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HR costs as a percentage of NSR 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 D e c e m b e r 1 1 , 2 0 1 7 , I s s u e 1 2 2 7

Keep it “professional”

T here’s something to be said for looking and acting the part if you want to be recognized as a professional. I think sometimes people in our business forget that. Here are some examples: ❚ ❚ Vehicles. If the company owns or leases them, they should be branded. That means consis- tent colors and graphics on every single one of them. They should also be kept clean. And they should be appropriate for the clients you serve. Government clients, for example, don’t like to see your people in what they consider to be excessively-flashy vehicles. ❚ ❚ Attire. I always say dress appropriately. And the fact is, that varies by client. If your clients wear jeans and golf shirts, you should not wear a suit. Conversely, if your clients always wear suits and dress formally and you go in jeans, that may not be right. Ditto with ties. Don’t show up wearing a tie in a company where none of the male employees do so. And women, cocktail dresses are never appropriate for work. “Appropriate” is the word when it comes to dress. ❚ ❚ Email. Return them, promptly, and with no spelling errors. Your people have got to have the idea that if someone responds to their request they should say “thank you.” An email response should not get dead air. And use “we” versus “I” in most cases. We all work for com- panies. That’s one of my pet peeves. ❚ ❚ Office space. Keep it clean. Keep the lights on. Keep the bathrooms and kitchens clean. Keep the trashcans from overflowing. Keep the magazines in the lobby fresh. Don’t let stuff pile up on the reception counter. Don’t let your conference room turn into a lunch room. Have some art on the walls. Keep the place

“There’s something to be said for looking and acting the part if you want to be recognized as a professional. I think sometimes people in our business forget that.”

According to Zweig Group’s 2017 Policies, Procedures & Benefits Survey , HR costs as a percentage of net service revenue have steadily increased over the last five years. HR- related expenses have jumped half a percentage point from 1.3 percent to 1.8 percent in the last year. The full list of expenses is captured in the 2017 survey so firms can compare, by staff size, how all HR-related expenses are being spent.

Mark Zweig

OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/

MORE COLUMNS xz GUEST SPEAKER: The reply button Page 3 xz GUEST SPEAKER: Policy quest Page 5 xz THE FAST LANE: Debriefing sessions Page 9 xz GUEST SPEAKER: Life insurance Page 11

F I R M I N D E X Fluor Corporation....................................4 Foster + Partners....................................4 Jacobs Engineering Group Inc................4 KBR, Inc.. ...............................................4 RPS North America Infrastructure. ..........6 The Stanley Foundation. .........................2

Page 6 Conference call: Bill Abbott See MARK ZWEIG, page 2

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

IN MEMORIAM RICHARD H. STANLEY (1932-2017) The Stanley Foundation is saddened to announce the passing of our Chair Emeritus, Richard H. Stanley. An engineer by profession, and a global businessman and world citizen at heart, Dick Stanley dedicated his life to making his community, family, and the world a better place. At the Stanley Foundation, Dick embodied our vision, seeking a secure peace with freedom and justice, built on global citizenship and effective global governance. Stanley died on November 17, 2017, following a brief illness. He was 85. Stanley’s service to the Stanley Foundation began in 1956 as a founding board member along with his father, C. Maxwell Stanley; his mother, Elizabeth; his brother, David; and his sister, Jane. He served as Stanley Foundation president from the time of his father’s death in 1984 until 2007 and served as board chair from 1984 to 2017. He also served as chair and president of the Stanley Group and as vice chair of the board of the HNI Corporation and was on the boards of several for-profit and nonprofit organizations. In his leadership roles at the Stanley Foundation, Stanley oversaw a private operating foundation directed toward achieving a secure peace with freedom and justice, built on global citizenship and effective global governance. He and the foundation advanced this work through policy analysis, conference dialogue, and outreach initiatives. In conjunction with foundation work, Stanley received the Harry S. Truman Distinguished Service Award from the American Association of Community Colleges and the Award for Citizen Diplomacy from the National Council for International Visitors. Former U.S. Representative Jim Leach (R-IA) paid tribute to Stanley’s many contributions: “A citizen of this state and this country, Dick recognized as deeply as any individual on the planet that no country is an island. He understood that America’s values could only be

