It’s not you, it’s me

Screen Shot 2016-03-23 at 2.23.45 PMThe M&A process is like the dating game: there’s plenty of fish in the sea, but hauling in the big catch isn’t easy.

Firms close deals every day without engaging an M&A consultant to help them, but does that mean that you’re prepared to manage on your own? Consider this scenario that applies to both buyers and sellers: you identify a list of 60 or so firms that you think would be a good fit for your company. You research them to get a bit more information, and to figure out who the right contact person is at each firm. You reach out to the top ten or fifteen firms on your list – whatever you have time for, you still have to run your own business and do all of the other things that keep you at the office late – and you strike up a conversation. The person on the other end of the phone is subject to every single pressure that you’re under as a business owner or decision-maker. After an initial conversation, maybe an email or two that makes you think that this could be “the one,” they drop off the face of the earth. They don’t reply to your last email. You wait a week, then you call them to check in. You leave a voicemail. Now what?

First, it should be pointed out that the comparison to dating is more clear than ever at this point in the M&A process. You met someone interesting, felt a connection, and then – suddenly – they vanish. Is it me? Is it them? Are they seeing someone else? Were they just leading me on? Maybe they lost my number? Maybe they really are just busy with their own stuff right now? How do I remind them that I’m still available and desirable without sounding, well, desperate?

This exact scenario is reason enough to “outsource” the M&A process to a consultant, and this is just step one of the process. All of that anguish – and all of those hours – and we are just talking about the stress of identifying the target firm in the first place and keeping them interested while you reach out to dozens of other potential matches. We have not touched on what happens next – evaluating firms for fit, analyzing financials, critical review of operations, determining a value, drafting term sheets, due diligence, negotiation, and planning for integration!

A few points about this process:

  • Time is even more valuable than money. It is not uncommon to approach 100 firms in an M&A search. Is it really the CEO’s highest and best use to search for these companies and to manage this part of the process? Selling firms, especially, always need to be aware that every hour that they spend not out there developing new jobs or otherwise continuing business as usual is risking the value of their firm. Our Valuation Survey shows that the single greatest distinction in a valuation obtained for an actual or potential sale or merger (versus any other reason for a valuation), is backlog. Buyers want to know that they understand what they are buying and that the revenue is predictable in order to minimize risk.
  • It’s not what you say, it’s who says it (and how long it takes). A consultant acting on your behalf can “follow up” with the target that’s gone MIA many (many!) more times than a firm can on their own. The consultant, although always professional and courteous, can be perceived as pushy, at worst. The firm that leaves five voicemails? Desperate. No other options. In addition, the first-date jitters are only exacerbated when it takes two business days to hear if there will be a second date. Having someone whose job it is full-time to manage the communication process and to be one step ahead of the conversation helps relieve that burden. The more time spent between a conversation and an “action item,” the more likely someone is to get distracted by work or other prospects. M&A is about clear communication and decisiveness, and that’s hard to do well when it is not your focus.
  • Breaking up is hard to do. It’s just as unpleasant to be the one that gets cold feet (“It’s not you, it’s me”), as it is to be the one left wondering what went wrong. It is hard to tell a firm owner – whether the firm is one that you initiated the conversation with through research, or one that you have worked with on projects for years – that you just don’t want to try to make this deal work. I worked with a client that felt that the right thing to do was to end the discussion with the target firm directly (versus asking us to help). The client was so complimentary of the target that the target didn’t even realize that they had just been dumped. I got a call the next week from the target to discuss deal structure! They had no idea the wedding was off.
  • The risk of “falling in love” with the wrong target is minimized when you incorporate a level of objectivity. The CFO is often a voice of reason in these circumstances. So can a board member who sees the train wreck up ahead before the first-class ticket is bought. The right level of push-back is important in M&A, whether you have assembled an internal or external deal team. There is a fine line between “over engineering” the target firm profile to the point that you have excluded plenty of great options, and having no idea what you’re looking for when you start the process. Firms in the former category never find what they’re looking for, or they get exhausted from the pursuit of perfection and end up overpaying. Firms in the latter category are at higher risk for wasting time with firms that don’t make a lot of sense for them.

Although it might sound like it, this article is not necessarily a plug for hiring a consultant. Instead, the purpose is to make sure that firms enter into M&A with their eyes open as to the unique challenges that arise in transactions, and that they are honest with themselves about their own skillsets.

Jamie Claire Kiser is Zweig Group’s director of M&A services. Contact her at jkiser@zweiggroup.com.

This article is from issue 1158 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Hire for charisma, train for skills

Death_to_Stock_Photography_BodyTruths_6We have all heard the adage, “Hire for character and train for skills.” A/E/P firms really need to “get” this idea. Most don’t do it. They’re focused on PE registrations and degrees and knowledge of specific types of software when in reality most of that stuff can be taught/overcome by the right orientation and training.

Character, however, cannot be taught. If you are dishonest, unethical, mean-spirited, negative, hostile, antagonistic, or too ego-centric you will ultimately fail in spite of degrees and years of experience. But that’s not what I want to talk about today. I want to talk about charisma.

I think charisma has a bad name today. Thanks to “Good to Great,” so many people believe charismatic leaders are a bad thing – they aren’t “Level 5” leaders. I have already written about that. I think it’s B.S. A/E firms are not (for the most part), multi-billion dollar, publicly traded enterprises. By and large they are closely held private professional service firms – with the emphasis on “professional.” That means you need more than a brand or institution to succeed. You need professionals. Lots of them – lots of good ones – ones who can inspire people and create a following.

Charisma is a big part of that. It is a hard-to-define quality that some people have and some don’t. It is, in part, how they look. It is how they carry themselves. How they dress. How they communicate. How they act.

Here’s the difference. The charismatic‎ person walks into a room of strangers and 30 minutes later has a crowd around them – talking, laughing, smiling – and they’re forming new relationships, some of which could last a lifetime. The non-charismatic person may join in but no one really notices them or pays any particular attention to what they say or do. And I’m not talking about extroverts versus introverts here. I have seen charismatic introverts in this business. ‎One of the best examples was the late Joe Lalli, FASLA, former CEO of EDSA. He was a charismatic introvert if there ever was one.

These charismatic people don’t have to be leaders/managers/owners, either. They can start out as simply professionals, working on projects and interfacing with others. Of course, they will probably grow into leaders because they can – and that’s good because we all need more leaders. Our organizations’ growth rate is directly related to it.

Are you specifically talking about charisma as a job qualification? Are you looking for people with it? Or are you falling into the same old traps everyone else is? If you want a hunting dog – you’d better pick one that has the qualities needed to be a good one. Make sense? Think about it – and better yet – act on it.

Mark Zweig is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

This article is from issue 1157 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Inbound marketing explained for the simple man

Death_to_stock_photography_Wake_Up_2If your content is consistently valuable, potential clients might give up their personal information to have it, and chose your firm over others when it’s time to close the deal.

Are you lost in marketing jargon about inbound marketing, content marketing, thought leadership, and converting leads?

Here’s a no-nonsense explanation of inbound marketing and where I think this concept is going:

To first understand inbound marketing, you have to understand outbound marketing. Outbound marketing relies on “old-fashioned” tactics like buying ads, buying mail lists, cold calling, and mass-emailing direct promotions of products/services. Outbound marketing is a billboard on the highway that says: “Use my firm because it is the best!”

Inbound marketing works in a more subtle way: First, a firm creates something valuable. This is called “content.” The key to creating valuable content is putting yourself in your clients’ shoes and understanding what interests them. Some examples include a fascinating article on a person your audience wants to know, a presentation of research that might help your clients do their jobs better, or a white paper on a new approach used to tackle a project.

No matter what you create, you have to be able to effectively get it out into a public space where your potential clients can find it. Inbound marketing usually relies on internet based methods. This piece of content has to be so appreciated and so valuable that not only will your potential clients like it, they will also pass it on to others they think might be interested. Content sharing happens when a news or industry website picks up your content and re-publishes it, social media posting, liking, sharing, and retweeting, or simply by forwarding an email.

Inbound marketing really works when this content is not only virally shared, but so incredibly wonderful that people are willing to give up something for it – their personal information. By hiding parts of this content behind forms, or dazzling them with something so interesting right from the start that they are willing to give you their information in the hopes of receiving something similar in the future, you can effectively begin to collect names and addresses of people who have a much higher likelihood to use your firm than others.

From this point, firms should now have a growing list of potentially interested clients coming to them, but the work isn’t over. All these potential clients have to be followed up with and, ideally, consistently impressed with more content. From this point on, much like outbound marketing, firms have to close the deal, and do the job.

Make something cool, put it on the internet, collect information from people who are interested in it, give them more, get them to share it, collect new information, follow up, and repeat over and over. Inbound marketing really isn’t that difficult.

