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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 A u g u s t 1 4 , 2 0 1 7 , I s s u e 1 2 1 2

M&A deals and winning firms

How nice should you be?

S omeone turns in their notice. They were either close to being fired or should have been. They let you down. Or, they are going to work for a competitor. Do you refuse to say “goodbye” to them? Do you hold a party for them? Do you send an email to staff about what a bum they were? Do you send an email to the staff about how sorry you are to see them go? This is ALWAYS a subject for debate. And I have personally been on both sides of it. When I was younger (let’s say the first 20 years of my career), if you quit you were dead to me. I was as severe as they come. And unforgiving. Then when I got older I went to the other side. I wanted everyone to love me. “You never know – so-and-so might come back some day.” After a string of failures related to hiring back people who quit my businesses previously, I’m starting to swing back to my “harder, less forgiving” side. The problem with being too mean is the rest of your people will think you’re an a-hole. And, you will burn a bridge with that former employee that could come back to haunt you down the road. The problem with being too nice is you’re sending a signal out to everyone that there’s no risk in leaving. “We’ll always hire you back, so you get out there with our blessing and if you decide you don’t like it, we’ll

“Someone turns in their notice. They were either close to being fired or should have been. They let you down. Or, they are going to work for a competitor.”

Zweig Group recently completed its awards application season and found that Hot Firms – the Top 100 fastest growing A/E firms – are taking advantage of their capital resources. We looked at the number of M&A deals done by Hot Firms and found that the Top 25 completed an average of 3.7 over the last three years. The second quarter of firms, 26 to 50 , completed 2.5 deals, the third quarter, 51 to 75 , completed just under 2 deals, and firms ranked from 76 to 100 completed 1.7 M&A transactions. Find out more about these award-winning firms with Zweig Group’s Successful Firms Study at shop.zweiggroup.com.

Mark Zweig

OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/

F I R M I N D E X Achates Power, Inc.................................4 Burns & McDonnell. ..............................10 CH2M.....................................................2 Environmental Consulting & Technology, Inc.. ......................................................12 Gensler...................................................4 Gryphon Technologies, LC......................4 Jacobs Engineering Group Inc................2 Salontai Consulting Group, LLC............10

MORE COLUMNS xz FROM THE CHAIRMAN: Mixed-use urban living Page 3 xz GUEST SPEAKER: What stays and what goes? Page 9 xz GUEST SPEAKER: Grade- based performance Page 11

See MARK ZWEIG, page 2

Conference call: Alan Dostert

Page 6

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 L T I N G F I R M S

BUSINESS NEWS CH2M-DESIGNED OHIO INTERCHANGE IMPROVEMENTS EARN RECOGNITION AS BEST URBAN HIGHWAY PROJECT Ohio Department of Transportation’s I-270/US 33 Interchange, designed by CH2M , received the 2017 ODOT/ ACEC Partnering Award for Excellence in Highway Design in the Best Urban Project category. The ODOT/ACEC Awards for Excellence in Highway Design program, a cooperative effort between Ohio Department of Transportation and the American Council of Engineering Companies in Ohio, recognizes the state’s best projects in three categories – structure, rural projects, and urban projects. Under an accelerated schedule beginning in 2013, CH2M served as the lead design consultant for approximately $70 million in improvements to the I-270/US 33 interchange, which had exceeded its original 1960s design capacity by more than 100 percent. Previously noted as one of the most dangerous in the state, ODOT ranked the interchange in the Top 20 for freeway crashes. In light of these safety concerns and increased traffic demand, the updated design aimed to: ❚ ❚ Eliminate the obsolete geometric designs within the interchange to improve safety. ❚ ❚ Add capacity with additional lanes on I-270 and on US 33/SR 161. ❚ ❚ Resolve traffic congestion and improved traffic flow at the interchange. The Phase 1 improvements included widening US-33 from two lanes to four lanes in each direction for approximately two miles, and realignment and reconstruction of seven ramps, eight new bridges, three widened bridges, and eight new retaining walls. Given the size and magnitude of funding necessary to reconstruct the interchange as a whole, CH2M worked with ODOT to develop a phasing strategy to rebuild the interchange in workable segments over time. The CH2M team completed the design process in just 14 months, and construction of the Phase 1 improvements reached substantial completion in 2016. ODOT will continue looking at additional Phase 2 enhancements for the interchange, which became the first interchange in the country to use predictive crash analysis methods per the AASHTO Highway Safety Manual during alternative analysis to influence alternative selection.