Take your advice from Mark Zweig to-go.

sustained at home and proliferated abroad by working with and understanding peoples from all parts of the globe.” International relations scholar John Ruggie, a frequent participant in Stanley Foundation conferences, recounted Stanley’s contribution to the many events he attended: “People from around the world who might have critical views about U.S. policies left Stanley Foundation meetings feeling that Americans can’t be all that bad if they’re anything like Dick Stanley.” Stanley Foundation President Keith Porter said, “In addition to providing 33 years of leadership to the foundation, Dick deepened and encouraged family involvement in the foundation, provided many opportunities for others to step up to leadership roles, sharpened our focus on strategic thinking and policy impact, and carefully managed the foundation’s resources. In these and many other ways, Dick laid the groundwork for us all to carry the foundation’s mission far into the future.” Stanley Foundation Board Chair Brian Hanson said, “We will miss Dick greatly. Through his leadership and deep commitment to the foundation’s goals and values, Dick greatly expanded the scope and impact of the foundation’s work. The greatest tribute we can offer is to carry on the legacy that Max and Dick built to make the world more peaceful and secure.” The Stanley Foundation advances multilateral action to create fair, just, and lasting solutions to critical issues of peace and security. The foundation’s work is built on a belief that greater international cooperation will improve global governance and enhance global citizenship. The organization values its Midwestern roots and family heritage as well as its role as a nonpartisan, private operating foundation.

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1200 North College Ave. Fayetteville, AR 72703 Mark Zweig | Publisher mzweig@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

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MARK ZWEIG, from page 1

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 Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399- 1900, ext. 139, or email TheZweigLetter@ TheYGSGroup.com. © Copyright 2017, Zweig Group. All rights reserved.

well-painted. Don’t let anyone make their individual work space a dump. ❚ ❚ Music. If you have music playing in the building, make it appropriate. Rap? Heavy Metal? NO! ❚ ❚ Entertaining. Most of your clients or employment candidates don’t want to go to Olive Garden. It sucks. You will look bad if you take them there. Ditto for Applebee’s. It is ter- rible. Take them somewhere nice, or somewhere local in flavor with some character. ❚ ❚ Website. Get someone with some graphic design talent to look at it. If it needs to look better, make it so. Everyone goes to your website to learn more about you. Look like a “real” business. Any other hints on looking more professional you’d like to share with your fellow readers? Send them my way. And meanwhile, have a great week! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

O P I N I O N

The reply button Having a quick response for clients and colleagues is good business, and it’s easy, so when you get that email, do the right thing.

S omething’s happened a couple dozen times in the last two-plus years I’ve been at Zweig Group. I’ll be working away when I get an email from a client asking a question about our awards, our annual Hot Firm conference, or something else we do here. I always try to find the information as quickly as I can and then respond. That is not the part that stands out to me. It’s when I get an email back saying, “Wow, that was really quick!”

Kyle Ahern GUEST SPEAKER

awards manager, I do a lot of communicating both with clients and with co-workers. The same can be said of my former position in executive search. If somebody needs something from you, and you have it at your fingertips, why make them wait? Quick communication is one of the little things you can do to make a big difference in the eyes of “Quick communication is one of the little things you can do to make a big difference in the eyes of the client, making them see you in a positive light.”