So where do firms in the A/E industry go wrong with inbound marketing?

  1. Not following up. Once you start finding out who is interested in you, you have to follow up, and follow up in the right way. It’s unlikely that a random person who was forwarded an email is going to immediately call you looking to give you work. They will need more exposure over time. Continue to impress them with more useful content (see #1).
  2. Not understanding what is “valuable” content. For this to work, your firm has to create something useful. A press release on a new hire is not valuable content. I’m not recommending you don’t ever send these out, but they won’t work as the cornerstone of your inbound marketing campaign.
  3. Not closing the deal. At some point, you need to have someone good who can sell your work.

While the term “inbound marketing” may be long gone five years from now, the idea that you want to find ways to draw potential clients to your firm is not something that is going to go away anytime soon. So give it a try, you don’t have much to lose.

Christina Zweig is Zweig Group’s director of research and marketing. Contact her at christinaz@zweiggroup.com.

This article is from issue 1156 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Quality is (not) job one

Chad ClinehensThe marketing of ‘quality’ is ubiquitous in the A/E industry, but oftentimes, the difference between perception and reality can undermine a firm’s brand equity.

Many firms are dealing with record high workloads. That translates into tight deadlines, long hours, and, unfortunately, problems with quality. We see increasing data that suggests quality, or lack thereof, is becoming more of an issue for A/E firms. What this means is that quality is not Job One. Firms are just simply getting the work done. The threat this poses to your firm is obvious and includes long-term damage to your brand. The effects will become more evident when the market cools down and your clients are able to be choosier with their distribution of work.

To better illustrate the significance of this problem, we need to zoom out and review the definition of brand equity. Brand equity is the net sum of your brand assets minus your brand liabilities. So think of brand equity like your net worth. A brand has high equity and is valuable when it has lots of assets and few, if any, liabilities. The major brand asset categories are:

  • Brand name awareness. Strength of a brand’s presence in the client’s mind.
  • Perceived quality. The client’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives.
  • Brand associations. Extent to which a particular brand calls to mind the attributes of a general product or service category. An example is asking for a “Kleenex” instead of a tissue.
  • Brand loyalty. Brand loyalty is when clients become committed to your firm (brand) and make repeat purchases over time.

Your professional services company has a strong brand when your firm’s name is at the top of the list, your clients perceive a high level of quality from your firm’s services, and you enjoy a high repeat client rate. Of course, problems in any of the asset categories can be a liability as well, especially for perceived quality.

Among all brand associations, only perceived quality has been shown by research to drive financial performance. Perceived quality is often a major strategic thrust of a business and is often heavily promoted by A/E firms. Perceived quality in professional service firms can drive other aspects of how a brand is perceived. Most A/E firms promote quality and talk about innovation when neither matches up with the perception of their clients.

That is why we use the term “perceived quality” as opposed to just quality. Quality is subjective. When we talk in terms of perceived quality, it forces us to look through the lens of our clients and face reality. For firm leaders, this is about bringing marketing, sales, and project management into alignment, and closing the gap of our beliefs versus reality. Unfortunately, these groups are separated from each other in many A/E firms. Here are a few things to consider implementing to improve perceived quality in your firm:

  • Connect marketing and sales with project management. Marketing staff needs to be more plugged into projects and clients. And likewise, project management needs to be more plugged into marketing, messaging, and branding. The first opportunity to fumble here is not following through on perceived promises made during proposals and interviews. Develop a list of all of the things you said you would do in the business development process and give that list to the project manager before they write up the scope and fee estimate. This assures that all of those services have a cost associated with them, and offers the client the opportunity to pay for them or not. Additionally, invite your marketing and BD staff to meetings where projects and upcoming work are discussed.
  • Implement a continuous client feedback system. The goal here is to get real feedback that you can use to improve your services and close the gap on what is believed to be the quality of your service versus the reality. Firms are not doing a good job of getting feedback, and even when they do, too many are not using the info. Part of the reason for this is that firms like to check the client feedback box and then get back to work. Feedback without action is a waste of resources. View client feedback as a two-way street. Consider having your PMs send out regular reports to clients outlining the work completed so far, any needed resources, and what is next. It is a tremendous communication builder, and considering communication problems are the number one cause of quality problems, this practice should improve real quality and thus the perceived quality.
  • Make quality Job One. This does not mean that everything else comes second. It means that everything else supports a true commitment to quality control. That means that during a tight market like the one we are in now, we are hiring people to keep the workload at reasonable levels and the quality high. If you are trying to hire and are having trouble, then ask yourself why. Do you need to outsource your recruiting? Do you need to improve your pay and benefits? Do you need to consider an acquisition? A serious commitment to making quality Job One means that someone in the firm is making this their mission and they are addressing any problems that get in the way.

To conclude, stop talking about how great your quality is and actually measure it. And then, no matter how good it is, make improvements to close the gap even further. If quality is good, look at threats down the road. Are your people working so hard that you are going to lose them, thus threatening quality? Put a high-level person in your firm in charge of monitoring quality, a most important feature of your business.

Research shows that perceived quality of your firm’s services can drive financial performance, one way or the other. The next time you talk about branding and someone in your firm rolls their eyes, break out the definition of brand equity and give them the mathematical perspective on this and tie it into project management. That should get their attention. Become the firm that walks the walk when it comes to quality. Trust me, it will differentiate you from your competitors, many of which talk about it, but provide average service.

Chad Clinehens is Zweig Group’s executive vice president. Contact him at cclinehens@zweiggroup.com.

This article is from issue 1156 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Improving project management in your firm

Mark Zweig, The Zweig LetterEveryone wants better project management. That’s why principals of AEC companies spend more time and money on PM training than any other type of business training.

But I’m not here to talk about training. I am here instead to talk about some things you can do to improve your overall PM effectiveness firm-wide. Here are a few ideas for you:

  1. Stop using your lowest rated PMs as project managers. In most companies, about 30 percent of your PMs should never manage another project. Rarely is being a PM a full-time role. So just use those people doing stuff they can do and give their projects to your top-ranked PMs.
  1. Stop making the wrong people manage projects. You know what I’m talking about here. ‎And you know when you give someone a PM role and it’s a mistake, too. People with short tempers, people who don’t listen, people who can’t influence anyone – just stop doing it. Give your best managers more projects to manage.
  1. Stop using PMs as bill collectors. Most of them are lousy at it and it puts them in a tough role with their clients. And stop telling me this is a cop-out and PMs need to do this job. They don’t. Let your F&A people do the job and only involve your PM if there’s a dispute on scope or deliverables.
  1. Stop making your PMs do stupid stuff that demotivates them. It’s hard enough doing the job when few or no people actually report to you on a permanent basis. So why make your PMs suffer through needlessly long meetings or fill out unnecessary internal forms for things?
  1. Track and publish PM performance metrics for all to see. Just showing the numbers to the PMs themselves will not work. You have to create peer pressure and complete transparency so everyone can see numbers such as budget-to-actual variance, WIP write-offs, dollar amount of work managed, average collection period, and more – all by individual PM.
  1. Make everyone do a weekly job status report. Send this to your client, your client’s boss, and everyone on the entire project team inside and outside of the company. Keep it simple – what you did this week, what’s happening next week, and other “issues,” such as you need to get paid for a bill that is now 60 days old (or anything else). These reports are essential!! Don’t wait for your client to demand one to do it. Make it part of your PM process.

If everyone who runs an AEC firm would just do these things, their companies would be so much more successful and their lives so much better!

Check out:  Introduction to Project Management Seminar and Advanced PM Seminar.  6 PDHs/CEUs

2016 Project Management Survey 

Successful Project Management for A/E/P Firms

Mark Zweig is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

This article is from issue 1156 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Thinking About an Acquisition? Make Sure You Are Ready First.

In a recent article, I wrote about how important it was to prepare your firm for sale even if you are not thinking about an external ownership transition. You can read that article here. This week, I want to take a look at the buyer’s side and the questions that should be asked before making an acquisition or merging with another company.

The A/E/P industry is experiencing fantastic growth in many markets around the United States and M&A activity has been at an all-time high since the great recession of 2008. Capital has remained steadily available and that generates a lot of excitement around making an acquisition as part of your growth strategy. There are also several good reasons to consider buying another firm:

  • Inorganic growth immediately:
    • Increases your firm’s assets and income
    • Diversifies risk
    • Expands market presence and adds additional services and competencies
  • You will have the opportunity to increase your firms value.
  • It can help eliminate competition.

Contemplating the idea of making an acquisition is exciting. It can be easy to get swept up in all of the possibilities, but before making a commitment, start by asking yourself a few questions.

