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Do you share that information with your staff? MI: We developed a report a number of years ago that we call the “Summary by Discipline/Office” report. This monthly report includes previous months as well as YTD totals and presents numerous metrics that everyone from a group manager and above receives. We’re a pretty open-book company. Metrics in this report include total revenue, expenses, OH allocation, P/L, headcount, direct labor hours, utilization rate, effective multiplier, and revenue factor. We also share proposal hit rate, but not on that report. TZL: How far into the future are you able to reliably predict your workload and cashflow? MI: Prior to the Great Recession, it was approximately four to six weeks because we were primarily doing private sector traffic studies/design work. We now have a 50/50 mix of public/private work and everyone now understands how cashflow impacts us; we have a fairly clear picture six to 12 months ahead, but one truly never knows what’s around the corner. “I think growth opportunities plus personal wealth building that can occur by staying in our firm and making sure it’s profitable are clear differentiators between us and the grass on the other side of the fence.” TZL: How has COVID-19 affected your business on a daily basis? MI: It’s too early to really tell. Obviously, we aren’t in our offices and everyone is having to get used to working remotely, but we are adapting very quickly. You know, there are some inefficiencies with working in an office – getting ready/ commuting, chit-chat, unnecessary meetings, etc. that is minimized with working remotely. However, there are some folks with kids in the house, connectivity issues, etc. that could add some challenges, so I’m not exactly sure how much it’s impacting us at this point – it may be a wash. TZL: Is change management a topic regularly addressed by the leadership at your firm? If so, elaborate.
MI: I’m definitely not running around with a solution looking for a problem, but I am constantly looking to be better in everything we do. I set a goal in 2014 to cut paper use by 50 percent within two to three years and be as close to paperless as possible by 2020. I did this not to save trees (which I’m not opposed to doing), but because I know it will drive efficiencies in our firm. We still have a ways to go to reach this goal, but I can see it’s working because our people are changing their behavior and looking for ways to be more efficient. 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? MI: Before starting our ESOP in 2004, we calculated our value internally using a big ole spreadsheet. Since 2004, we’ve been using an outside firm to handle our annual valuations. We provide them the normal financial documents (balance sheet, income statement, tax returns, etc.), but they also look at backlog, WIP, A/R, staff size/experience, market conditions, overall U.S. economy, and they interview folks within the firm to get a feel for how things are going – it’s a pretty intensive effort. TZL: What measures are you taking to protect your employees during the COVID-19 crisis? MI: Healthwise, I sent everyone home and I’m highly recommending they stay home. They are supposed to get approval from me to visit any of our offices, which I generally allow on a very limited basis. They know I will not be happy if I learn someone is in an office without my approval. Other than reminding them to follow CDC prevention guidelines, I’m not sure what else I should be doing. TZL: What financial metrics do you monitor to gauge the health of your firm? MI: We look at the normal industry metrics – revenue growth, revenue factor, etc., but cash is king in our house. 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? MI: When our founder, Ramey Kemp (who founded our firm in 1992), and I were having conversations about me joining
HEADQUARTERS: Raleigh, NC NUMNBER OF EMPLOYEES: 82 YEAR FOUNDED: 1992 OFFICE LOCATIONS:
❚ ❚ Raleigh, NC
❚ ❚ Charlotte, NC
❚ ❚ Winston-Salem, NC
❚ ❚ Richmond, VA
❚ ❚ Charleston, SC
❚ ❚ Columbia, SC
SERVICES:
❚ ❚ Traffic engineering
❚ ❚ Roadway design
❚ ❚ Traffic operations design
❚ ❚ Transportation planning
CULTURE: Ownership: Ownership in the company, ownership in the profession, ownership in personal lives. CERTIFICATIONS: RKA is a certified SPSF with the North Carolina Department of Transportation and is a federally certified small business. RKA is also SWaM certified in the Commonwealth of Virginia. CORE VALUES: Friendly, brave, loyal, helpful, trustworthy, courteous, clean, cheerful, kind, reverent, thrifty, and obedient.
See OWNERSHIP, page 8
© Copyright 2020. Zweig Group. All rights reserved.
pril 13, 2020, ISSUE 1340
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