Don’t get me wrong, I like hearing that, but it confuses me. We live in a society that is constantly connected with email, social media, and cell phones. When I am in the office, I am at my computer 90 percent of the time. When I am out of the office, I have my iPhone with me 95 percent of the time, which means I’m still connected. I think this is probably the same for most of us, so it really shouldn’t be a surprise when a client thanks us for being prompt – especially when helping clients find answers is an important part of the job. Working in a few different positions here at Zweig Group, I have learned a lot. But even if my roles have changed, one thing has been consistent across each segment, and that’s been the importance of communication. In my job as the

See KYLE AHERN, page 4

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

BUSINESS NEWS JACOBS RECEIVES CONTRACT FROM FERRING PHARMACEUTICALS FOR RESEARCH AND DEVELOPMENT HEADQUARTERS IN COPENHAGEN Jacobs Engineering Group Inc. received an engineering, procurement, construction management, and validation services contract for the new Ferring Pharmaceuticals research and development headquarters, which will be located in Copenhagen, Denmark. Jacobs was selected for this project phase following the successful completion of the conceptual study and basic engineering design. As Ferring Pharmaceuticals’ principal biopharmaceutical product development center, this new facility will feature collaborative work spaces and serve as an inspirational, global research and development unit for identifying and developing innovative products in the fields of reproductive health, urology, gastroenterology, endocrinology, and orthopedics. When constructed, the facility will include six stories above grade, two basement levels, and a site area of approximately 124,000 square feet. Jacobs is working alongside Foster + Partners , an architecture consultancy firm, to develop the iconic vision for the new R&D center. “Our clients turn to Jacobs because we provide the biopharmaceutical labs and corporate building expertise they need, as well as end-to-end solutions for delivering their facility to completion,” said Jacobs Buildings and Infrastructure and Industrial President Bob Pragada. FLUOR’S STORK AWARDED NEW OPERATIONS CONTRACT BY ECOPETROL IN COLOMBIA UNTIL 2020 Fluor Corporation announced that Stork, part of Fluor’s Diversified Services segment, was awarded a 29-month contract by Ecopetrol S.A., to provide operations support services in production facilities and clusters for its Orinoquia Vice-Presidency project located in the central region of Colombia. Fluor booked the undisclosed contract value in the third quarter of 2017.

“Stork has worked with Ecopetrol for more than 30 years and we look forward to strengthening our relationship by continuing to provide first- class operations and maintenance services,” said Jorge Estrada, regional vice president of Stork Latin America and Offshore. “This contract with Ecopetrol continues to position Stork as a leading provider of integrated operations and maintenance solutions in Colombia.” Stork delivers maintenance, modification, and asset integrity services to more than 60 clients in the Colombia-Peru region and more than 4,000 clients around the world with extensive experience in multi- site execution. The contract with Ecopetrol includes sampling and monitoring services over injection and production wells, surface facilities, and the inspection of oil well locations. KBRWYLE TO SPONSOR ARMY 10-MILER KBR, Inc. announced that, through its global government services business KBRwyle, it would once again join the Association of the U.S. Army as co-lead sponsor of the Army 10-Miler race in Washington, D.C., which was in October. KBR has been a major sponsor of the ATM for 12 years. At the race, KBRwyle provides free event shuttles, water stations, pre-packaged meal boxes, and reunion areas where family and friends link up with runners. KBRwyle also sponsors the famous Hooah-Tent Zone where attendees interact with soldiers while enjoying the ATM experience and Wisconsin bratwursts. The ATM is the third largest 10-mile race in the U.S. with an estimated attendance this year of 40,000 runners and spectators from around the world. “KBRwyle is very pleased to partner with organizations like AUSA and the Army 10-Miler to support soldiers and veterans from across the military,” said Byron Bright, KBRwyle president. “KBRwyle stands beside our troops