  1. First and foremost, are YOU ready?

I’ve written before about the steps that sellers must take to be ready and these all apply to buyers as well. Buyers are not the only party that performs due diligence. Sellers will want to know that the foundation of the company that is buying them is strong. There are dozens of studies that estimate the number of M&A deals failing to meet financial expectations anywhere from 50 – 90 percent. Odds are better for the A/E/P industry, but it still behooves you to take a step back and analyze whether your firm can withstand the disruption that an acquisition entails.

The cost of an acquisition goes beyond the purchase price of the business you are looking to buy. In addition to capital, you will expend a lot of time and energy to make the integration or partnership with the acquired company work. You will need to have your house in order financially, structurally, and strategically. Consider performing internal stress tests to determine whether your firm has the infrastructure and resources to handle the change.

  1. Do your values and culture align?

Possibly THE most important factor when considering a deal is the cultural and philosophical fit between the two companies. It is easy to get wrapped up in the numbers, but it is hard to put a value on values. I like to get buyers and sellers together on the phone, and in person, as soon as possible. M&A is a lot like dating and making sure there is chemistry between the executive teams is crucial to a successful deal.

This takes a lot of time, phone calls, and face-to-face meetings, but the dividends you will reap are immense. Your conversations should center around culture, values, company structure, firm history, as well as financial history. Do you feel like the target firm is a good fit?

  1. Who are the key players that will be crucial to the success of the firm after the acquisition?

While you do not want to share that you are looking at a possible acquisition until the time is right, it is important to be as transparent and authentic as you can be. Especially with key personnel that are going to be essential for the success of the firm during and after the acquisition. Millennials, the future of the industry, consistently rank authenticity as the most important trait that can be possessed by a company or leader.

Some estimates put the turnover cost for mid-level employees at 150% of their annual salary, but more importantly, gaining these key players trust can go a long way in ensuring a successful partnership. These people can act as ambassadors that make integrating two firm cultures much easier. To gain their trust, executive leadership must be clear about their intentions, flexibility, and commitment to the partnership. If executed correctly, these key players will be growth drivers long after the deal has been closed.

  1. Is this firm a good strategic fit?

This one may seem like common sense, but it is easy to get distracted from your initial vision and start rationalizing the integration of the acquired firm. Focus needs to be on the business plan and vision for your firm. Does this firm objectively fit into that strategy?

An acquisition provides immediate inorganic growth. In the A/E/P industry, the value of a firm pursuing an M&A strategy and a firm with a purely organic growth strategy can be vastly different. Mergers and acquisitions can be a tremendous value driver.

In addition to inorganic growth, you may see benefits from economies of scale and efficiencies. Will the acquisition open geographical markets or new market sectors? Are you seeking to add new services to your product offering? These questions must be answered before moving forward with any deal. M&A has the potential to make your business, and the potential to break it. Therefore, it is imperative that careful consideration be given to whether the seller fits into your strategy.

  1. Finally, where should you focus your due diligence efforts?

OK, you’ve determined you are ready for an acquisition, you believe that the seller’s values align with your firms’, you have identified the key players, and the company fits into your long term strategic vision. Now, it is time to perform a thorough examination of the company’s history and portfolio to determine its value and reveal any red flags.

Items that should be reviewed will be detailed by your attorney once they understand the particular risks of the specific target firm. In general, due diligence items will always include financial statements for the last three to five years, paying close attention to current assets (especially accounts receivable) and liabilities. Backlog and contracts, projections, revenue concentrations, bonus plans, benefits, equity arrangements, leases, credit reports, employment contracts, compliance records, and many other contracts that might affect the success of the deal should also be reviewed.

Change is difficult for any organization. Careful evaluation of these key areas, management of emotions and expectations, clear communication of intentions, and an executive team that champions the change will go a long way to ensuring a successful transaction. This is a good start to thinking about the exciting world of M&A.

Phil Keil is a client consultant in Zweig Group’s M&A division.  You can contact him at PKeil@zweiggroup.com

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

A pattern of inaction

If you are you stuck in neutral, break out of the rut by asking questions, altering your approach, and accepting the possibility that there may be a problem.

Some of us have a hard time taking action when it’s needed. Sometimes we deny that we even have to take action.

I’ve been a consultant for a local business for most of the past year and have been frustrated by my client’s lack of action. Granted, I’m a consultant and don’t have a financial stake in the business, but I treat the company as if it were my own and I don’t like to see a company fail. This company is on the path to failure due to the owner’s pattern of inaction.

The owner opened the business two years ago with a very small capital investment, no line of credit, and no business plan. As a result, the owner has no financial resources to rely on during the negative-revenue months. The business’ gross revenue has increased by less than 5% in the past year, but its net revenue has decreased by more than 10%. In short, the company is losing money almost every month, but the owner has not done anything to correct the downward spiral.

Like some firm leaders in our industry, this owner acknowledges that significant changes are needed to save the company, but won’t take the steps necessary to enact those changes. It’s frustrating for me, but even so for the employees, because they can see where the company is heading.

The owner has never had a business class and everything about operating a business has been learned through trial and error. There are some firms in our industry that started the same way. They began with a great idea, but never felt they had the time to obtain formal training on how to actually lead a company. Now, after the firm has expanded, they’re too busy to take the time needed to understand how to run a business. They, too, are stuck in a pattern of inaction.

Despite my best efforts to explain basic accounting principles, the owner can’t understand where the money is going. There’s an antiquated process for analyzing monthly cash inflow, but no accounting of the cash outflow. Some of the accounts payable are in arears by more than 18 months.

It’s like a train barreling down the tracks and the engineer is ignoring the flashing lights warning that the bridge is out. Hopefully, your firm isn’t in such dire straits, but how do you know if you’re stuck in a pattern of inaction?

  • Your first response to any difficult question is “I don’t know.” The business owner I work with loves this phrase. When asked why a specific action was taken, the response is, “I don’t know.”  Where are your 2015 receipts? “I don’t know.” How much are you paying for marketing? “I don’t know.” For the owner, it’s easier to deflect uncomfortable questions with a simple brush off, because any other response would require action.
  • You would rather make no decision than to make a bad one. A bad decision typically leads to bad results, but the assumption is that if you don’t make a decision, nothing can go wrong. In reality, quite the opposite can be true. The decision to not make a decision can lead to lost proposals and missed deadlines, resulting in lost revenue.
  • You refuse to accept, or you dismiss, bad news. Accepting bad news typically prompts people to take some action to correct the problem. If you don’t accept the bad news, why would you have to act? This is the equivalent of covering your ears and shouting, “I can’t hear you!”
  • You don’t get involved in details when numbers and statistics are concerned. Looking at “the big picture” and “staying out of the weeds” can be useful tactics if you’re trying to avoid becoming a micro-manager, but not if you’re trying to keep your firm on track to meet its strategic goals.

Becoming a deliberate leader can help you break the pattern of inaction.

  • Replace the phrase “I don’t know” with “I’ll find out.” By making this statement, you’re committing to others that you’re going to look for an answer or solution to an issue, but you have to take action or you’ll lose credibility.
  • Start with the premise that there may be a problem. When you accept that there may be a problem, you’ve already committed to taking the necessary steps towards improving your business.
  • Don’t accept the phrase, “Because that’s the way we’ve always done it,” unless it’s been documented as the best, most efficient or effective way of accomplishing a task. Accepting that phrase in any other circumstance is just another way of saying, “I’m too lazy to come up with a better way of doing things.”
  • Attend a business management program with other peer company leaders. These types of events are great opportunities for learning from other peoples’ successes and failures. When confronted with a similar situation, you’ll already have an idea of what does and doesn’t work and will boost your decision making confidence.

Doing nothing is easy, but it will lead to problems, much like taking your hands off the steering wheel while driving on the highway. My client’s company has much potential for growth, if only the owner would make some decisions to put the company on track for success. Take a look at the decision points in your business. Are you actively guiding your firm or have you fallen into a pattern of inaction?

Zweig Group has a number of options to help you break out of this distructive pattern.

Bill Murphey is Zweig Group’s director of education. Contact him at bmurphey@zweiggroup.com.

This article is from issue 1158 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Leadership transition

Ted Maziejka, Consulting, Zweig GroupLetting go is hard to do, so when the time comes for a changing of the guard, it helps if the second tier is groomed, confident, and empowered.

Much of our recent work has been in assisting A/E/P firms in the creation of effective ownership transition plans that allow the variety of tiers to assume management and operations of the firm. In many cases, senior leaders have created and guided their firms for most of their careers, some spanning generations.

Much like those of us who have raised children and watched them turn into teenagers and then into young adults, the successful first tier leaders are able guide the second tier, allow them to learn and to fail, and finally, to help them step into leadership roles with confidence. Most importantly, both parents and leaders alike recognize that without letting go, the ownership transition will not be successful.