Take your advice from Mark Zweig to-go.

The I-270/US 33 Interchange project received its award at the ODOT/ACEC Partnering Conference on June 14, 2017. JACOBS SECURES MAJOR RAIL PROJECT IN MALAYSIA Jacobs Engineering Group Inc. has been awarded the role of lead trackwork design consultant for the Klang Valley Mass Rapid Transit Sungai Buloh-Serdang-Putrajaya Line in Malaysia. The KVMRT project involves the construction of a rail-based public transport network comprised of three lines. The SSP Line, which is the second mass rapid transit line to be developed, has an estimated construction cost of approximately $7.6 billion. Jacobs will work with the China Communications and Construction Company and George Kent Joint Venture, which was awarded the approximately $234 million contract for the engineering, procurement, construction, testing, and commissioning of track work, maintenance vehicles, and work trains on the MRT SSP Line by MRT Corporation. “This is the first large scale rail project for Jacobs in Malaysia, which builds on our strong presence across South East Asia in the growing transport infrastructure market, reinforcing our reputation as a leading service provider,” said Jacobs Buildings and Infrastructure Senior Vice President Patrick Hill. “This follows our deliberate investment in the transportation sector in South East Asia, mobilizing capabilities from the U.K. and Australia to support our clients in projects with an increasing level of scale and complexity.” The MRT SSP Line will be approximately 32.4 miles in length, with 8.4 miles of rail in tunnels and the remaining on elevated structures. It will include 26 elevated stations, 11 underground stations, and a maintenance depot. The line will serve a corridor with a population of nearly two million people. Jacobs’ services include the design of trackwork, emergency walkways, cable containment systems, and stray current control systems. The project will be delivered in accordance with international systems engineering and assurance practices to ensure a fully interfaced and compliant design. Jacobs will provide design support services throughout the construction period and use building information modeling to support a fully integrated digital engineering approach.

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MARK ZWEIG, from page 1

welcome you back and probably even give you a raise!”

That looks bad.

It’s hard to win on this one. I guess I will just vacillate between the two on a case- by-case basis. Don’t you wish management was black and white? MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

O P I N I O N

W e’re listening closely to the market desires for our West 2nd District Project here in Reno. We’re observing some interesting trends relating to millennials and retirees. Mixed-use urban living Smaller housing within walking distance to essentials and amenities is appealing to both the young and the old.

A significant number of new jobs, many of them with technology firms (e.g., Tesla, Panasonic, Apple, Google, Switch, etc.), are being filled by bright, young millennials relocating from California and other states. Most of these transplants are coming from urban settings. They are not coming from single-family homes, but from apartments or condominiums in cities, where they can walk to their favorite café, a grocery store, a pharmacy, the hair salon or barber shop, and other conveniences that make for an attractive lifestyle. And, we’ve had many inquiries from the older segment of our population whose children have left the family home, which is larger than the empty-nesters want to maintain at this stage of their lives. While they also claim to need a garden to putter in, most of them (like my wife who mourned the loss of her garden when we moved

into a high-rise Reno condominium) rapidly adapt to the beauty of no-yard-to-take-care-of, no- gardener-to-pay, and no-sprinklers-to-maintain. There’s lots to say for the freedom to lock-it-up and go traveling for a while. “We hadn’t expected the immense interest we’re seeing from (about- to-be or already-are) retired baby boomers.” That’s what is being planned for West 2nd District, including a much more walkable planning pattern. We hadn’t expected the immense interest we’re seeing from (about-to-be or already-are) retired baby boomers. Like many cities in America, Reno

Edward Friedrichs

See EDWARD FRIEDRICHS, page 4

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

BUSINESS NEWS GRYPHON TECHNOLOGIES WINS A $25.5 MILLION SINGLE AWARD CONTRACT SUPPORTING THE NAVAL SURFACE WARFARE CENTER, PANAMA CITY DIVISION, EXPEDITIONARY SYSTEMS DIVISION Gryphon Technologies, LC was awarded a competitively bid single award contract to provide technical engineering support services for the Landing Craft Air Cushion and Naval Assault Craft Units. Services include maintenance, repair, and modification of LCACs assigned to NSWC PCD and to the Naval Assault Craft Units. Gryphon will conduct tests, trials, evaluations, special studies, model or prototype fabrication and testing and shock and vibration testing, supporting product improvements of components to the legacy LCAC craft and the new LCAC 100 craft being delivered in late 2017 to NSWC PCD. If all options are exercised, the contract will be complete in 2022.

