm stand out among the rest. JOHN BRAY is a consultant with Zweig Group’s executive search and recruiting. He can be reached at jbray@zweiggroup.com. active in area chapters of the American Council of Engineering Companies and frequently conducts risk management seminars for clients and industry trade associations. Brett Gough, who will lead the firm’s Boston, Massachusetts, operations, had been a senior vice president of the firm and partner. He succeeds Mike Herlihy, who will remain a member of the firm’s leadership team with client relationship, sales and insurance placement responsibilities. Brett Gough joined the firm in 1995 and has been responsible for business development, as well as for addressing the risk management and insurance needs of many of the broker’s large design-firm clients. He continues to remain active in numerous industry and professional associations. With more than 1,500 architects, engineering firms, and other construction professionals of all sizes as clients, Ames & Gough is the leading insurance brokerage and risk consulting firm serving the needs of these professionals. Ames & Gough also has established itself as a committed, superior resource for law firms and associations and nonprofit organizations in need of professional liability, management liability, and property/casualty insurance and risk management assistance. Established in 1992, the firm has offices in Boston, Massachusetts; New York, New York; Philadelphia, Pennsylvania; and Washington, D.C. Clients throughout the U.S. are served by a team of more than 40 professionals and staff located in the four offices.

2018 PRINCIPALS, PARTNERS & OWNERS SURVEY Zweig Group’s 2018 Principals, Partners & Owners Survey of AEC Firms is a comprehensive study of owners and top managers of U.S. AEC firms. This eye-opening report covers ownership, stock appreciation, buy/sell agreements, non- compete agreements, voting rights, roles, responsibilities, perks, compensation, and more. The 2018 Principals, Partners, and Owners Survey has data on the following: ❚ ❚ Principal compensation, benefits, and perks ❚ ❚ Common issues and challenges related to running an AEC firm ❚ ❚ Qualifications, job requirements, and demographics of principals, partners, and owners in the industry ❚ ❚ Employment agreements, non-competes, and stock buyback provisions ❚ ❚ How principals manage time and break down the work day Zweig Group’s 2018 Principals, Partners & Owners Survey of AEC Firms is the one annual report for, by, and about principals and top managers in U.S. AEC firms, and it’s the only source of inside information on the issues that principals are really concerned with. For more information, visit bit.ly/PPO1286 or call 800.466.6275.

JOHN BRAY, from page 3

to an attitude prevalent in professional sports: What have you done for me lately? Out of sight, out of mind is a cliché for a reason. Other firms are certainly calling your clients for an opportunity, and if you aren’t keeping in touch with your business partners on a regular basis, they could very well give another firm a chance to exceed their expectations. “Don’t settle for complacency. Pick up the phone. Help your firm stand out among the rest.” ❚ ❚ Calling clients without trying to sell them anything. This is something that is easily forgotten, especially in busy firms where it seems like there is more work to be done than your team can handle. In the field of professional services, contracts aren’t just transactional. They’re relational. Your firm is selling the long-term capabilities of its employees, not a product. Show your clients you and your team care about them by call- ing in without any intention of selling them

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

ZWEIG GROUP 2019 EVENT SCHEDULE

MAR 13-15 27

Successful Successor Roundtable Excellence in Project Management

New Orleans, LA Kansas City, MO

APR MAY JUN JUL OCT

CEO Roundtable Retreat Race Car Driving Experience The Principals Academy

10-12 24-25

Scottsdale, AZ Dallas, TX

Leadership Skills for AEC Professionals

22-23

San Diego, CA

The Principals Academy Real Marketing & Branding for AEC Firms AEC Business Development Training

5-6 20 21

Seattle, WA Chicago, IL Chicago, IL Minneapolis, MN

The Principals Academy

17-18

Elevate AEC Conference Real Marketing & Branding for AEC Firms AEC Business Development Training The Principals Academy

2-5 10 11 31-Nov. 1

Las Vegas Houston, TX Houston, TX New York, NY

NOV 13-14

Raleigh, NC Leadership Skills for AEC Professionals

For more information

www.zweiggroup.com/seminars/

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

P R O F I L E

Key successors: Bob Howell CEO of SSOE Group (Hot Firm #44 for 2018), a global project delivery firm for architecture, engineering, and construction management based in Toledo, Ohio.