supporting them in carrying out their important missions worldwide, and stands behind them and their families when they return home.” All proceeds from the ATM go to the U.S. Army’s Morale, Welfare, and Recreation program. The MWR program directly supports soldiers and their families worldwide by providing a variety of family, morale, welfare and recreation programs and services to enrich soldiers’ and their families’ lives culturally and PERU COPPER CORPORATION APPOINTS JACOBS AS EPC PROVIDER FOR ITS NO. 1 ACID PLANT Jacobs Engineering Group Inc. was selected by Southern Peru Copper Corporation to provide engineering, procurement, and construction services for its No. 1 Acid Plant upgrade project. SPCC operates one of the world’s largest copper smelting/refinery facilities in Ilo, Peru, which is located approximately 600 miles south of Lima. creatively. SOUTHERN Under the terms of this lump sum EPC contract, Jacobs will perform modifications to the existing acid plant, decreasing its sulphur dioxide emissions while increasing sulphuric acid production capacity through the use of Jacobs’ proprietary Chemetics sulphuric acid technology. “Our successful relationship with Southern Peru Copper Corporation spans more than 20 years,” said Jacobs Mining and Minerals and Specialty Chemicals Senior Vice President and General Manager Andrew Berryman. “We will provide our innovative Chemetics acid plant technology for this project, complementing the two existing plants our teams previously executed at the site, to further reduce SO 2 emissions.” In addition to the No. 1 Acid Plant project, Jacobs is performing a feasibility study for SPCC in Lima for its power distribution system that will enable the company to support future demand.

it. It could be the difference between having a repeat client and a one-time deal. KYLE AHERN is the awards manager at Zweig Group. Contact him at kahern@zweiggroup.com. “You may not always get to be as responsive as you’d like, and there are certainly times when it just isn’t possible. Whenever you have the chance, however, you should take it. It could be the difference between having a repeat client and a one-time deal.”

KYLE AHERN, from page 3

the client, making them see you in a positive light. Even if you are traveling, in a meeting, or busy with something else, a quick email saying you will find the answer as soon as you can will let them know that their issue is important. It doesn’t keep the client waiting and guessing if you got their email, or if you will get back with them. You don’t forget about answering their question, which is easy to do especially when you get busy later. And finally, clients will appreciate, and sometimes even be shocked by, the quick answer. You may not always get to be as responsive as you’d like, and there are certainly times when it just isn’t possible. Whenever you have the chance, however, you should take

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

O P I N I O N

A s design firms look ahead to 2018, the time may be right to reassess their professional liability insurance limits. In recent months, design firm clients have been contractually requiring design firms to carry increasingly higher amounts of coverage. Policy quest As 2018 approaches, A/E firms may want to revisit professional liability insurance limits, and find optimal solutions for their requirements.

Rob Hughes GUEST SPEAKER

❚ ❚ Average project size. This is measured by an A/E firm’s fees and total construction value. The bigger the project, the bigger the potential claim (i.e., 10 aggregate was standard and most design firms had at least that amount of coverage in place.” “Historically, most design firm clients accepted whatever limits A/E firms carried or set relatively minimal amounts; $1 million per claim/

Historically, most design firm clients accepted whatever limits A/E firms carried or set relatively minimal amounts; $1 million per claim/aggregate was standard and most design firms had at least that amount of coverage in place. Yet, during 2017, more contracts require limits of $5 million to $10 million – not just for prime designers, but for the various sub-consultants as well. In prior years, when most design firms carried limits of $1 million or $2 million, they were based on such factors as: ❚ ❚ Total revenues and assets. Larger firms with great- er assets typically have more to insure and protect.

See ROB HUGHES, page 8

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

Bill A

P R O F I L E

Conference call: Bill Abbott President, RPS North America Infrastructure, a division of RPS (formerly RPS Klotz Associates, Inc., Best Firm Civil #36 for 2017), a 500-person firm based in Houston.

By LIISA ANDREASSEN Correspondent “O ur limitations are people,” Abbott says. “We could do more if we could find more quali- fied people.” A CONVERSATION WITH BILL ABBOTT. The Zweig Letter: The talent war in the A/E in- dustry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms? Bill Abbott: Recruitment is a dog-eat-dog world right now. We’re feeding on ourselves. We try to ensure that every employee has a path to move up and create a reason for them to stay. We provide growth opportunities and have no set guidelines

for who moves up (i.e., after every two-and-a-half years, a person is promoted). If you prove yourself, you move up. We also stay competitive with salary and benefits. “We have positive business relationships and work to maintain a strong track record with clients so they will keep coming back to us again and again. Repeat business is key.” TZL: The A/E market is great right now. What are you doing to cushion your firm in the event of a downturn?