“LCACs and amphibious ships are the pillars of Gryphon,” said P.J. Braden, founder and CEO of Gryphon. “We are pleased and proud that we can work with NSWC PCD in support of their mission.” The Naval Surface Warfare Center, Panama City Division, Expeditionary System Division, supports Naval Sea Systems Command to provide support services for expeditionary warfare and Strategic Sealift programs. ACHATES POWER HONORED AS A 2017 CORP! MAGAZINE MICHIGAN ECONOMIC BRIGHT SPOT WINNER Achates Power, Inc. was named a Michigan Economic Bright Spot for 2017 by Corp! Magazine , a Michigan business publication. The Economic Bright Spot award is presented annually to Michigan companies that have exhibited economic growth and expansion throughout the year. Achates Power is a developer of radically improved

internal combustion engines that increase fuel efficiency, reduce greenhouse gas emissions, and cost less than conventional engines. Achates Power was recognized for its accelerated growth since opening the company’s second office in 2015, located in Metro Detroit. The company has seen overall financial growth of 157 percent from 2015 to 2016, and has quickly filled its local office space faster than the anticipated three-year time frame. “There are enormous growth opportunities in Michigan for Achates Power, the recognition from Corp! Magazine as a Michigan Economic Bright Spot is just the beginning,” said David Johnson, CEO and president of Achates Power, Inc. “We anticipate our strong growth trend to continue as engine manufacturers continue to look at how to meet future emissions regulations.”

Finally, 10 years after the building was completed, a small grocery store is being built across the street. I’m seeing an increase in demand across the country for this mix of uses and planning pattern. As we look at other projects around the Reno area, we’re hearing people speak positively about what West 2nd District promises. The community is debating how these characteristics can be incorporated into lower-density housing and retail developments. Most of our buildings range from 10 to 25 stories, with one 40-story tower in the center. Can these same amenities find their way into a four- to six- story environment? We believe so, and are beginning to study a few suburban sites that can be anchored around a village center with many of the conveniences and a small grocery store, and an environment that provides the same walkability attraction as the central-city development. As autonomous vehicles begin to displace the need for a three-car garage (two cars plus a boat), we think the pattern is going to shift, and walkability – to the grocery store and other conveniences we drive to today, as well as work and school – will become a more desirable way to live than the current pattern of suburban tract houses with wide streets and sidewalks no one ever walks on. Let me know what you’re seeing in your city. If you have good examples of these patterns, send them to me. I’ll accumulate them and publish them in some form. EDWARD FRIEDRICHS, FAIA, FIIDA, is a consultant with Zweig Group and the former CEO and president of Gensler. Contact him at efriedrichs@zweiggroup.com. “We think the pattern is going to shift, and walkability will become a more desirable way to live than the current pattern of suburban tract houses with wide streets and sidewalks no one ever walks on.”

EDWARD FRIEDRICHS, from page 3

has a dramatic shortage of this urban, mixed-use pattern of development. And by walkable, I don’t mean a gridiron street plan where pedestrians and automobiles often make for an uncomfortable interface. In West 2nd, we’re closing a number of streets, making them into paseos with fountains and sidewalk restaurants and public plazas. All parking structures will be fed from the perimeter to avoid pedestrians having to wait for cars entering or exiting the parking garages. We’re finding there is a finite time for this generation of seniors to live in their new urban home. There’s a robust market for active senior housing, smaller in scale, with a different set of services. We’re curious about whether old and young people are okay living in the same neighborhood. The condominium my wife and I live in has 380 units with a broad age demographic, from college students and young professionals to seniors like us. And, by the way, everything in between. We have a few families in the building with school-age children. We’re a pet-friendly environment with lots of diversity. It makes for lively conversations and friends that cross generations. What our building lacks, though, is that walkable, urban setting. We’re on a busy street. Sidewalk cafés and restaurants are blocks away, and there are few retail convenience shops. “We’re closing a number of streets, making them into paseos with fountains and sidewalk restaurants and public plazas. All parking structures will be fed from the perimeter to avoid pedestrians having to wait for cars entering or exiting the parking garages.”