By LIISA ANDREASSEN Correspondent

“A ll key positions within the company are required to have two key successors,” Howell says. A CONVERSATION WITH BOB HOWELL. The Zweig Letter: How are the tariffs impacting your business and that of your clients? Bob Howell: Currently, tariffs have been causing some un- certainty with a few of our clients, resulting in some proj- ects being placed on hold or awaiting the go-ahead to pro- ceed from the client. TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO? BH: Leadership development and succession planning for firm sustainability. TZL: Engineers love being engineers, but what are you doing to instill a business culture in your firm? BH: We are doing several things to instill a business culture within the firm when it comes to our engineers. We conduct project manager training sessions on basic financials for a

fundamental understanding of how the firm makes money. As a corporation, it’s our responsibility to make it an easy task for our PMs to get their project financials so they’re able to run each project like a business. Business Intelligent tools and software give our PMs the ability to pull data such as earned value, actual versus budget, etc., quickly and eas- ily to understand the current situation of their projects. TZL: Do you tie compensation to performance for your top leaders? BH: Yes. We have a program where all senior associates and above have performance-based metrics. As an individual’s career progression level increases, a higher portion of their incentive compensation is tied to these performance-based metrics. Additionally, the company’s stock value is based on the financial success of the firm so, again, senior associates and above, can earn additional reward for performance via this opportunity. TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your profes- sional life?

THE ZWEIG LETTER Ma

BH: When I was named CEO. Our finan- cials were lagging and I wanted to focus on four key areas: clients, culture, collabora- tion, and employees. I believe those are the leading indicators of success. If we could make progress in these four key focus ar- eas, the numbers would follow. I knew we had a great corporate growth strategy, but there were aspects of our culture that were getting in the way of us successfully exe- cuting that strategy. We’ve conducted mul- tiple “All Hands on Deck” meetings across all of our operations in the years since. The energy level of the employees was extreme- ly high and the results of our employee en- gagement surveys and customer satisfac- tion surveys have shown significant im- provement. During this same period, the financial performance of the firm has also increased considerably. TZL: How do you promote young and new leaders as the firm grows? BH: SSOE has two programs that help de- velop new leaders within the organization and prepare them for future promotions. “Getting Results” is our leadership devel- opment program that expands the capac- ity of high-performing individuals. It pro- motes relationship building among those individuals to benefit collaboration efforts now and down the road. This program pro- vides specialized leadership coaching as they tackle group projects. After a two- day seminar, individuals are grouped into teams and given an assignment involving an actual business problem or opportuni- ty that they must research and solve over a six-month period. Each team presents their solution to senior management and meets for regular coaching sessions for the remainder of the year. The second is our “Next Generation Lead- ership” program which is a leadership de- velopment initiative that consists of six, four-hour sessions in addition to a consid- erable amount of pre-work for each ses- sion. Participants attend quarterly ses- sions prior to SSOE’s scheduled manage- ment team meetings to provide an oppor- tunity to rotate participants into the meet- ings and present on current NGL content. This program requires considerable time, energy, and commitment and ends with a graduation celebration. TZL: What happens to the firm if you leave tomorrow? BH: We have a formal succession plan- ning process and we place great empha- sis on this area. Our succession planning process has two scenarios – a planned

succession and an unplanned succession. Each one addresses various possible suc- cessors and timing of readiness. We know how valuable it is to determine succes- sors and help them develop into those fu- ture roles. Recently, we had organization- al structure changes which allowed us to spread out the roles and responsibilities of the COO to other key leaders to en- sure that more than one person is ready to move into the CEO position down the road. It also ensures that the subsequent CEOs will also be prepared to take on the role. All key positions within the company are required to have two key successors. TZL: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours? BH: As a firm, we’re moving toward col- laborative project delivery, similar to what some people in the industry refer to as in- tegrated project delivery, although CPD is not necessarily contractually based like IPD. At SSOE, it refers to a strategy guid- ed by a LEAN mindset with a goal of de- fining and delivering a collective vision of success on a project by eliminating waste, compressing schedules, lowering cost, and improving satisfaction. The overall idea is to work with the contractor, client and key subcontractors as a team to collectively set a target cost for the project below industry benchmarks. This challenges the team to drive innovation and deliver better results. However, efficiency leads to fewer hours worked. To transition to more value-based pricing, AEC firms need to be willing to share the risk in order to get compensated fairly – shared risks equal shared rewards. It not only aligns with our corporate-wide cultural journey, which is centered around collaboration and LEAN principles, but it allows us to move toward executing proj- ects in a way that brings more value to our clients and their business. We also document our value promise to our clients in the form of project cost sav- ings. We have been successful in providing our clients with project cost saving equiva- lent to our fees. TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue? BH: SSOE has made a commitment to fos- ter a diverse and inclusive culture that pro- motes personal and organizational growth – building these values into the firm’s vi- sion, core values, and corporate priorities. See KEY SUCCESSORS, page 8