Often ownership transition is less about the financial model than it is about the second- and even third-tier leaders who are stepping into somewhat uncharted territory. If you have been honored to mentor these folks, you see their frustration with failure. Sometimes that feeling of failure comes with a fear of moving forward, since trying to do so would just lead to more failure. So we draw on the greater wisdom from Yoda: “Try not. Do or do not. There is no try.”

The cultivation of a culture of trust is fundamental to the organization. As the second- and third-tier leaders take ownership of their new roles, they must have a network that has their back at all times. Lessons and the way they learned them can have either a positive or a negative impact. It’s all in how the senior leaders carry the code of conduct, and how they foster interest in the roles of these new leaders. Failure is a perception that can be modified by the gentle guidance of the leadership team. Without that guidance, you as a senior run the risk of losing the very talent that you want to move into your role.

As a senior leader, how participatory are you in cultivating MBWA – Management by Walking Around? Do you really know the staff that works for you? What drives them, nourishes them, and what is their professional passion? For yourself, have you engaged someone who you trust, someone who has no fear of telling you what you need to hear?

In a previous article, we highlighted the guys at Pikes Place Fish Market and how they transformed their customers’ experience. Out of that came a simple little book, the Fish Philosophy. As a leader, do you and your team embrace these four simple traits: “Choose your attitude! Play! Make their day! Be there, be present!”

If you are worried that your second and third tier might not do what’s needed to ensure success, try this. Have them create a business plan. In a recent strategic planning exercise in which we engaged 19 new leaders, both second and third tier, we challenged all of them to provide the following in six pages:

  1. What is my vision for the continued success of the firm?
  2. What do I see as the growth and performance in my area?
  3. What Targets of Opportunity will I engage to grow my area?
  4. How will I get the firm to participate in my Vision?
  5. What will define success?
  6. How will I safeguard the ownership transition, not just for the departing 1st tier, but for the future sustainability of the firm?

These six-page plans set a foundation of success for this particular firm and guided the next year’s vision. The plans were not perfect, but it allowed the first tier to work with these leaders to amplify the ideas that were strong and to assist in those that required tuning. With these plans in place, letting go became easier to do.

So as you move into the future, remember what Neil Sedaka said: “Breaking up is hard to do.” Letting go is even harder – unless you embrace, engage, and trust the next tier.

Ted Maziejka is a Zweig Group financial and management consultant. Contact him at tmaziejka@zweiggroup.com.

Zweig Group has recently released, Guide to Ownership & Succession Planning, 2nd edition. 

This article is from issue 1155 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Try going Hollywood

Randy Wilburn recruitingThe use of video in your recruiting campaign might be what it takes to create buzz for your firm, and in the end, land great employees.

This summer movie season is going to be pretty unique with several big ones coming out over the next four months. You have a Ghostbusters reboot, X-Men Apocalypse, Independence Day II, and Jason Bourne to name a few. The biggest in my mind is Marvel’s Captain America Civil War. They’ve been teasing this movie for over a year now. I couldn’t wait to see it and ended up in the theater the first weekend it opened.

The movie studios know how to create a buzz and whet our appetites for their product. They’ve teased us with one trailer after another showing bits and pieces of the movie. This method of storytelling by marketing ensures that the movie studios get the biggest audience possible when the movie premiers.

Like the trailer method of storytelling employed by Hollywood, companies in the design industry need to think about how they build momentum for a service, project, and a position.

This article should serve as a primer for how to create a buzz to attract real talent to your organization.

I’ve spent a lot of time with clients working on their branding and marketing efforts. I’ve been telling anyone who will listen that recruiting and marketing go hand in hand. Now more than ever before, it’s easy to get the word out about a company and what makes them unique. It’s called YouTube! Housing not only one of the biggest and busiest search engines on the web, YouTube has become the go-to site for any and everything. Imagine having your company information indexed and cataloged on YouTube for that next great employee who may be looking for a more engaging place to work!

One way to do this is by using video to highlight the benefits of working at your firm.

Here are four ways for you to create cool content that you can share with the outside world about just how great your firm is. You can use this content to engage and enlighten clients and future job candidates alike.

  1. Create a YouTube channel for your company and start populating your channel with short videos about your business. Things like the services you offer, what’s it like to be an employee there, and plans you have for the future, are all appropriate themes.
  2. Document some of the activities that you do on a daily basis for clients. I would also include a “Day in the Life” type of video for a broad range of employees. I would also corral the CEO/President and even another leader and feature them in a video as well. Especially those that are camera shy.
  3. Highlight the extracurricular activities of your employees and the firm. Talk about the athletes in your organization and how you foster active lifestyles with gym memberships, and cycling or running groups. You should also consider discussing some of the ways that your company gives back to the community at-large.
  4. When possible, capture testimonials from your clients discussing how your firm helped them out in some way. We can never have enough testimonials, and for some reason, when they’re on video they take on a life of their own. That’s a good thing.

I heard an expression a long time ago that I use quite a bit. “It’s a pitiful Frog that doesn’t praise his own pond!” And in terms of touting your firm, it couldn’t be more appropriate.

I know it may seem like a lot of effort for little return, but the reality is that you don’t know how effective you can be at marketing your company if you don’t at least try using video. Here is an example of a tech company, Shopify, on how you can make these videos informational and fun at the same time. Check it out here: https://youtu.be/XMRufdqpFnM

I wrote this article to get your creative video juices flowing. I would be more than happy to discuss these ideas with you further. Email me and we can chat more.

Randy Wilburn is director of executive search at Zweig Group. Contact him at rwilburn@zweiggroup.com.

This article is from issue 1155 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Finance and accounting terminology made simple

8B73DF90BBMany folks working in firms in the A/E/P and environmental consulting industry don’t understand commonly-used financial terminology. How can you blame them? If no one ever explained it to them you can’t expect them to know it.

It isn’t difficult, but not understanding it puts your people at a disadvantage and is bad for the firm. We want everyone who works in an A/E/P or environmental firm to understand this stuff. So here we go with some simple definitions of terms we all hear every day. Please pass these onto your people!

Gross revenue. All revenue from the operations of your business or business unit, including subconsultants and reimbursable expenses.

Net service revenue (NSR). This is gross revenue (see above) less subconsultants and reimbursable expenses.

Raw labor. This is the total labor cost in salaries and hourly wages and includes no company-paid payroll taxes or insurance or anything else. E.g., someone earning gross pay of $25 an hour and working 2,000 hours in the year has a raw labor cost of $50,000.

‎New project “sale” (or sales). The dollar value of a new project (or projects) under contract with authorization to proceed.

Backlog. The total amount of work under contract yet to be performed. This can be expressed as a dollar amount but it’s usually expressed in months. Calculated as total backlog divided by net service revenue times 365. E.g., a company with $5 million in NSR and a $3-million backlog has 219 days of backlog.

Direct labor. The dollar amount of raw labor charged to active jobs or projects.

Total labor. The dollar amount of total raw labor.

Utilization rate. Total direct labor dollars over total raw labor dollars.‎ E.g., a firm has total direct labor of $2 million with total raw labor of $3 million. The utilization rate is 66.67 percent. Some people calculate this as total direct labor hours over total labor hours, but this is not correct!

Effective labor multiplier. Net service revenue divided by raw direct labor dollars.‎ E.g., a firm has $5 mill in NSR with $2 mill in direct labor. Effective labor multiplier is 2.5.

Target labor multiplier. Projected net service revenue divided by projected raw direct labor. A hypothetical number that may or may not become reality.

Revenue factor. Net service revenue divided by total raw labor, OR utilization times effective labor multiplier. E.g., a firm with NSR of $5 million and total raw labor of $3 million has a revenue factor of 1.67.

Accounts receivable (AR). The total dollar amount of all bills sent out but as of yet owed to you by clients.

Average collection period (ACP). The time it takes you, on average, to collect on an invoice. Expressed as days outstanding. Total AR divided by annual gross revenue times 365. E.g., a company has a total AR of $1 million and does $6 million in gross revenue. ACP is 60.8 days.

Work in-progress or work in-process (WIP). This is the total value of work performed that has not yet been billed to clients. Usually expressed in days of unbilled revenue. Unbilled revenue divided by annual net service revenue times 365. ‎E.g., a company does $5 million NSR and has total unbilled work of $350K. WIP is 25.5 days.

Overhead rate. Total costs less total direct labor divided by ‎total direct labor. E.g., a company has $4.5 million in total costs with $2 million in direct labor. Overhead rate is $4.5 million minus $2 million divided by $2 million, or 1.25. Usually expressed as a percentage, this would be 125 percent.

Accounts payable. Total of all money you owe your subconsultants and suppliers.

Current assets. Cash in the bank plus accounts receivable on a specific date.