Bill Abbott, President, RPS North America Infrastructure

THE ZWEIG LETTER Decem

Abbott

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BA: We are invested heavily on the public side – state, coun- ty agencies – in public works and transportation. We try to diversify within those categories. We have positive business relationships and work to maintain a strong track record with clients so they will keep coming back to us again and again. Repeat business is key. “Our marketing is constantly changing. We’re never content with the status quo. Marketing is a huge part of our success. Every year we create a marketing budget and a plan of pursuit. At the end of the year, we revisit what was spent and what worked.” TZL: Monthly happy hours and dog friendly offices. What do today’s CEOs need to know about today’s workforce? BA: Today’s workforce is so diverse. We have a combina- tion of baby boomers, millennials, X and Y generations, and more. It’s difficult to keep everyone happy. Our philosophy is to try to be open and accepting of all. We slow down long enough to tap into people’s individual skills and really get to know them. We find out what they need as far as a re- sponse goes and then work to give it to them. We don’t have the “Google” types so a lot of those trendy perks don’t re- ally apply. TZL: How do you deal with underperforming employees? What are your steps for removal after they have prov- en to be ineffective, or even counterproductive, to your firm? BA: First, we find out why they are underperforming. Is it personal? Do they not have the correct skills for the job at hand? Next, we provide a plan for getting back on track. Our discovery approach is three-pronged: ❚ ❚ Can’t: Why can’t they do the job? ❚ ❚ Won’t: Do they simply want out to do something else? ❚ ❚ Don’t know how: Do they need more training? TZL: How does marketing contribute to your success rate? Are you content with your marketing efforts, or do you think you should increase/decrease marketing?

BA: Our marketing is constantly changing. We’re never con- tent with the status quo. Marketing is a huge part of our success. Every year we create a marketing budget and a plan of pursuit. At the end of the year, we revisit what was spent and what worked. Typically, we allot about 5 to 8 per- cent of the overall budget to marketing – it depends on the year. TZL: If there was one program, course, or degree pro- gram that you could take or recommend before becoming a principal or owner, what would it be? BA: How to solve tech problems and simple accounting. I never thought about accounting as an engineer. Also, any- thing legal. TZL: What’s the greatest challenge presented by growth? BA: Assimilation – whether companies are acquired organi- cally or through acquisition, it’s important to keep things moving and to get people to acclimate quickly. TZL: What is the role of entrepreneurship in your firm? BA: It’s encouraged. When we were privately owned, we had a bit of a different mindset than being publicly owned, but we still want to be innovative and think outside the box. Ultimately, I’ll decide if we move forward with an idea and whether we give it a try or not. “Our philosophy is to try to be open and accepting of all. We slow down long enough to tap into people’s individual skills and really get to know them. We find out what they need as far as a response goes and then work to give it to them.” TZL: What’s your prediction for the next five years? BA: Texas is booming. We have about 1,000 people mov- ing here per day. The outlook for transportation is strong. Our limitations are people. We could do more if we could find more qualified people. More and more, we’re look- ing outside the area for staff. For the next five years, we’re focused on manageable growth – about 10 percent per year.