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

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THE ZWEIG LETTER August 14, 2017, ISSUE 1212

Alan

P R O F I L E

Conference call: Alan Dostert President and CEO of EAPC Architects Engineers (Marketing Excellence #3 Website and #1 Holiday for 2017), a 140-person firm based in Grand Forks, North Dakota.

Editor’s note: EAPC, founded in 1967, is celebrating its 50th anniversary this year. By LIISA ANDREASSEN Correspondent “T he very things that have made you success- ful at one level may be what has to change to expand and move to the next, without selling out who you are as a corporate culture,” Dostert says. A CONVERSATION WITH ALAN DOSTERT. TZL: Fifty years in business is a big achievement. How did the firm get it done? AD: It’s a mix of things. First, our founding part- ners viewed EAPC as a venture that would outlive them as leaders of the firm. The EAPC acronym is not a collection of names. It stands for Engineers Architects Professional Corporation. It was impor- tant to the original partners that the firm would stand on its own and ownership could come and go without turmoil. To that end, these original in- dividuals wrote a solid buy/sell agreement that

ensured a fair treatment to those both exiting/re- tiring and those buying in. EAPC was an entity that ensured success but did not become an ego block. “For any design firm that wants to enjoy a long, prosperous history, they must remain relevant in services offered, design philosophy, application of technology, and creative marketing.” Secondly, EAPC has always been very diverse and forward thinking. With engineering and architec- ture as the base of services, the original owner- ship offered construction management long be- fore it was in vogue as it is today. Central steam projects and industrial engineering were also part of the service offerings. Forensics were offered as well, developing that science into investigations of combustion source for fires and even vehicular/

Alan Dostert, President and CEO, EAPC

Architects Engineers

THE ZWEIG LETTER Aug

Dostert

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AD: It helps tremendously! Not everyone can leverage five decades of experience and apply lessons learned to testing and launching new marketing strategies. This milestone al- lows us to offer immediate legitimacy to potential clients. Our clients today are very sophisticated and they recognize that long-term success doesn’t just happen. They also un- derstand what it takes to be successful and remain success- ful! That knowledge pays dividends to those of us who have endured the ups and downs of the last 50 years of our econ- omy. Because of our longevity, we can analyze what marketing techniques have worked in the past, and then apply new creative strategies for today’s tech-savvy culture. Here’s the deal: We know who we are and our purpose. We are design consultants who strive to provide the very best multi-disci- pline services to our clients. During our journey, EAPC has seen tremendous growth with the expansion of office loca- tions, adding new services, and simply hiring good people. The path may have narrowed at times or taken some sharp turns as it does for any business, but our philosophy along the way has been to invest in strong marketing efforts to preserve and continuously daylight our EAPC brand identi- ty. Time and technology does shape how we think and how we approach marketing, but the core values throughout our journey remain the same, and that is our best guide to effec- tive marketing. TZL: How does 50 years in business help in terms of re- cruiting/retaining talent? AD: Again, that legitimacy of 50 years implies tested and true systems and a solid business platform, creating em- ployment stability. However, we must remain relevant and stay on the cutting edge of technology if we want those young, aggressive professionals to knock on the door. “Because of our longevity, we can analyze what marketing techniques have worked in the past, and then apply new creative strategies for today’s tech-savvy culture.” TZL: Is there a secret to effective ownership transition? AD: We are currently looking at this next step. Most of the current ownership was recruited to replace a particular skill set and to fill a place at the table. Our next generation of ownership will be a combination of an empowering middle management (to attract and retain top-notch professional talent), and adding additional diversity to the existing own- ership pool to encourage growth outside of our current of- ferings of professional services. TZL: How do you go about winning work? See CONFERENCE CALL, page 8