Current liabilities. Accounts payable, accrued payroll (money people have earned but not yet been paid), and other short-term obligations.

Current ratio. ‎Total current assets divided by total current liabilities.

Income statement. Total income less total expenses equals profit or loss. Covers a period of time – usually a month, quarter, or year.

Balance sheet. Total assets minus total liabilities equals owners’ equity or “book value.” Calculated at a specific point in time – usually month end, quarter end, or year end. A “snapshot” view of the firm.

Accrual accounting. Revenue is based on revenue earned, whether or not it has been billed or collected, and expenses are based on expenses incurred, even if the company hasn’t received a bill for them yet.

Cash basis accounting. Revenue is based on money received by the firm (cash in) and expenses are bills that have been actually paid (cash out). Cash basis accounting is how one keeps their checkbook.

Ready to learn more?  Zweig Group is holding a seminar, Financial Management for Non-Financial Managers, August 17 in Denver, CO.

Mark Zweig is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

This article is from issue 1155 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

A CEO’s advice for young professionals

Screen Shot 2016-07-25 at 2.21.21 PMHere are nine tips on how to be successful in the A/E/P business. Hint, most of these tips are not specific to the A/E/P business.

I have the honor of being a guest lecturer once a semester for a senior-level course at the University of Arkansas. It’s fun because I get to be with these “kids” right before they enter the workforce. After we’re done with the technical part of the class, I share a little free advice with them about what I think are the keys for success in our industry. I offer those same points here for your consideration.

  1. Work hard. It may sound old fashioned and “un-hip,” but there is no substitute for a person who gives his or her boss the extra effort to get the job done. I’ll take someone with a strong work ethic any day over someone who is supposedly “gifted” but can’t meet deadlines or take pride in the quality of his/her work. Labor Omnia Vincit!
  2. Dress for success – the “I just got back from a kegger look” won’t cut it. Mark Zweig wrote about this in the April 25th edition of The Zweig Letter, and he was right on point. Even in the business casual world of 2016, our clients expect professionalism from us, and that starts with how we present ourselves. If we want to charge those healthy hourly rates, we need to look and act like we deserve it. Make a good impression on your clients and your boss by dressing sharp for work.
  3. Establish technical expertise – become a professional. Fortunately, in the U.S. we have laws that require qualified professionals to design projects and stamp construction plans and studies.  Besides basic pride in the accomplishment, being a licensed professional makes one marketable, and clients and employers need that expertise. I’ve never met anyone who said, “Boy, I sure regret getting my P.E. license.”
  4. Be a team player. I don’t think we’ve ever had a project in our business that was completely produced by one person; design and construction projects are all about working with people. You’ve got to be able to get along with people to have any chance of success.
  5. Become an excellent writer. For most in our industry, our college education is spent in classes teaching the technical parts of the profession – doing calculations and working problems.  Unfortunately, far too many new graduates leave college without the ability to write a paragraph that is grammatically correct, with correct spelling, correct punctuation, etc. Don’t slip into “text mode” in business communication, including letters and email. Learn to write well and don’t be afraid of edits and feedback from others.
  6. Become an excellent speaker. Let’s face it; most folks in this profession are introverts. There’s nothing we love better than cranking out drawings and spreadsheets all day. But, to be a successful architect or engineer, you’ve got to learn to be comfortable speaking in front of others. It doesn’t come naturally for most people, so it takes practice, practice, practice. When an NBA player hits a clutch shot at the last second to win the game, he didn’t make that by accident – years and years of practice went into preparing him for that moment. The same is true with speaking in public – it takes practice, so look for ways to hone that skill and it will serve you well.
  7. Establish relationships with clients. The lifeblood of this business is revenue, and revenue comes from clients. The person who can form and foster relationships with clients, bringing new work to his or her firm, will always be highly valued.
  8. Look for challenging opportunities. It’s easy to fade into the woodwork. Just show up for work, do the hours and leave at the end of the day. Don’t be that guy or gal. Ask your boss for challenges and difficult projects. When the office needs someone to organize a fund-raiser, step up and take it on. Be the person who stands out because of your enthusiasm for any task.
  9. Become involved in your community. Life is not all about you. Invest time outside work hours in things you are passionate about: church, professional or technical societies, social clubs, Big Bros/Big Sis, Habitat for Humanity, United Way, coaching youth sports, etc. Find something that you are genuinely interested in and give back. Your life will be richer for it.

I’m sure many of you have helpful advice for people entering our profession, and I would love to hear what you have to say.

Matt Crafton is president and CEO of Crafton Tull, an architecture, engineering, and surveying firm based in Rogers, Arkansas. He can be reached at matt.crafton@craftontull.com.

This article is from issue 1155 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Managing change

Screen Shot 2016-05-11 at 2.29.38 PMChange is a powerful force, so embrace it, learn from it, and by all means, take account of its effects and be reasonable in dealing with it.

Life would be more comfortable if clichés helped. “Change is the only constant.” “Without change we’d never have progress.” “Change should be embraced.” If only it were that easy.

Scientists talk about the ripple effect of one small change in ecosystems in the natural world. Change has the same effect on the patterns and systems that we set up in our own lives.

Imagine, then, the impact of change on organizations; leadership transition; reorganization; redefining departmental vision; merging departments and trying to bring together two different cultures; and the constant technological accommodations required by all of us these days.

Even the smallest diversion from the norm can cause tremendous resistance for the following reasons.

  • When we are in transition we are, at least for a time, deprived of knowledge. When our knowledge base is eroded, we feel we no longer have our influence. Control becomes a real issue.
  • When we are not in control, we have a tendency to hang onto the familiar. Often we dig in our heels and insist on staying with the old ways. Sometimes we even sabotage our own progress or the progress of others, a phenomenon known as “success sabotage,” or “fear of success,” so we don’t have to face the unknown.
  • Anxiety increases and it is not really about the present because we know what’s happening at the moment. Anxiety invokes the past. We remember what we went through with past transitions. Or it is about the future. We anticipate the worst.
  • There is a loss of the familiar. We may be giving up a feeling of expertise, old habits, or comfortable working relationships. Even when the changes are needed and positive, we are losing familiarity and predictability, which leads to a loss of confidence. “We have always done it that way,” means we know how to do it that way and it is no longer a struggle. In a world of tension and inherent difficulty, sameness can be calming and soothing. The fact that a new direction is appealing does not mean we don’t long for the old.
  • Stress increases. Stress results, not merely from hard work, but from the gap between working hard and not accomplishing what needs to be accomplished. Changes increase that gap.
  • Finally, positive change can be just as stressful as negative change because with every gain there is a loss. There are trade-offs, both anticipated and unanticipated.

So what should we do?

  1. Recognize resistance, concern, anxiety, and stress as normal reactions during periods of change. We do not need to add judgment to an already tense situation. If people’s self-esteem is already strained by having to learn a new protocol, for instance, it certainly will not be enhanced by berating them for not accommodating the changes. In other words, accept how people feel. Feelings aren’t right or wrong, they just are. If they exist, they’re valid.
  2. While enumerating the gains and positive aspects of the change, also address the losses. What are they giving up? What will they miss? Listen to what they’re telling you about the trade-offs. People don’t have to be right, they just need to be heard.
  3. Learn what has to be accomplished to accommodate the changes and make a reasonable plan for getting it done. At the same time, recognize that everyone has his or her own pace. Respect personal styles – and to the extent possible – take them into account. When people believe their unique approaches will be tolerated, the pressure reduces and they can often make transitions faster.
  4. Support one another. Those who are able to make changes more quickly can either be intolerant of those who need more time or they can help them in a non-judgmental way. Helping is rewarding and builds a team atmosphere.
  5. Acknowledge that a single change affects the entire system. To the extent those ramifications can be anticipated, you’ll be that much farther ahead. However, it’s not possible to predict everything. Expect the unexpected. If the surprises are seen as normal, people will be less likely to be negatively affected by them.
  6. It is essential to communicate far more often than usual even when there is not much to say. Keep as few secrets as possible. Have more meetings rather than less, in order to check in. Time taken now will, ultimately, save time later.
  7. And, most important, include employees in the decision-making process whenever possible. The people who do the job every day know how to solve the problems. The more their expertise is tapped, the more invested they’ll be in the outcome.

Employees need to trust their executives and executives need to trust their employees. Be accessible and available and, please, realize that a one-time announcement is simply not enough. If, as most say, “your employees are your greatest asset,” reflect that philosophy as you facilitate change within your organization.

Gerri King, Ph.D., is a founding partner and president of Human Dynamics Associates Inc., in Concord New Hampshire. For more information, visit gerriking.com.