ABOUT TZL’S WEEKLY CONFERENCE CALL Winners from Zweig Group’s Hot Firm and A/E Industry Awards Conference, the industry’s largest and most comprehensive business conference for leaders and aspiring leaders of AEC firms in the U.S., are highlighted

in The Zweig Letter , in addition to being celebrated at the conference. In 2017, Zweig Group offered four awards programs focused on A/E/P and environmental consulting firm achievement: ❚ ❚ Hot Firm List

❚ ❚ Best Firms to Work For ❚ ❚ Marketing Excellence Award ❚ ❚ Jerry Allen Courage in Leadership Award Visit hotfirm.com/our-awards/ to learn more about Zweig Group’s awards.

mber 11, 2017, ISSUE 1227

ROB HUGHES, from page 5

catastrophic design error is discovered, warranting a tear- down and complete rebuild. Is there a reasonable scenario where the damages would be two-and-a-half times the original construction costs? Probably not. If the requirement for the higher limits remains, insurance solutions are available. Your firm might increase its overall practice policy limit to the required level; this will be costly because it applies to all your work, not just this project/ client. An alternative: Add an additional limit to the policy for this project or all projects for a particular client. “The premium adds up, especially when you include the potential additional premium charges for each sub. This may prove an effective negotiating tool: It adds significant costs to the project!” In their pricing, insurers typically start at a minimum premium for each additional million needed, which typically ranges from $2,000/$1 million limit up to $5,000/$1 million limit. A/E firms must pay a full-year premium for the additional limits regardless of the time remaining on the policy expiration date, and subsequently will have to be renewed through the duration of the project and possibly for a stipulated number of years post substantial completion. The premium adds up, especially when you include the potential additional premium charges for each sub. This may prove an effective negotiating tool: It adds significant costs to the project! SAVING COST BY BUNDLING ADDITIONAL LIMITS. A few insurers now offer the ability to “bundle” all additional limits projects/ clients onto one endorsement. Instead of adding three separate endorsements for three different clients, you may only need to add one endorsement and one extra premium charge. The carrier will review annually the number of contracts under the endorsement, as well as project types, scope of service, etc., and total revenues billed and expect- ed in the future. Another option: Consider a project-specific policy to insure the entire design team. Two decades ago, the market was basically down to one insurer offering this coverage for “mega” projects. Today, however, with market competition, project policies are more readily available from a number of different insurers. They may even be willing to offer terms on projects as small as $20 million to $25 million in construction costs. As A/E firms anticipate their future project opportunities, many may involve new contractual requirements for higher professional liability insurance limits. Careful planning may help determine the best approaches for negotiating with potential clients and optimal solutions from the insurance market. ROB HUGHES is a senior vice president and partner at Ames & Gough. He can be reached by email at rhughes@amesgough.com.

percent cost overruns on a $1 million project represent far less exposure to the design firm than a 10 percent threshold on a $10 million project). ❚ ❚ Specialty and type of projects. Geotechnical and structural engineers may carry higher limits than landscape architects or civil/site engineers, as the impact of errors by the former is likely to result in a larger claim (i.e., damages derived from a building settlement are far greater than if a roadway is laid out improperly or grading plan is slightly off). Meanwhile, the professional liability insurance market remained relatively soft. Some design firms have used the favorable market conditions to increase their limits; using potential premium savings to raise their limits from $1 million or $2 million to $3 million or higher. Although generally available, limits of $5 million and above are typically not carried by design firms with under $20 million in annual billings. In choosing their insurance limits, A/E firms balance risk/reward and cost to obtain what they feel is appropriate coverage. MEETING NEW REQUIREMENTS. Lately, however, that process has been affected or taken away by design firm clients that have contractually required limits of at least $5 million per claim/aggregate. Consider a recent example: “Professional liability insurance shall be provided and the limit shall not be less than $10,000,000 per claim and in the annual aggregate.” Another approach ties required limits to the construction costs:

Party

Construction Value

$1 million to $5 million

Less than $1 million

$5 million and greater

A/E Firm

Professional Liability/ Errors & Omissions Limit

$1 million $5 million $10 million

A/E firms can try to negotiate to have the client accept their existing limits or they can comply by increasing their coverage to comply with the standard. One approach in negotiating with clients is to explain that your insurance is not the only coverage available in the event of a professional claim. There is a “stacking” of limits assuming the prime designer retains sub-consultants for some or all sub-disciplines, such as MEP, structural, interior design, landscape design, etc. If a claim arises, the relevant insurance includes that of the prime, as well as the sub or subs whose scope of work is at issue; multiple policies may trigger, making available multiple limits. A/E firms also might walk clients through reasonable and even worst-case loss scenarios to illustrate if they might even approach a loss nearing the contract limit. Consider: Why would a $2 million project “need” a $5 million PLI limit? Suppose the building is nearly complete when a