accident reconstruction. Diversity in our offerings and for- ward thinking continues to be as important today as it was in the early days. Lastly, no business can succeed without dedication from passionate and talented employees. Tenure among EAPC employees ranges from one year or less to 45 years. We have been extremely fortunate to have this type of loyalty, en- thusiasm, and talent that results in a service that our clients desire and, quite frankly, expect. It’s the special sauce that has been getting it done since 1967. “Not everyone can leverage five decades of experience and apply lessons learned to testing and launching new marketing strategies. This milestone allows us to offer immediate legitimacy to potential clients.” TZL: What is the biggest challenge faced by a firm with such history and expectations? AD: Reinventing ourselves without losing the original at- tributes that made the firm successful is tough. For any de- sign firm that wants to enjoy a long, prosperous history, they must remain relevant in services offered, design phi- losophy, application of technology, and creative marketing. There are a lot of distractions that can cause a loss of focus – especially today! TZL: What are the next professional services the firm plans on offering? AD: As we recruit and provide the necessary training to cur- rent talent, the time ahead for offerings is exciting! We are currently positioning the firm to offer more standalone en- gineering and commissioning services. We will likely morph our wind energy sector into a more diverse offering includ- ing solar and other alternative energy applications for our building sector. We currently are expanding our industrial services into more process-driven opportunities, and we are also developing our business excellence and LEAN services to a more meaningful market share. Other options EAPC will look at very closely are expanded interior architecture, marketing, and human resources services. We have solid skill sets and leadership in these areas and it only makes sense to see where these might lead when offered to out- side markets. The EAPC Idea Vault contains these ideas and more to en- hance our overall client offerings, strengthen EAPC’s pres- ence in the A/E industry, and allow for continued organ- ic growth as well as the acquisition of new services. Stay tuned! TZL: How does 50 years in business help in terms of mar- keting?

gust 14, 2017, ISSUE 1212

8 AD: Cultivating and nurturing solid relationships with our existing clientele is an everyday intentional effort. Provid- ing creative ideas, responsive solutions, and simply being present with an ear to listen is a recipe we follow. With new pursuits, we draw from our 50 years of experience. We have a good story to tell and with the backbone of our market- ing team, and the lessons learned, we’re able to put our best foot forward. CONFERENCE CALL, from page 7 “We’re always looking for good people. By that I mean people who have a background of giving back or paying forward in their personal lives. It’s the culture we promote and it seems to breed more of the same as we grow.” TZL: What’s the greatest problem to overcome in the pro- posal process? AD: Managing multiple submittals with similar deadlines. Solid coordination, communication, and frequent quality control checks are all part of the process. Missing a propos- al deadline is not an option per our marketing director. We also know that without personal contact our success rate drops dramatically. Finding the time to be face-to-face with that potential client is sometimes difficult to schedule and sometimes not allowed due to RFP protocol. TZL: Once you’ve won a contract, what are the “marching orders” for your PMs? AD: We’re currently working out and updating those “marching orders” to provide a higher level of consistency and predictability (thus profitability) due to rapid growth over the last three to five years. We have a few steps that are being implemented as follows: 1) Review the proposal and contract for consistency. This may sound elementary, but it ensures that a fully executed con- tract is filed. 2) Review the team as identified in the proposal to ensure com- mitments/prior commitments are and will be met. 3) Enter the project in our accounting/management system. TZL: What has your firm done recently to upgrade its IT system? AD: We constantly monitor feedback from our PCs/PMs department and office managers to respond to IT issues. Whether it be hardware or software needs, we commit to making the necessary upgrades to serve our team. This also includes staffing commitments within the IT department. Each office location has a designated person that is the go-to person. Most recently we have implemented a tick- et system to provide a clearing house of issues, needs, re- quests, and how our IT department will process and resolve them. TZL: What’s the best way to recruit and retain top talent in a tight labor market?

AD: We’re always looking for good people. By that I mean people who have a background of giving back or paying for- ward in their personal lives. It’s the culture we promote and it seems to breed more of the same as we grow. TZL: How do you raise capital? AD: Up until now we have primarily capitalized profits and/ or used “capital call” from the partners. We’re looking at how expanded ownership and management will affect this process. TZL: What’s your preferred strategy for growth, M&A or organic? Give us a synopsis of how your firm effected growth in the recent past. AD: We’ve used both. We’ve honed a process where we connect with an established firm – typically a sole propri- etor, which may not have done such a great job of looking at their own succession planning. We’ve offered a business plan to them where we finish out their existing contracts (sub consult), purchase their physical assets (furniture, etc.), selectively hire their staff, and offer an employment contract with performance incentives for their marketing efforts. We’ve also grown in markets organically by starting a pres- ence in a regional market and building on that office loca- tion within EAPC’s talent pool. These organic growth ef- forts have typically been developed around key employees who desire to build on these growth opportunities. We also seek established and experienced new employees who pro- vide connections and skill sets within the markets that are for specific targeted locations. TZL: What’s the greatest challenge presented by growth? AD: Keeping your culture intact where it’s appropriate and modifying that culture to respond where it’s appropriate to do so. This may sound elementary, however the very things that have made you successful at one level may be what has to change to expand and move to the next, without selling out who you are as a corporate culture. TZL: What is the role of entrepreneurship in your firm? AD: We value that role in marketing. We look to staff who have the abilities/skill sets to carve out new mar- kets and expand our client base. EAPC is review- ing options to enhance and reward internal entrepre- neurship regarding project management and find- ing new and improved methods of getting work out the door. entrepreneurship regarding project management and finding new and improved methods of getting work out the door.” “We look to staff who have the abilities/ skill sets to carve out new markets and expand our client base. EAPC is reviewing options to enhance and reward internal