This article is from issue 1154 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

 

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Deep client engagement

Screen Shot 2016-05-11 at 2.05.30 PMFriendships are not only good for the soul, their good for business, so make as many of them as you can if you want your firm to prosper. 

Personal engagement with clients determines so much of a firm’s success. A client’s satisfaction with the personal relationship with you and your team affects the recommendation they will give to other clients or prospects. It affects whether or not they turn to you for additional work. It affects what they’ll say to their friends about the experience they had, and it even affects the degree to which they pay your bills on time or argue about changes to your scope of services that require additional fees.

Here are some recommended rules of engagement:

  1. Mirror your client. Learn how they learn. Be a student of their personality traits, values and attitudes. You don’t need to be a chameleon, adopting their mannerisms, but you do need to understand who they are and where they come from to avoid offending them or getting into unnecessary arguments about things that have nothing to do with what you’re working on.

    Learn how they absorb information. Are they visual or verbal people? Would they rather see or be told? Do they rely heavily on the opinion or advice of others because, secretly, they have difficulty translating something they see pictorially into how they are going to experience it in real life? Field trips to, or photos of, solutions similar to what you’re presenting can help a great deal. Do they struggle with technical information? Can you find a peer of your client, whom they trust, to endorse what you’re recommending?

  1. Innovate. Think beyond the scope of the work you’ve been engaged to do. Start by learning what’s important to your client. Determine what will make their business perform at a higher level. Are there aspects of what you’re going to do with them that you never talked about in the interview, or wrote about in the contract, that can change their organization’s life?
  1. Become friends. Learn about your client’s family, likes and dislikes, fears and hobbies. Share your own. In my career, I became very close to almost every client, remaining friends long after our business had been concluded.

I’m reminded of Stephen Ambrose’s book, Undaunted Courage, which follows Lewis and Clark’s journals of their expedition to America’s West. Ambrose wrote extensively about the nature of friendship, which was so evident in the relationship between Lewis and Clark. It was the element which gave them the strength to endure the hardships they faced as they crossed the continent as the first explorers ever to do so. Working for a client can often seem as daunting.

The description made me appreciate the deep and lasting friendships which have been so much a part of my life, and to realize how important friendship has been in achieving the things we were able to accomplish together. I hope you find this passage from the book worthwhile and wish for you true friendships with the people with whom you share your work.

“Friendship is different from all other human relationships. Unlike acquaintanceship, friendship is based on love. Unlike lovers and married couples, friendship is free of jealousy. Unlike children and parents, friendship knows neither criticism nor resentment nor rebellion. Friendship has no status in law. Business partnerships are based on a contract, as is marriage. Parents are bound by the law as are children. 

“But friendship is freely entered into, freely given, freely exercised. Friends never cheat on one another, or take advantage, or lie. Friends do not spy on one another, yet they have no secrets. Friends glory in each other’s successes and are downcast by their failures. Friends minister to each other. Friends give to each other, worry about each other, stand always ready to help. At its height, friendship is an ecstasy. For Lewis and Clark, it was an ecstasy and the critical factor in their success.”

Follow these “Rules of Engagement” and you’ll be richly rewarded. You’ll enjoy your work more, you’ll take greater pride in what you’ve accomplished with your clients, you’ll receive more repeat and referral business with people you’ve genuinely come to like, and your brand will be richly embellished.

Edward Friedrichs, FAIA, FIIDA, is a consultant with Zweig Group and the former CEO and president of Gensler. Contact him at efriedrichs@zweiggroup.com.

This article is from issue 1154 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

A transformative process

Screen Shot 2016-05-04 at 12.46.59 PMIf a firm is to achieve something spectacular, its leaders have to have big hearts, and they have to galvanize the entire staff.

One of the most rewarding things we do as consultants is guide a client through the strategic planning and business planning process.

We often spend more than 16 weeks interviewing the leadership team and the firm’s clients. Some people might have good things to say, others not so much. We conduct anonymous online surveys with the employees. We amass, review, and analyze an enormous amount of data – financial, organizational, human resources, and even past strategic plans – anything that will give us a window into the firm so we can understand it better.

This effort translates into a review document that assesses, evaluates, and recommends improvements to the firm in many areas. It often is a 150-plus page document that is distributed for review prior to a two-day onsite meeting with as many as 30 people. Sometimes people approach this exercise with doubts, fears, and pre-conceived ideas on what will occur. Our role is to facilitate the process and turn the experience into a solid 10 for all involved. It’s exhausting and rewarding all at the same time.

The process, to be truly transformative, allows all the participants to share their thoughts and opinions, and many times, these are the very leaders that will implement the vision with the support of their studios, offices or lines of business, taking the firm into a future that requires them to stretch out of what is comfortable and achieve the extraordinary.

As we move the participants through this process, and hearing many diverse and different approaches to the practice of architecture, engineering and planning, part of the transformation that occurs is to identify what many perceive as ordinary parts of the design effort.

Many elements of the work effort, due to the longevity of the participants in the respective practice, are often perceived as ordinary elements of the work that they do; the plumbing detail, the culvert design, the space plan, the fenestration design, the electric load calculation, the Phase 1 study and the structural load calculation. The reality is that these are all extraordinary efforts, brought about by equally extraordinary staff members who have forgotten that attitude and approach can be transformative. If the senior leaders can rally around the concept that everything is extraordinary, there is an ability to inject new energy into their departments by transforming the attitudes of their staff.

The development of a tangible, quantifiable vision is often started by the suggestion that all areas of the firm need to move from one level of revenue to a radical look forward over five years. Often this amounts to doubling, tripling, or quadrupling revenue growth.

Recently, with a planning session involving both senior leaders in their late 50s and early 60s, and a mid-level leadership team ranging from their early 30s to late 40s, the collective decision took the firm from $15 million in annual gross revenue to over $50 million by 2020. This transformative plan was crafted on day one, and on day two, we asked how that $50-million goal felt after a good night’s sleep.

One brave soul raised their hand and stated what many felt: “This plan was sheer terror and fear.” But they were reassured by the senior leaders that they stood behind the plan and would commit the resources required to achieve this epic vision. The new president was equally passionate in his commitment to reassure the team that there would be no obstacles standing in the way of creating a transformation. WOW!

Revenue growth that is this transformative has so many components that every facet of the organization has to engage in the effort. Business development goals, management goals, production and staffing needs, potential merger and acquisition strategies, technology, and new ways of staffing and planning. The firm must commit to assess and manage the strategic vision by reviewing the monthly or quarterly goals. The only way success can be achieved is by always keeping everyone’s eye on the prize.

Transformation ultimately drives down to the staff level, and what will their impact be on how the firm achieves the goals that it’s established? By participating and being invited to engage in the process!

Truly transformative change can often start with the third tier, the 25 to 30 year olds who should be valued for their ability to think outside the box, review processes, and create efficiencies through an unfiltered view of how work can be accomplished.

And here is the true secret of transformative change. In The Truth about Leadership, by James M. Kouzes and Barry Z. Posners, the 10th point focuses on the concept that “Leadership Requires Heart.” In other words, care and concern are the foundations of great leaders. Positive leadership generates positive emotion and, in that space, teams can create amazing and extraordinary results!

Ted Maziejka is a Zweig Group financial and management consultant. Contact him at tmaziejka@zweiggroup.com.

This article is from issue 1153 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Questions and answers

Screen Shot 2016-05-03 at 4.23.51 PMWhen positioning your firm for a potential sale, you should be prepared to talk about all facets of the organization, not just the C-suite.   

As an M&A consultant, I come into contact with sellers of all varieties. From “Maybe it’s time to start planning our exit” sellers, to “Get me out of here yesterday” sellers. Anyone considering an external ownership transition should be prepared to answer a few questions that come up in every M&A conversation. You only get one chance to have a first conversation with a potential buyer; you would be well-served by spending some time thinking about answers to the questions that are always raised.

  1. Why are you considering a sale? This one sounds like a no-brainer, but having an honest answer to this question opens up the dialogue in a way that nothing else does. A candid answer to this question starts the discussion with a tone of trust and credibility that are essential to moving the conversation forward.
  2. Tell me about your firm. Sellers need to be prepared to “sell” their firm to the party on the other end of the phone. According to IBIS World, there are 143,172 engineering services firms, and 72,346 architecture firms in the U.S. What makes your firm one in a couple-hundred thousand? Be able to articulate what makes your firm special (i.e. valuable!), and make an impression on the prospective buyer that they will not soon forget.
  3. What are your plans after the sale? I try not to “coach” sellers to give specific answers to questions, but this one, specifically, is my exception to the rule. I don’t have a right answer to this, but I can tell you that the wrong answer is that you plan to retire immediately after closing. If that is the truth, then be aware that leaving the firm before the ink is dry on the transaction documents will drive down your value considerably. The business you have built up will need you to maintain stability for some period of time before you pass the baton to the buyer. Letting the prospective buyer know that you’d like to retire after a few years is a much better answer than telling the buyer that you’re ready to retire immediately.
  4. Tell me about your staff. This is the opportunity to talk about the high quality second-tier of leadership that you have developed and mentored over the last few years (because you’ve done that, right?). Buyers want to know who they can count on in the short-, medium-, and long-term to keep the business on track. Spending the conversation talking about yourself and starting every sentence with “I did this” and “I did that” raises a red flag, especially if you just told the prospective buyer that you’re ready to retire. Focus on the answer to the question from the buyer’s perspective – what can you say about your people that will give the buyer confidence in the ability of your firm to continue to perform without you there?