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

O P I N I O N

I have long told my clients that requesting a debriefing after a selection has been made should be a standard conclusion of their firm’s “win work” proposal process – whether their team was selected for the project or not. Debriefing sessions There’s a strong case for including marketing staff post-proposal, especially if things didn’t go so well with the client.

attendee(s) may become defensive, and possibly even belligerent and argumentative. Such behavior does nothing positive for your future relationship with the client, who might be an entity with whom you really want to work if you can only figure out how to please them. “I have long told my clients that requesting a debriefing after a selection has been made should be a standard conclusion of their firm’s ‘win work’ proposal process – whether their team was selected for the project or not.”

A debriefing session does a number of valuable things for your firm: ❚ ❚ It tells you what the client liked about your proposal or presentation, so you can do more of that when pursuing other work with them or other clients. ❚ ❚ It tells you what the client didn’t like, so you can do less of that or avoid doing that altogether on future pursuits for that or other clients. ❚ ❚ It signals to the client that you really want to work with them and hope to make the debriefing a learn- ing session. But a debriefing can also be a treacherous time – especially if your firm wasn’t selected for the project – depending on who attends the session. If the principal in charge and the project manager go to the debriefing, and the client is 100 percent honest about where they thought your experience, approach, or proposed staffing section fell short, there is a 50-50 chance that one or both of your

Bernie Siben THE FAST LANE

See BERNIE SIBEN, page 12

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

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THE ZWEIG LETTER December 11, 2017, ISSUE 1227

O P I N I O N

Life insurance Could it be your final act of leadership? If you are a CEO or partner and do not have it, please consider changing the scenario.

T he A/E/P and environmental consulting industry has many unique qualities, but one I find intriguing is the longevity of careers at a single firm. Zweig Group’s 2017 Principals, Partners & Owners Survey reports that 60 percent of the respondents have been with their firm for 17 to 31 years, with the median of that group having a tenure of 24 years. The median time as an owner is 18 years. These statistics confirm that owners, principals, and partners have a solid commitment not only to the profession but to the firm. So, I find it even more intriguing that a current 34 percent have not secured a very important detail to take care of the long-term: life insurance coverage.

Tracey Eaves GUEST SPEAKER

It’s a pretty safe bet that shareholders are also the primary rainmakers and the sudden absence of that revenue will have long-term ramifications the back burner, especially when the majority of firm owners are between the ages of 40 and 59.” “People in general do not like to think about their own demise and it’s easy to push planning for that event to

People in general do not like to think about their own demise and it’s easy to push planning for that event to the back burner, especially when the majority of firm owners (73 percent) are between the ages of 40 and 59. But, as an owner, addressing the issue and securing the firm’s future is an ultimate expression of love for your company and for the people whose livelihood depends upon its existence. Having spent many years valuing privately-held businesses, I fully understand the impact the death of a partner can have on a firm, not only from the personal perspective but also the loss of business, productivity, and financial security.