YEAR FOUNDED: 1948 HEADQUARTERS: Toledo, Ohio OFFICE LOCATIONS: 27 NO. OF EMPLOYEES: 1,013 BOB HOWELL: Bob Howell began his career with the company in 1980. He started out as a draftsman trainee and worked his way up to associate in 1990. He continued to help the firm grow and evolve before being named CEO in 2014. THEIR MISSION: Making clients successful by saving them time, money and trouble. THEIR VISION: World-class people, delivering world-class projects, for world-class clients. They have:

❚ ❚ Safety-always culture ❚ ❚ Continuous efficiency

improvements/innovation ❚ ❚ Prominence in their markets ❚ ❚ Career growth opportunities

❚ ❚ Employee prosperity ❚ ❚ Diversity of thought

❚ ❚ Growth in strategic areas ❚ ❚ Competitive advantage ❚ ❚ A reputation for adding the greatest client value and environmental sustainability MARKETS: Automotive, chemical, commercial, consumer products, energy/power, education, food, glass, healthcare, manufacturing/ high tech, pharmaceutical, retail, and semiconductor SERVICES: Architecture, engineering, construction management, project management, program management, site selection, master planning, interior design, data/fire/security, and procurement

arch 4, 2019, ISSUE 1286

SSOE employees celebrate company culture.

KEY SUCCESSORS, from page 7

that contributed to us being recognized as a “Great Work- place” by Great Place to Work for the last three years. These benefits and perks include flexible work arrangements, buy/ sell paid time-off option to buy up to 40 hours of additional PTO or to sell up to 80 hours of PTO, subsidized gym mem- berships, tuition reimbursement, and a 401(k) plan that matches 50 percent of employee contributions up to 6 per- cent. In addition, SSOE offers additional work perks such as SSOE swag for new employees, BRAVO employee recog- nition program, a one-day “SSOE Experience” class that in- troduces new employees to the organization, employee ap- preciation clubs and volunteerism programs, as well as ca- reer progression. “As a company we recognize diversity of thought as a strategic advantage – one that we’re not yet fully leveraging, but working toward.” TZL: Tell us about the last time you named a new princi- pal from outside the firm. BH: We announced the appointment of Cathy Myers, P.E., to our advanced technology leadership team in October 2017. We knew she would be an excellent fit because she not only brought with her 25-plus years of expertise, but she also has a deep familiarity with the semiconductor indus- try, one of SSOE’s key markets. In addition, she has a dual bachelor’s degree in chemistry and mechanical engineering from the University of Portland and is a licensed profession- al engineer.

SSOE has been on a journey to broader diversity and inclu- sion for some time now, focusing on building a strong foun- dation to ensure it becomes sustainable and ingrained in the firm’s culture. As a company we recognize diversity of thought as a strategic advantage – one that we’re not yet fully leveraging, but working toward. Although we hold ourselves accountable to benchmarks that ensure progress, we believe diversity is really about hir- ing someone who thinks “differently than I do” in an effort to generate stronger ideas. To put forward something differ- ent requires a variance in life experiences, which frequently emerge from contrasting backgrounds, be they economic, gender, race, ability, generational, or industry differentia- tion. We train our employees on the dangers of implicit bias so we can proactively combat these tendencies. We also ac- tively recruit employees who bring a fresh perspective, par- ticipating in programs like the U.S. Chamber of Commerce Foundation’s Hiring Our Heroes Corporate Fellowship Pro- gram, which is designed to train transitioning service mem- bers on skills needed to succeed in the civilian workforce. Additionally, we work with educational non-profits and uni- versities to ensure women and underrepresented minori- ties have options and ways to get involved in STEM. TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around? BH: In addition to our culture initiative that has a proven ROI when it comes to retention, SSOE offers its employees an extensive list of benefit programs and employee perks

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

O P I N I O N

The AEC ‘factory’

O ver my career, I have had some disappointed clients. I am not talking about the disappointment you feel from realizing you ordered the wrong entrée at dinner. I am talking about the disappointment you feel when you realize your firm is worth much less than you expected. Firm managers run a production process. If the deliverables get out the door, great. If not, cash flow – and company value – could be harmed.