I experienced a great example of seller preparation at a recent meeting with a prospective seller. This firm prepared a presentation for me to help me understand who they are, why they are the best, and what sets them apart. The presentation included market sectors, a few award-winning projects that they were proud of (and – I loved this detail – which of their all-star staff worked on the project other than leadership!), and their business model. An additional detail that was new to me in these types of conversations was a discussion of all of their major technology and equipment investments over the last few years, from how they financed the purchases, to how they were using those tools to generate revenue. I was blown away. That level of preparation answers a lot of questions before they are raised. I left the meeting with a better understanding of this firm’s commitment to cutting-edge technology, and confidence that this firm was ready to talk to potential buyers.

These questions and examples are just a few of the initial items on the list, but they are the ones that seem to occur during every introductory conversation. Remember that the person on the other end of the phone has already looked up your firm; they know what is on the website. The key to having a great initial conversation (which leads to great deals and partnerships), is preparation. They don’t know who you are and what makes your firm worth pursuing – so take some time and be ready to tell them!

Jamie Claire Kiser is Zweig Group’s director of M&A services. Contact her at jkiser@zweiggroup.com.

This article is from issue 1153 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Nodding your head

Screen Shot 2016-05-04 at 12.53.07 PM
It’s easy to spout acronyms, tell inside jokes, and use empty jargon, but oftentimes, people are just pretending to know what you mean.

Have you ever been in one of those meetings where a topic came up or an acronym reared its ugly head and you found yourself thinking that you’re probably the only person in the room who has no idea what everyone is talking about? I’ve been there multiple times. It’s an uncomfortable feeling. It’s the joke everyone laughs at, but you don’t understand. You just politely smile and nod your head.

I saw this in action years ago while teaching a master’s level class on global logistics. My fellow instructor and I created an outstanding presentation with all kinds of facts, figures, and diagrams, and spent a day talking about logistics processes and the importance of “Tip-fid” discipline and what can happen if one doesn’t “follow the Tip-fid.” We fostered excellent dialogue with and among the two dozen graduate students. As an instructor, there’s nothing better than when you know your students “got it.”

Except none of our students “got it.” The day after we returned home, I received an email from one of the students whom I had known for several years. He asked me if he could interview me as a subject matter expert for his thesis paper and then in a somewhat sheepish manner, he added at the bottom of the email, “By the way, what’s a ‘Tip-fid?’”

In this case, I was referring to Time-Phased Force Deployment Data, a standard term to describe the priority process used to move Department of Defense people and equipment. It’s a well-known term, but only if you’ve been exposed to that level of logistics, which was not the case for my students. So, who was at fault for the confusion? Why, that was me. The next time I taught that course, I spent a half hour describing the term and its meaning, and the class went so much better than the first one.

Is there something you say on a regular basis that you assume everyone around you understands, but in reality they may have no clue what you’re talking about? Is there an acronym or saying you use that may have different meanings to different audiences?

  • How confident are you that your clients understand everything you’ve proposed to them?
  • How many sports analogies do you make in your daily conversations? Have you ever called “audible” on a project or asked someone to “take a knee” when presented with a scope change request?
  • Do your biweekly production meetings occur twice a week or every other week?

Unambiguous speech is a force multiplier. It gets everyone moving in the same direction, as opposed to the classic: “I’m turning left, right?” There are several things you can do to help others avoid that uncomfortable feeling of not knowing what you’re talking about.

  • Avoid using acronyms outside of your organization. If you must use acronyms in a presentation, spell them out the first time you use them.
  • Build and maintain a master list of acronyms and commonly used terms in your organization. They are immensely helpful for your new hires. They can also make a great addition to your contract proposal to ensure there’s no ambiguity between your firm and your client’s firm.
  • Sometimes using acronyms with a client can signal to them that you understand their issue on a deeper level or even that you understand their company’s culture. Cover yourself and use the full phrase at least once to confirm your understanding of the acronym is the same as your client’s understanding.
  • Know your audience. If you’re leading a meeting, make sure you understand the audience before you begin. If your discussion ventures into areas possibly unknown to others, throw them a lifeline and provide a brief summary or background on the concept at hand.
  • Avoid using faddish terms found in the latest business management books. What exactly is a BHAG? And I don’t know anything about your cheese or care about what’s in your bucket or what color hat you’re wearing. Chances are most people will not have read those books and they may view you as a smug bloviator. Don’t get me wrong. I have my favorite business books, but if I’m going to make a reference to a concept I found in a book, I translate it so that everyone around me understands the point I’m trying to make.
  • Minimize the use of slang. The Pentagon is a breeding ground for such extraneous nothingness. If I had a dollar for every time I heard about a “self-licking ice cream cone” – code for a purposeless, self-serving process – or a dog that won’t hunt, I’d be a rich man. It literally took me months to figure out the thing about the ice cream cone.

I don’t know anyone who likes to be the person who doesn’t get the inside joke. Do your clients and your audience a favor and speak in terms they’ll understand, because not everyone will get everything you’re saying – even if they’re smiling and nodding their heads.

Bill Murphey is Zweig Group’s director of education. Contact him at bmurphey@zweiggroup.com.

This article is from issue 1153 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Prepare Your Business for Sale Today

Phillip Kiel“I’m not ready to sell my business,” “I am not ready to retire,” or “business is too good right now for me to sell” are all statements you might be thinking right now, but there are very good reasons that you need to start preparing to sell today.

“My business is not for sale though.” Well, it is better to be ready to sell your businesses when you want to, and not when you need to. The overwhelming majority of businesses are not ready for sale. You never know when a great opportunity to sell might come your way and you want to be prepared. Other factors that may lead to a need to sell can include illness, death, sudden relocation, loss of staff, exhaustion, and more. The last thing you want to worry about at a time like that is getting the business in order so that you can sell. Furthermore, not being prepared can lead to receiving a low value or simply being forced to close the doors.

The good news is that most of the steps you take to prepare your business to sell are good business practices that will benefit your business in the long run. “Should I sell my business or shut the doors?” That is a question that all business owners must face at some point. Selling is generally the better choice. You have spent years building a reputation, a team, and a vision. As an entrepreneur, we all want to ensure the success of the people we have hired to help us build our vision.

Are you prepared to sell your business today?

  • Could you respond to a strategic buyer if they were to approach your business about a sale?
  • Do you have a plan for your business to continue without you should your circumstances change?
  • Does that include a strategy for growth and new business?
  • Can you respond to questions about your competitive advantage and market fit?

A potential buyer is going to spend a lot of time on due diligence and reviewing your firm’s history. It will take you even longer to prepare to make a good first impression. The earlier you get started, the better. First, there are a few questions you need to ask.

  1. When is the best time for me to sell my business?
  2. What will I do after the sale?
  3. How much money will I need to sell my business for to achieve my goals?

The first thing that a potential buyer will ask for is a copy of your financial statements going back at least 3 years. Up to date, clean, and audited financials will get you started off on the right foot. You will also want to ensure your business has contracts in place with customers, employees, and suppliers. Rushing around getting contracts negotiated before a sale may send up red flags to your customers and staff, so the ideal time to put these in place is at the time of business.

Understand your motivations and goals for selling your business and ensure that you maximize the value you can receive for your business. Some other things you can do to prepare for a sale include: preparing a strategic plan including expected future revenue (the higher the backlog the better), prepare a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, ensure your business documentation (key processes, procedures, contracts, records, etc.) are in place and easily accessible, prepare management and employee succession plans, understand  what your valuation is, and prepare documentation on anything that can show a good business reputation and good customer relationships.

When preparing to sell, think of it from a buyers prospective. If you were going to buy a firm, what would you like to see? What would make a good first impression on you? This will allow you to position your business for the highest value. Taking the steps to prepare your business for sale will make your business more successful. Therefore, today is the day to start preparing your business for sale.