See TRACEY EAVES, page 12

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

BERNIE SIBEN, from page 9

from previous pursuits with this client, such as adding the client’s logo to the page layout despite the suggestion from marketing staff that the client might not like this? In addition, when not selected, there is a comparison to be made with the selected firm. A marketing person won’t hesitate to ask the client what he/she liked or didn’t like about the winner’s proposal. The technical folks often do not think to ask this; they are only concerned with what they did that was good or bad. “A marketing person won’t hesitate to ask the client what he/she liked or didn’t like about the winner’s proposal. The technical folks often do not think to ask this; they are only concerned with what they did that was good or bad.” Given the range of concerns to be discussed during a debriefing session, and the need to ensure that a calm discussion doesn’t deteriorate into “the last time that client ever talks to us,” one might even make the case that all debriefings should be attended only by marketing staff, with the principal and project manager given an opportunity to suggest questions, but not the opportunity to attend. BERNIE SIBEN, CPSM, is owner and principal consultant with The Siben Consult, LLC, an independent A/E marketing and strategic consultancy located in Austin, Texas. He can be reached at 559.901.9596 or at siben@sibenconsult.com. is advisable that a valuation of the shares be conducted at the initiation of this process. Thereafter, regular monitoring of share value should be done to ensure that coverage is keeping pace with growth in stock value. ❚ ❚ What happens to the coverage when a partner leaves or retires? A majority of policies are purchased as permanent life insurance. However, term life insurance may be less ex- pensive and can be bought to cover a partner until he or she leaves or retires. ❚ ❚ Should this be strictly life insurance or should disability also be covered? Considering the age range of the average partner in an A/E/P firm per the survey, disability is as likely if not more so than death. Beyond the owners of stock in your firm, if you have key employees that drive business and the loss would cause instability, key person insurance should be considered for them as well. From a value perspective, the lack of insurance coverage on owners and key people is a major risk factor that drives discount rates up and values down. This type of coverage is as important as any other and your insurance agent can help to direct you in securing the appropriate policies. If you do not have it, please strongly consider spending the money to get it. TRACEY EAVES, MBA, CBA, CVA, BCA, CMEA is a member of the valuation consulting team at Zweig Group. She has been valuing privately held company interests for more than 17 years. Contact Tracey at teaves@zweiggroup.com or directly at 505.258.8821.

Having a member of the marketing staff attend the debriefing results in several important benefits for your firm and its representatives: ❚ ❚ A marketing staff member has nothing about which to become defensive. He/she can be a calming influence, and can quash a potentially offensive response before it manifests and takes the session in the wrong direction. The marketing person can take over the discussion if he/she thinks it is tak- ing on a more volatile characteristic than would be desired. ❚ ❚ A marketing staff member knows there is more to being selected than the technical information. The firm’s reputa- tion and processes to ensure superior client service can be as important a discriminator in the selection process as the firm’s technical experience and product. ❚ ❚ Marketing staff are sensitive to the client’s response to both the content and the look of a proposal. Most of the technical folks focus on the client’s response to the proposal’s technical approach, project experience, and proposed staff- ing. But marketing staff will also be sensitive to the client’s response to the look of the proposal, such as: ❚ ❚ Did the cover make them want to open the document? ❚ ❚ Did the page layout make for an inviting read? ❚ ❚ Was the page so cluttered with unnecessary graphics that the most important information was hard to find? ❚ ❚ Did the use of certain kinds of graphic images (i.e. clip art) make the document look something less than profes- sional? ❚ ❚ Did the PIC or PM insist on ignoring the lessons learned

TRACEY EAVES, from page 11

on business operations. For those left behind, the impact also involves the change in ownership when an heir inherits that person’s stock. Without the means to remedy the situation with the buyout of those shares through life insurance proceeds and a buy-sell agreement the business could find itself in jeopardy. Those firms with sole ownership of the shares are even more at risk because remaining staff may not have the money to buy the firm from an heir nor maintain the working capital necessary to move forward. “From a value perspective, the lack of insurance coverage on owners and key people is a major risk factor that drives discount rates up and values down. This type of coverage is as important as any other.” The investment of a few thousand dollars per year may, in the end, secure the continued existence of the business. Considerations to make when buying this type of insurance include: ❚ ❚ What is adequate coverage? The firm should carry enough coverage to fully fund the buyout of stock from the deceased’s estate and provide for additional cash to help right the ship. It

THE ZWEIG LETTER December 11, 2017, ISSUE 1227

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