Hobson Hogan GUEST SPEAKER

Most owners look back and wish they had focused on increasing revenue, improving margins, or cutting costs, when they really should have been focused on improving cash flow. Why is this important, you may ask? The fact is buyers, and great investors, focus on free cash flow – cash flow less capital expenditures. Free cash flow drives your value far greater than any other metric – period, full stop, drop mic. At this point you may be confused because you may be under the impression that the value of your firm is derived from EBITDA. The answer is no, EBITDA is simply a proxy for deriving value because calculating free cash flow requires a little work and people are lazy, at least when it comes to corporate finance. Put simply, your value is the sum of your future free cash flow divided by a capitalization rate. After all is said and done, the

free cash flow method is what matters the most. Firms all across the economic spectrum that have focused their management efforts on it have generated wealth well beyond their peers. The mindset of an owner that contemplates the power of free cash flow is they focus on getting paid; more specifically, getting paid faster. I am “Firms all across the economic spectrum that have focused their management efforts on [free cash flow] have generated wealth well beyond their peers.”

See HOBSON HOGAN, page 10

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

ON THE MOVE SEVEN STAFF MEMBERS BECOME SANBORN HEAD SHAREHOLDERS Sanborn Head has announced seven new shareholders in the firm. “By purchasing Sanborn Head stock, these leaders are investing in their own careers,” said Barret Cole, President and Chief Operating Officer. “They are also investing in the future success of the company.” Russell Abell, P.G., LSP, leads Sanborn Head’s Industrial practice area. His work specializes in contaminant hydrogeology, contaminant fate and transport including chlorinated volatile organics, petroleum VOCs, and per- and polyfluoroalkyl substances, litigation support, and transactional due diligence. Sarah Dolcino, MBA, is the Director of Administrative Services. She oversees corporate communications and training programs and is the manager of the firm’s Concord, New Hampshire, office.

Mary Beth Dopfer, CPA, MBA, is Sanborn Head’s Vice President of Finance. She also leads the firm’s human resources and information technology. Scott Nerney, P.E., practices environmental site characterization and remediation as a member of our Industrial group. He has extensive experience with Superfund and Brownfields properties. Scott also heads up the firm’s Health & Safety programs. Tim Reed, P.E., CPESC, works on engineering and permitting in our Solid Waste practice area. He specializes in landfill and site/ civil construction, and as the CAD Services Manager for the firm, Reed has particular expertise in the use of computer aided design software. Jennifer Sanborn, P.E., practices environmental engineering and hydrogeological consulting

in our Industrial practice area. She specializes in vapor intrusion investigation and mitigation, contaminant hydrogeology, emerging contaminants, and the Brownfields program. Stephen Zemba, Ph.D., P.E., is amember of our Industrial practice area. He provides consulting and expert witness services on health risk assessment from environmental contaminants, including per- and polyfluoroalkyl substances, and teaches classes in air quality assessment. Sanborn Head is an engineering and technical consulting firm serving a broad array of private, public and institutional clients in the development, energy, industrial, and solid waste markets. Our multi-disciplinary team of engineers and scientists specializes in integrating our core expertise in earth, energy, and environment to deliver innovative, yet practical solutions to our clients.