Phillip Keil is a member of Zweig Group’s M&A team. He can be reached at pkeil@zweiggroup.com

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Making marketing matter

Screen Shot 2016-06-30 at 10.33.35 AMIf you’re one of those people who still thinks “word of mouth” is the way to go when it comes to marketing, my guess is you have a very small firm that will remain a small firm. If that’s what you are interested in continuing to be, read no further. This isn’t for you. Today, I’m trying to reach out to those architects and engineers who want to grow their businesses.

Marketing is critical to your success. It isn’t some BS stuff that can be doled out to someone – anyone – and everyone else can just go back to real work (i.e., architecture, engineering, planning, surveying, etc.). It is REAL work. It takes a lot of heavy lifting. And it permeates every single area of the company. It isn’t just something that hangs off to the side that we call in when we need their help. It’s not just a “support” group.

We have a big problem in this industry. It stems from a lack of business education and from a basic belief that marketers are full of bull liars and exaggerators. While we can’t solve that perception problem easily, we can give you some advice about how to elevate marketing’s importance in your firm – a crucial first step if you want to make its contributions more impactful to the firm.

Here are my thoughts:

  1. Hire the right person for the job. I’m talking about the head of marketing – CMO or VP of marketing or whatever you want to call him or her. You need someone dynamic. You need someone who is inspired. You need someone who is positive. You need someone who is creative. You need someone who can communicate. You need someone who will work their tail off. And you need someone who wants to be successful, needs to be successful. Notice I didn’t talk about degrees and years of experience? That’s because those things don’t mean squat if the person doesn’t have those other qualities, which, quite frankly, are much more important!
  1. Put the person in the right spot on the organization chart. That means that he or she (whoever heads up marketing), reports to the president or CEO of the company. They don’t report to a group, they don’t report to a committee, and they don’t report to anyone who isn’t the one who can allocate resources and kick ass and make things happen in the organization. This is essential, because if your marketing person is going to get anything done they will be CHANGING things inside the organization. That will ruffle feathers. Those whose feathers get ruffled will be obstructing change. Someone will probably have to confront them.
  1. Show what is getting done marketing-wise. This means constant and continuous reporting of leads, sales, new clients, new jobs, new prospects, backlog, web hits, press mentions, and about a hundred OTHER things that show something is happening marketing-wise. It has to go out to everyone in the firm – NOT just the owners and managers – so everyone can see what’s happening that’s good and bad and support the firm’s marketing efforts as best they can. That’s what it’s about – getting everyone involved!
  1. While everything we do marketing-wise is a team effort, don’t forget to recognize and promote the very specific contributions of your top marketing person and other marketing team members. I think sometimes firm principals are actually AFRAID to do this, that the professional and technical staff may complain or feel slighted if they aren’t the ones in the constant limelight. It’s BS, though. The marketing people need some love, too—some PDA (public displays of affection!). Give it to them – if you don’t, someone else will!

Doing these four things will help elevate the importance of marketing in your firm, and that’s going to help marketing get more done for you. Trust me – I know!

Mark Zweig is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

This article is from issue 1152 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Let’s talk about student loans

Screen Shot 2016-06-30 at 10.17.38 AMWith college debt at an all-time high and expected to increase, now’s the time to think about adding loan reduction as a benefit.

Recruiting great talent takes skill, a little bit of luck, and some great benefits. The other day I was trying to figure out ways our clients could separate themselves from the competition when it comes to recruiting the best talent.

Of course, everyone wants to just throw money at the problem without thinking about the factors that drive a candidate to decide to go with one firm or another. It’s probably a bit more involved than that. Ask any recruiter and they will tell you that the deal isn’t done until the candidate signs the offer letter, and even then things can fall by the wayside through no fault of your own.

I was on a plane recently and stumbled across an article in The Wall Street Journal that addressed student relief as a corporate perk.

What a novel idea!

This issue got me thinking about the challenges facing young engineers and architects who are looking to work for a great company. It’s hard enough beating the pavement and finding a job, and when you add to it the stress of dealing with student loan debt ($35,000 average student loan debt at graduation in 2015), the decision-making process for these newly minted engineers and architects becomes a bit tricky.

Here are some ideas to consider as you work to fine tune your pay and benefits package to attract this millennial generation of talent.

Imagine being able to offer new employees healthcare, a 401(k) program, and a student loan repayment option or bonus. That’s a big deal for a young employee dealing with the kind of debt that this millennial generation is facing.

National student-loan debt is at an all-time high – and is expected to double in 10 years. Projections by the Congressional Budget Office put the total outstanding federal student-loan debt at $2.4 trillion by 2025.

According to a 2015 survey by Iontuition.com (a website that helps manage student-loan payments), more than half of current students and recent college graduates with student loans said they would rather receive an offer of loan help than a health plan. Nearly half of those surveyed also stated that they would rather have student-loan help than a 401(k).

These survey results are very telling. In the immortal words of the great R&B group, the O’Jays: “Give the people what they want.”

This new opportunity has even spawned start-up companies that have developed student-loan repayment programs. Companies like Boston-based Gradifi Inc., and Student Loan Genius, located in Austin, have developed platforms that can help firms implement these new benefits.

PricewaterhouseCoopers has taken this idea and leveraged it to their advantage on college campuses throughout the nation as they work to attract new hires. PwC worked directly with Gradifi to get the program up and running and make student loan repayment a reality for new employees joining the firm.

Now I should say that, according to an SHRM survey, only 3 percent of companies in 2015 were currently offering to help their employees pay off their student loans. Based on anecdotal evidence, it appears the number is quickly rising.

The biggest challenge to this option is the tax implication. Money to help pay student loans is taxable income. There is a bill in Congress right now, the Employer Participation in Student Loan Assistance Act, introduced by Rep. Rodney Davis (R-Ill.) on the House side, and on the Senate side by Sen. Mark Warner (D-Va.). The House bill seeks to extend the tax exclusion that currently applies to employer-provided tuition assistance – up to $5,250 per year – to include employer contributions to employees’ student loans. The bill would also provide incentives for employers to subsidize student loan repayments.

Whether this bill passes or not, there are some creative ways that a company can implement this benefit and create a strong recruitment and retention tool for new and current employees. This is one of those benefits that has yet to take hold in the design industry. I suspect that those early adopters who figure out a way to make this work will have a tremendous advantage over peer firms who are not willing to be creative when it comes to developing new ideas and programs to attract and retain the best talent available.

I honestly hope that someone will read this article and sit down with their CFO, controller, and head of HR, and figure something out. Please, do share your efforts with me and let me know how things go. As always, I’m available to discuss this topic or anything else related to recruitment, retention, and leadership.

Randy Wilburn is Zweig Group’s director of executive search. Contact him at rwilburn@zweiggroup.com.

This article is from issue 1151 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Getting serious about training your people

Screen Shot 2016-06-30 at 10.10.44 AMMy extensive observations on the AEC business tell me that the only training most of us do is catch-as-catch-can, luck-based training. There’s no structure or thought or meaningful budget applied to it in most companies in this business (with a few exceptions). Yet it is so important! It’s not like it’s easy to just hire the people you want and need who already know everything they need to know to perform the way you want them too. You HAVE to train people to get the workers you need to run and grow your business.

Here are my thoughts on the subject:

  1. You need to get involved personally. This isn’t one of those areas where you can just get out your checkbook. You have to do some work. As the founders/owners/top managers/best people at what you do in your firm, YOU have knowledge your people need.
  1. Not everyone wants to learn. The best people, however, do want to learn. If you find, as you get into your training effort, that certain people don’t want to learn, you need to get them out. They will undermine all your training efforts with everyone else. Not being willing to learn is unacceptable and a good reason to cut someone from your team. Get ’em out!
  1. Office layout/seating is crucial‎. People, ideally, should be physically located near those who are supposed to be training them. There are just too many “teaching moments” lost when that is not the case. Walled offices with closed doors are your enemies to effective training!
  1. Take people with you when going to job sites or visiting clients or regulators. This is how I was trained in how to sell A/E/P services. My “boss,” the company president, just asked me to go along with him. I learned a lot watching him. And he told me in no uncertain terms to be quiet unless he asked me to say something!
  1. Real world projects versus theory is crucial. I think too much training involves general concepts and theory, and not enough on practical problem-solving for real world situations. As a result, the training doesn’t seem relevant. Why not solve real problems and train people for future generations at the same time? But to do this, the trainer has to get involved and poke their nose into specific project situations. You cannot expect your people to bring you these every time on their own.
  1. Use your best people – not your worst – to train. So many companies dole off training duties to those who are the least busy. Huge mistake! The busiest people are the best people. You need them doing it – not your worst people. Your trainees need to emulate success, not mediocrity. And while you’re at it – get some diversity going. Using more women and people with different ethnic backgrounds may bring a different perspective to things that could help with creativity.

There’s a lot more to this topic. Your thoughts? Send them to me at mzweig@zweiggroup.com.

This article is from issue 1151 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone