Chargeability among principals T R E N D L I N E S M a y 4 , 2 0 2 0 , I s s u e 1 3 4 3 W W W . T H E Z W E I G L E T T E R . C O M
Break out of the spreadsheet mentality and build an ownership team that drives value and performance long-term. Evolve your view of ownership
In Zweig Group’s 2020 Principals, Partners & Owners Report of AEC Firms , we asked principals what percentage of their time was chargeable to jobs. When broken down by firm staff size, we see a direct correlation between increasing staff size and decreasing principal chargeability. This makes sense as, when firms grow larger, principals can delegate their technical work and focus more on business management and leadership activities. The overall median chargeability reported was 25 percent, which was about 10 percent lower than previous years.
D eciding who gets to be an owner can be one of the most important, yet difficult, decisions a leader can make. Unfortunately, part of the difficulty can be self-inflicted as most firms lack any criteria or structure to guide decisions. In fact, Zweig Group’s 2020 Principals, Partners & Owners Survey shows that only 35 percent of firms establish any specific minimum eligibility criteria for becoming an owner. Of those that do, criteria focus on:
❚ ❚ Business development/sales abilities, 65 percent ❚ ❚ Project management experience, 58 percent ❚ ❚ Staff management responsibilities, 56 percent ❚ ❚ Professional registration/licensure, 51 percent
❚ ❚ Years of experience, 40 percent ❚ ❚ Marketing experience, 30 percent ❚ ❚ Education minimum, 28 percent
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As you can see, most of the criteria revolve around things that can be measured in some way. As an industry, we like numbers and spreadsheets to help us make decisions, however, I would encourage firms to expand their thinking on what it means to be an owner. Consider some of the following recommendations to expand your thinking on ownership: ❚ ❚ Owners are your business partners. Becoming an owner should not be viewed simply as a promotion, but rather an acceptance of the risk and reward of being a business owner. Too many in AEC firms view ownership as a rung on the career ladder that must be achieved. Frankly, there are a lot of current and aspiring owners in the industry who do not have the investor temperament to be a good principal, partner, or owner. Ideal business partners understand the importance of building long-term value in the enterprise. Being an owner is not about higher bonuses and more power around the office. When viewing ownership through this lens, you are able to look beyond the basic qualification criteria that many firms use when choosing owners and focus on the attributes that drive real value. ❚ ❚ Owners must understand and be able to take risks. Related to the point above, being a business partner means taking smart, calculated risks that move the company forward while protecting the firm. Someone who is completely risk averse is likely to be unable to make hard decisions or take the right risks to advance the firm. Additionally, owners must understand the risk that ownership can pose to them personally. Ownership is not for everyone. For those
F I R M I N D E X A. Morton Thomas and Associates, Inc...4 Bancroft Architects & Engineers............12 Kudela & Weinheimer..............................6 Luchs Consulting Engineers/DeCarlo & Doll Architects.......................................12 Ramtech Building Systems. ....................4 Ware Malcomb......................................10 MO R E A R T I C L E S xz PHIL KEIL & TRAVIS WHITE: Smart investments Page 3 xz Vision: Thad Kudela Page 6 xz MARK ZWEIG: Changes in the A/E business Page 9 xz LYNN DIGIOVANNI: We got this! Page 11
See CHAD CLINEHENS, page 2
T H E V O I C E O F R E A S O N F O R T H E A E C I N D U S T R Y
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