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

O P I N I O N

What stays and what goes? The rationalization process is all about determining what is working and what is not – especially with a sharp eye to the future.

M ost companies are doing very well these days and the effort to create or update their strategic direction is clearly on the rise. There certainly is no shortage of strategic choices to make with a healthy economy. My observation is that companies struggle in taking on too much and then figuring out how to prioritize what they keep and what they let go. Failure to divest yourself of areas of the business that don’t deliver an acceptable return dilutes your leadership talent as we always tend to spend more time on things that need attention than areas that don’t. It also allows a company to become “fat,” ensuring a harder fall when an economic downturn occurs.

Gerry Salontai

❚ ❚ What part of your business do you rationalize? Any portion of the business that is large enough to have a material impact on the profitability of the firm, takes away human resources, and uses finan- cial capital. The process of rationalizing what you do brings clarity to not only the present, but more importantly, helps shape the desired future for the company. We find the very best firms periodically rationalize the markets they are focused on, clients or client groups, service offerings, initiatives that had been launched previously and are still not con- sidered established, and each established functional

A timeless saying related to strategy and planning for the future is, “Strategy is as much about what you are not going to do as it is about what you are going to do.” Many leaders don’t account for all that is not going well and instead focus almost entirely on where the company can go in the future. The reality is that all companies have parts of their business that are not performing well, have been marginalized, or are not a good fit for the firm’s future. Assessing – or as some refer to it, rationalizing each aspect of what the company does – is needed on a near-continuous basis.

See GERRY SALONTAI, page 10

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

ON THE MOVE BURNS & MCDONNELL HIRES RAFAEL PAGAN TO EXPAND TRANSMISSION AND DISTRIBUTION SERVICES IN MID-ATLANTIC REGION With a growing need to improve reliability of the electrical grid serving the Mid-Atlantic region, Burns & McDonnell hires Rafael Pagan as a project manager on its regional transmission and distribution team in the Washington, D.C., metropolitan area. Pagan will oversee a team of power delivery engineers focused on design and execution of substation and transmission projects. Burns & McDonnell is currently ranked No. 1 in electrical power and transmission and distribution by Engineering News-Record magazine. “The Mid-Atlantic region continues to upgrade aging infrastructure and at the same time, has a growing demand for power,” says John Olander, Burns & McDonnell president and Transmission and Distribution general

manager. “Adding to the local presence in the Washington, D.C. area increases our ability to better serve our clients. Rafael has the strong technical knowledge and project management experience to grow our local team and help provide solutions from concept to completion.” Pagan has more than 10 years of experience in high-voltage transmission, substations, and distribution systems. He’s managed, developed, and engineered projects across the U.S. ranging from 13-kV to 500-kV, with individual values exceeding $25 million. “Rafael has worked for and with major utility companies throughout the Mid-Atlantic, giving him a deep understanding of the region’s infrastructure needs, challenges, and regulations,” says Jeff Ganthner, general manager of Burns & McDonnell Mid-Atlantic offices. “His consulting, project management,

and design abilities make him a strong addition to our expanding team.” Pagan is a licensed professional engineer in Virginia, Maryland, Washington, D.C., Delaware and Puerto Rico. He holds a bachelor’s degree in electrical engineering from the University of Puerto Rico and a master’s degree in engineering from the University of Maryland. Burns & McDonnell opened its first Mid- Atlantic office in 2010. Since then, the team has grown from two employee-owners to more than 70, located in Roanoke, Virginia, Chesapeake, Virginia, and the Washington, D.C., metropolitan area. Burns & McDonnell is a family of companies made up of more than 5,700 engineers, architects, construction professionals, scientists, consultants, and entrepreneurs with offices across the country and throughout the world.