HOBSON HOGAN, from page 9

stacking up, orders languishing on the factory floor, and cramped warehouse space. Managers of AEC firms have no such physical indicators; they need to create systems to warn themselves of issues. When times are lean, banks force firms to become efficient by limiting credit; however, when times are good credit is used as a crutch, masking the fact effort is not being turned into cash. This is not just for looking at your administrative functions; it is really for business planning and decision- making. Could you imagine GM or Boeing budgeting for next year without any consideration for the capacity of their factories? I cannot, but architects and engineers do it every year. “How much more revenue did we have last year? $10 million? Great, how about $12 million this year. Next item on the agenda, corporate Holiday Cards.” No thought or consideration is given to how you produce the projects that generate the revenue. You can kill your cash flow by haphazardly adding work. Plan your production process poorly – congratulations, you killed your firm’s value by increasing revenue. You think I am kidding, but I am not. The fact of the matter is that this is conceptually easy, but hard in practice. You may not be able to work faster like our anchor example, though you may have plenty of waste in your firm that can be dumped to increase the speed in which you convert effort into cash. Focusing on cash flow requires you to change how you think about which projects to pursue, how to do work, how to bill – essentially the entire business. Managers of AEC firms ultimately run a production process. Ignore the factory at your own peril. HOBSON HOGAN is an investment banker and consultant with Continuum Advisory Group. He can be reached at hhogan@ continuumag.com.

not simply talking about getting your clients to pay more quickly; I am talking about focusing on increasing the speed at which you turn your firm’s efforts into cash. This mindset leads you to be more efficient in how you deploy your firm’s resources, and constantly strive to increase the efficiency at which you do your work. “Focusing on cash flow requires you to change how you think about which projects to pursue, how to do work, how to bill – essentially the entire business. Managers of AEC firms ultimately run a production process. Ignore the factory at your own peril.” Architects and engineers live in a world of professional service, which deludes them into thinking that they are detached from the world that is occupied by purveyors of tangible goods. Wrong! Let me tell you, it’s no different. Think about your architecture or engineering firm as a factory that produces concrete anchors. Your architects and engineers are the machines that produce the anchors and the projects are the anchors themselves. The longer the machines take to create the anchors, the more work in process you have on hand. As sales grow, you have to invest more cash into anchors that are being made, money that could be spent elsewhere. As revenue increases, your A/R grows and more of your money is tied up as a client’s IOU rather than as cash in the bank. Conversely, the faster you produce anchors, WIP decreases and cash flow increases. It is not just factories that work this way; this applies to an AEC firm. It is frankly easier for a factory manager to look out at her factory floor and see problems. Physical product that is

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

O P I N I O N

A firm leader must break out of the deadline cycle and make a meaningful connection with employees. If not, performance will (predictably) suffer. Employee engagement (Part 2)

M ost of what we do today as leaders is not leadership. In a world of urgent deadlines and constant busyness, it can seem necessary to rely on our skills to win quarters and rescue projects, but that’s not the only thing needed. We also need to inspire a “better future” and provide day-to-day opportunities for our teams to help make it a reality. If that seems soft, that’s a problem. It’s why employee engagement is low and performance remains less than it could be.

Peter Atherton GUEST SPEAKER

our relationship management. Emotionally intel- ligent people are more successful and are better leaders. Emotional intelligence is what draws people to like, know, and trust us. Emotionally intelligent people can attract and inspire others up and down the corporate ladder. Interactions with emotionally intelligent people are more relational and less trans- actional – which makes them so much more “We can’t expect positive changes if we don’t initiate them, personally model what they look like, and incentivize what it takes.”

Our strength as leaders today is in our ability to connect and enable others to become their best selves as part of our work, not in affirming our positions and showcasing skill sets that only perpetuate our current cycle. For things to change we, as leaders, need to “see more” and “do differently.” ❚ ❚ Raising awareness. First, we must recognize that there’s a problem when more than two-thirds of em- ployees are routinely disengaged, and burnout and career pivoting is on the rise. Leaders have the most prominent role in solving this, but are often too con- sumed and not aware enough to do so. Emotional intelligence is a measure of our self- awareness, self-management, social-awareness, and

See PETER ATHERTON, page 12

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

BUSINESS NEWS KIMBERLY MOORE, FOUNDER AND PRESIDENT OF CHICAGO BASED COMPANY KDM ENGINEERING, RECOGNIZED AS HONOREE OF CRAIN’S 2018 40 UNDER 40 Each year Crain’s Chicago Business selects 40 individuals in recognition of their exceptional professionalism and entrepreneurial spirit. Notable 40 Under 40 alums include Barack Obama, Oprah Winfrey, Chance the Rapper, and Valerie Jarrett. Of the 2018 Class of Crain ’s 40 Under 40, KDM Engineering Founder and President Kimberly Moore has been selected as an honoree! Highlighting her success in a personal profile, Kimberly is featured on Crain Chicago’s website and in their current issue. Providing her professional and personal background, alongwith quotes fromherself and her mentor David Schwartz, Crain’s Chicago

Business acknowledges how Kimberly moved forward through hardships, establishing KDM as the reputable engineering firm it is today. The profile also shares the work she is doing through her nonprofit Calculated Genius. In her mission to guide people towards their dreams, Kimberly says, “I’m helping other people grow, I’m helping other families support themselves. Being able to see that change on a daily basis is important.” In response to Crain’s prestigious recognition, Kimberly shares: “This is simply a ‘thank you,’ not just to Crain’s Chicago Business , but to everyone and anyone who listened to me during late nights, invited me places understanding I probably wouldn’t have time to hang out, still loved me

after years of not talking on the phone, and for those who were there after losses and celebrated with me after wins. There is much more to be accomplished, but my team says I never stop and celebrate the good. Today, I will do just that. Thank you all!” KDM Engineering is an engineering consulting firm headquartered in Downtown Chicago with a vision of challenging and changing the energy infrastructure to help light up the world. Priding themselves on being an established Women’s Business Enterprise and Minority Business Enterprise, KDM focuses heavily on company culture and diversity within the workplace. Dedicated to delivering outstanding client support and customer service, KDM Engineering offers a multitude of services within the realm of engineering.

PETER ATHERTON, from page 11

effective. On average, however, we lose emotional intelligence as we progress in our careers. As leaders, and as a leadership team, we need to work es- pecially hard to beat this trend if we want to be more com- petent, relevant, and effective today in terms of employee engagement and moving our organizations forward. ❚ ❚ Self-care. Most leaders are overwhelmed and many are burn- ing out. This is not good for us, our teams, our organizations, and those we care for outside of the office. We need to face the reality that we carry heavy workloads and burdens in the AEC industry. Without appropriate margin and rest built into our schedules, we become fatigued, less creative, and less en- gaging. To maintain growth and performance over the long-term, we need to put on our own “oxygen mask” first. Executive leadership needs to determine how best to design and enforce personal growth and refresh strategies for themselves and others. Fully seeing what’s happening to and around us posi- tions us to move forward. ❚ ❚ A mission that matters. Top talent and clients want to participate in pursuits that matter to them and to the world around them. Without such a mission, employee engagement seldom lasts. Top organizations establish a clear vision of why they exist and articulate why their top- and bottom-line growth is pursuent to realizing something greater. Top leaders align and connect day-to-day actions with realizing our full potential in pursuit of the vision. ❚ ❚ Conditions that engage. Today, leaders need to systemati- cally analyze (and possibly redesign) how we do work to better engage and develop our talent. Strategies that include “process” as well as “product” improvements are more inclu- sive within a team and throughout an organization, and can be designed to support our goals related to culture, sustain- ability, diversity, and innovation. “Our strength as leaders today is in our ability to connect and enable others to become their best selves.”

By Drs. Travis Bradberry and Jean Greaves; Emotional Intelligence 2.0

❚ ❚ Walking the talk. Talk is cheap. Just talking about change disengages. For most firms, strategic plan implementation has already taken too long or has become “back-burnered” due to the urgent and busy cycles we help perpetuate. Leaders, we can’t expect positive changes if we don’t initiate them, personally model what they look like, and incentivize what it takes. Raise awareness. Take care of people. Get to the root of issues. Remove hurdles. Invest in training. Hire coaches. Inspire connection, performance, innovation, and impact. Communicate results. Doing so sets our managers and employees up to help break the current cycle, drive our growth and success, and realize our better future. PETER ATHERTON, P.E. is an industry insider having spent more than 20 years as a successful professional, principal, major owner, and member of the board of directors for a high-achieving AEC firm. Atherton is now the president and founder of ActionsProve, LLC, author of Reversing Burnout: How to Immediately Engage Top Talent and Grow! A Blueprint for Professionals and Business Owners , and the creator of the I.M.P.A.C.T. process. He can be reached at pete@ actionsprove.com.

THE ZWEIG LETTER March 4, 2019, ISSUE 1286

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12

Made with FlippingBook Annual report