emotionally attached will make the best reviewer. In some cases, it is desirable to bring in some outside help using an industry experienced person to get the most objectivity in the process. Whether inside or out, an individual or a group of individuals who can bring market, strategic, financial, and operational experience to the table have the needed traits. ❚ ❚ What questions do you ask? The rationalization process is all about determining what is working and what is not – es- pecially with an eye to the future. So the very first question to ask is how does this fit in our current and future strategy of the company? Many ignore this question and you find over time that a company continues doing things that were never included in their strategy. The remaining questions vary, de- pending on what aspect of the business you are rationalizing. For example, in evaluating business units, regional offices, or similar operations, you should evaluate the historical profit- ability, market potential, and strategic significance. The drain of your leadership talent as part of this evaluation cannot be ignored as that same time could be spent on other efforts that will drive the company. Hopefully this gives you the picture on the missing part of strategy through a rationalization process. It is all about ensuring the best use of your financial, talent, and leadership resources to build value for the shareholders and all employees. The best firms focus on the “critical few” things that make a company successful. So whatever you do in planning for the future – don’t forget to look at what you are currently doing and whether you should continue on that course. This is all about doing less and doing what you do well. GERRY SALONTAI is the founder of Salontai Consulting Group, LLC. Contact him at gerry@salontai.com. “Whatever you do in planning for the future – don’t forget to look at what you are currently doing and whether you should continue on that course. This is all about doing less and doing what you do well.”

GERRY SALONTAI, from page 9

business unit within the firm. These functional units can include client market sectors, larger groups or departments, offices, regions, entire divisions, and even subsidiaries. ❚ ❚ When should you do this? The key is to perform this process often enough to identify and then change, reduce funding or exit those aspects of the business that are not meeting expectations. It is equally important not do this too frequently, thus causing disruption or giving up on the area being evaluated too quickly. Rationalization is best performed annually and no more than every few years. One approach is to perform this along with the strategy/strategic planning process. This timing gives you the opportunity to determine how what you are doing now relates to how it may fit into the business of your future. Care should be taken to avoid directly performing the rationalization in your strategy planning, because it could take away from the creative thinking needed for the future. The results of this effort may be an input to the planning process to help decide where the company will place its investments, including reinvesting in existing initiatives, exiting what is not working or does not fit in the future. “Many leaders don’t account for all that is not going well and instead focus almost entirely on where the company can go in the future. The reality is that all companies have parts of their business that are not performing well, have been marginalized, or are not a good fit for the firm’s future.” ❚ ❚ Who would do this? You need to have your most objective thinker(s) perform the rationalization process. One key to make this a success is to choose an individual who is not directly attached to the topical area as independence is very important. Generally forming a small task group with specific areas to evaluate is an acceptable approach if a firm does not have one person that is well rounded enough to cover all the areas to be rationalized. An individual who is not invested or

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

Grade-based performance Senior employees are outperformed by their subordinates all the time. Use metrics to reward the doers and identify the dead weight. O P I N I O N

T he subject of compensation is a challenging and emotionally-charged issue. It affects all of us: our staff, our families, and our organizations. During the process of annual performance reviews, we as supervisors know that subjectivity is our menace and we need to be uniform in our approach to the evaluation of staff. As leadership, we also recognize the need to provide young professionals with a defined pathway for salary advancement. And as shareholders, we want a mechanism for identifying the people in our firms who are not contributing at levels commensurate with their salaries. We all want a compensation program that is consistent in its application, equitable in its distribution, and transparent in its implementation – one that maximizes our individual and corporate potentials for growth.

Marc Florian

As supervisors and management, we’re all looking for quantitative systems that can quickly provide consistent, equitable, and measurable standards for: ❚ ❚ Benchmarking performance ❚ ❚ Encouraging effective performance ❚ ❚ Retaining talented employees We get together in conference calls and meetings to discuss: ❚ ❚ How general performance guidelines/expectations could be tied to individual job classifications? ❚ ❚ How could these tools be used to standardize a means of driving effective performance and identify unacceptable performance? We all seem to agree that every employee, young and old, should know exactly what is expected of them, and that those expectations should be embodied among the fundamental building blocks of our firms’ career frameworks. With this introduction, what follows is a discussion of how rolling financial metrics within any given job classification or labor category could be used to help drive individual and corporate performance, provide a pathway for salary growth and career advancement among our hard- working professional-technical staff, and serve as justification for corrective action among our under-performers. GRADE-BASED PERFORMANCE GOALS (PROFESSIONAL-TECHNICAL STAFF). In nearly every A/E firm I know, you’ll find supervisors, leadership, and shareholders express- ing concern that their review processes don’t nec- essarily provide consistent, equitable, or measur- able standards to benchmark performance. And,

nearly all of them say that their review practices generally fail to address concerns about long-term, underperforming staff, particularly those at more senior levels with higher compensation. In fact, I’ve heard many front-line managers say that some of their processes not only fail to recognize hard- working employees, but continue to reward less productive employees. “We all want a compensation program that is consistent in its application, equitable in its distribution, and transparent in its implementation.” That said, the following example demonstrates how using three-year rolling financial metrics, such as those associated with labor revenues stemming from an individual’s project management and/or marketing efforts (PM/ ME) could provide a quantifiable, equitable, and consistent basis for rating the performance of professional-technical staff, advancing careers, and driving shareholder value. ASSIMILATING AND ANALYZING THE DATA. Each year, as part of the budgeting process, many A/E firms will generate financial statistics associated with the PM/ME contributions of its professional-technical staff. These data serve two key purposes: First, it enables management to look back at what was, thereby helping them to forecast what can be, and second, it enables supervisors to compare and contrast the contributions of individual staff. However, many firms will take this process a step further and publish three years of these data

See MARC FLORIAN, page 12

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

Annual Avg PM+ME Revenue Contribution

MARC FLORIAN, from page 11

within each labor category and can be used to justify reviews and promotions, and to identify and address issues of underperformance. SUMMARY. Clearly, grade-based performance goals such as these shouldn’t be the only metric against which individual performance of professional-technical staff is measured. This example simply demonstrates how general perfor- mance guidelines/expectations can be reliably linked to individual job classifications; and how a comparison of roll- ing averages can aide the justification for promotion, or the grounds for corrective action. However, we as supervisors and leadership also need to remind ourselves that young employees today want to know what they have to do to advance in terms of their careers and in terms of their compensation. There’s little tolerance for ambiguity or the appearance of favoritism or bias commonly associ- ated with subjective performance reviews, and there’s even less with respect to promotions. Therefore, while having a financial-based metric that helps drive performance to- wards what is seen as gainful for a firm’s economic success, doesn’t preclude us from still incorporating less quantita- tive factors into the overall review process. It could very well mark a cultural shift in your salary administration policy; one that promotes the alignment of individual and corporate goals. One where hard-working employees can be rewarded, and habitually underperforming staff (both junior and senior) can be easily identified and corrective actions justified. That said, the effectiveness of using grade-based performance goals such as these depends on their being adopted as policy, such that their implementation can ensure uniform, equitable and measurable standards for benchmarking performance, establishing a pathway for career advancement, and corrective action across an organization. MARC FLORIAN is vice president for Environmental Consulting & Technology, Inc., a professional consulting, engineering, and scientific services organization serving clients and markets throughout the United States and on four continents. He can be reached at mflorian@ectinc. com.

sorted by the individual job classifications or labor catego- ries of their professional-technical staff (e.g., staff types or grade-levels). The annual average PM/ME revenue contribution for this three-year period is then calculated within each labor category. (This can be done for any desired financial metric.) The resulting data are often graphed to illustrate individual staff performance within each labor category (see the graph above). These graphs will typically demonstrate that performance is diverse within individual labor categories (e.g., not everyone performs equally), and that some staff within lower labor categories are out-performing other staff within higher labor categories. (This is not unusual.) Note: ❚ ❚ On average, G26 staff are outperforming G28 staff USING THE DATA TO ESTABLISH PERFORMANCE CRITERIA. Further analy- sis of these data sets can be used to divide the overall performance of each staff type or grade level into any num- ber of intervals, with each interval representing some per- centage of the annual three-year average. Each of the in- tervals can then be assigned a corresponding performance criterion, such as outstanding, commendable, satisfactory, needs improvement, and unsatisfactory. (See example be- low.)

% of Annual 3-Year Average (PM+ME Lbr. Revenue)

Rating

Outstanding: Commendable: Satisfactory:

≥125% ≥110%

≥90% ≥75% ≤75%

Needs Improvement:

Unsatisfactory:

These criteria can then form the desired revenue goal

THE ZWEIG LETTER August 14, 2017, ISSUE 1212

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