Think before you hit “send”!

jamiekiser_hoverA few weeks ago, I wrote a short article about how important it is for firm owners to understand the value of their business. The point of the piece was to address the real threat to firms that have no idea what they are worth or what drives their value. The issue that we see in M&A all too often is the firm owner that throws out a value with no basis in reality, effectively slamming the door shut on what could be a very happy – and lucrative – union. It’s completely avoidable, but yet it occurs time after time. So I wrote a brief piece with a few examples, and we sent it out via email.

The article I’m writing today isn’t about M&A or valuation, though. I want to talk about what happened after we hit “send.” The emails were sent from my account, and all responses were directed to my inbox. After wading through hundreds of “out of office” notifications, I started to receive actual feedback. Some recipients read the email and provided comments or questioned my analysis. Others, perhaps assuming that there wasn’t a human behind the email, or maybe emboldened by the indirect nature of digital communication, took the time to fire back scathing critiques or rude remarks.

Plenty of the nastier comments were funny, sure, but I was surprised that emails sent to professionals would garner so many, well, unprofessional responses. As a consultant to this industry, I’d like to recommend thinking twice before sending something out into the World Wide Web.

It’s not only responding to emails (sent from your company’s email address!), which are just a forward button away from the rest of the universe. When you post a snide remark, share a politically-charged opinion, or upload a picture from your friend’s bachelor party on the internet, the ripple effect can have real consequences for your reputation and your firm’s reputation.

This point is especially important as more Millennials – people who have grown up with the internet – enter the workplace and take on management roles. Although Millennials are by no means the only ones guilty of online indiscretion, they do tend to have less concern over privacy settings and to utilize more outlets to potentially embarrass themselves or their employer in social media. That combination is a liability in an industry that relies on sound judgment calls. It’s hard enough to stay on top of projects, reach revenue projections, land new clients, find great employees, and close M&A deals without adding one more “risk factor” to the equation!

Jamie Claire Kiser is Director of M&A Services. She can be reached at jkiser@zweiggroup.com or Office: 800.466.6275 | Direct: 479.435.6521

 

 

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The entitled ones

photo-1448932223592-d1fc686e76eaFor most of my career, I have defended the “new generation,” i.e., those just getting out of school and starting their careers. The older people have always complained about the group coming in behind them, saying they don’t work as hard or have the commitment level that they had. After all, they walked six miles uphill in snowstorms both ways to school when they were kids. And they all started in the mailroom for $1 an hour and worked their way up. The cycle of bashing your successors continues from generation to generation.

My defense has frequently revolved around the idea that every generation DOES do this, and, young people, if given the right environment AND inspiration, will do whatever it takes and work their tails off to do a good job. And for the most part, I think ‎I was right. I think I still AM right – just not AS right as I used to be.

The newest generation does include some unbelievably diligent and intelligent workers who are willing to dig in and get the job done. We feel extremely fortunate to have a number of them working for us at Zweig Group and I would put them up against anyone for work ethic and willingness to do whatever has to be done to meet a deadline or fix a problem.

That said – I have seen and heard some examples of entitlement from millennials that blew my mind recently. As many of our readers know, I teach entrepreneurship at the undergraduate level at the University of Arkansas. During one class in the last year or so I asked my students what their plans were after college. One young woman who keeps a rather low profile in terms of class participation said she wanted to be a Fortune 500 CEO. I thought, “Great – she’s very ambitious.” Then I followed up with, “Awesome! What do you want to start out your career doing?” Her response: “I’m willing to start out as a COO.” I was so shocked I was nearly speechless! And she wasn’t joking.

Another example came to me from a local design/build firm. A young, degreed but not registered architect in their employ did some work on a set of plans for a former fellow employee – a project manager – who was fired a few months earlier for working on his own projects on company time. Not only that, the plans were prepared BY the firm a few months earlier but the former PM stole the project away from the firm before he was fired, and the employee knew all about this. In spite of the guy’s complete lack of ethics, the young architect refined the plans for the PM while on the company payroll. ‎The only reason the company learned about it was a contractor called them to warn them about potential litigation surrounding the project! When confronted, the young architect said he felt justified in his behavior because his “rent was due” and he “hadn’t had a raise” in too many months. He was “owed the money” he made working for a guy who stole from the company. Mind boggling!!

Yet another example was brought to me from a large engineering firm in the southeast. When interviewing a young engineering graduate for a potential position in their firm, the cocky fellow stopped the discussion and told them he would “not work one minute more than 40 hours per week and possibly four hours on Saturday,” or he “would not work there.” Hey, his time was his time, period! Guess what? He was right – he didn’t work there!

I could go on and on. There’s just too little respect for the senior people, too much of an attitude that the company owes someone a living because of their degree or just because, and too little willingness to do the crappy jobs that lead to better jobs. Again – not to put EVERY millennial in this pot – but there are too damned many of them who act like this.

Why do they act like this? There are many theories. Here’s mine: In a nutshell, life has been too easy on them. They’re living in $3,000 a month apartments as university sophomores instead of $100 a month mobile homes. Mom and dad are going in debt to pay for their degrees instead of them going in debt with student loans. They drive new Denalis and Tahoes and GT500 Mustangs, not $200, worn-out, six-cylinder Biscaynes. They don’t work in school but if they do, it’s only in a (relatively) highly-paid internship instead of the local service station or burger joint for $2 an hour. And don’t worry about living on Banquet pot pies and three-for-a-buck Swanson “Swiss Steak” dinners, or Kraft Mac N Cheese – go out for sushi on Mom and Dad’s credit card, or better yet, get the surf ‘N turf at a fine dining establishment. We created these monsters, folks, as the coddling parents and oft-spoiling grandparents of this new generation. And as their employers, we will undoubtedly pay the price for it.

But fellow baby-boomers out there – don’t despair. And please don’t work too hard this week. Life is short. And finally, as always, send your comments and feedback to me at mzweig@zweiggroup.com.

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

This article is from issue 1143 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.

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Negative energy and your brand

Screen Shot 2016-03-30 at 9.34.19 AMTroublemakers within a firm can do a lot of damage, especially if they are tolerated.

Every firm has these people to some degree. The naysayers, the skeptics, and the gossips. These people are holding back firms, inhibiting performance, and are a toxin to the firms they work for just like a poison running through the veins of your body. The negative energy these people create can have a profound impact on any organization. No matter how big or how small their role is, they can be a very destructive force. Professional service organizations must be extra vigilant in the crusade against negative energy as it has a deeper impact on them than other industries. The reason is we are a people business. We sell people and client service. When we poison a team or an entire company, it dramatically affects the product we are selling – our people. A few defeatists on your staff can do more damage to your brand than the positive effect of all of your other staff combined.

This is a big problem in the AEC industry. When you get behind the closed doors of firm leaders, you realize how much time is spent dealing with people problems. They take valuable time away from executing strategies to grow and develop the firm. I am continuously impressed with how many high-level strategy sessions get derailed by conversations about bad apples. All that valuable time that could be used to discuss growth and new ideas is instead used to talk about one or a few troublemakers.

When you want to remediate a toxic environment, you need to understand that people have three basic psychosocial needs: the need for control, the need for security, and the need for recognition. The reality is that many employees do not feel like they have control in the workplace and that combines with the feeling of not receiving adequate attention, acknowledgment and recognition. As a leader, you have the ability to create an environment that fosters all of those needs. You must first recognize that the company on the outside reflects what’s on the inside. Get serious today about fixing your people problems with these critical actions:

  • Get rid of negative people. Assuming you have had the appropriate discussions with them and tried to remedy the situation, it is time to part ways if no improvements have been made. Too many firms tolerate those who ruin the team and its brand. You cannot sell a fun environment to new recruits or high quality services to clients if you retain people that exude negativity.
  • Give your people more control. If you have appropriately dealt with the people that are negative and cannot be trusted, you should have no problem eliminating some of your policies that create bureaucracy and slow down decision-making. Dependable people thrive on freedom, yet so many firms have too many processes that are designed to control people and results. This is especially a problem as firms grow larger. When you have the right people on the team, you should be able to trust them and therefore offer them more control.
  • Give people security. I don’t mean unconditional job security. I mean security in the sense of feeling good about the company, its direction and their role in that direction. Have a clear vision for growth with a strong commitment to opportunity everywhere. Share more information with all employees using an open book management philosophy. Demand that all leaders have an ongoing, open dialogue with their people about how they are doing as a team and as individuals. Try to break free from the “once-a-year career development discussion” that is often aided by forms and meetings that accomplish little. True security is gained by reasonable transparency and confidence in the future.
  • Recognize your people. Getting rid of negative people tells everyone else we like what you are doing and we do not like what they were doing. Taking that a step further is recognizing performance and excellence as it happens. Again, resist the standard approach of talking to employees once a year about performance and offering raises and promotions at that same time. Offer raises throughout the year when deserved. Positive reinforcement is more effective when offered in response to the desired actions as opposed to a schedule. At the end of the day, paying at the top of the market and offering promotions are the recognition that employees need. If you have built your company like a sports team and only have the right people on the team, this should be easy.

Negativity is one of the greatest enemies of your brand, both internally and externally. Tolerating it is a big problem in the AEC industry, especially right now as the market for talent is tight. You must decide if you are going to focus on building a company around needs or around ideals. A company built on needs grows and shrinks based on the market. They tolerate poor performance and negativity because they employ people to fulfill a need. They lose high performers to other companies that have strong ideals and better fulfill their basic needs of control, security and recognition. A company based on ideals and focused on positivity flourishes in all markets and does a great job of providing for the pyscho-social needs of staff. If this article resonates with you, you have some hard decisions to make. It’s these hard things, though, that create prosperity. Good luck!

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

This article is from issue 1142 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.

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Looking for Inspiration?

Screen Shot 2016-03-25 at 9.09.13 AMWhile success and security are good things, they can also zap your energy, so find something new.

Chances are, if you’re reading this, things have gone pretty well for you. The company is doing well and you’re making a great living. You’ve probably got a nice house and decent vehicles – maybe you even have super cool vehicles! Your kids go to good schools or are already through school and into college or beyond. You aren’t worried about paying for their college. You may even have been on a nice vacation in the last 12 months and have another one planned. In short, you’re living pretty darn well.

That said, you may be unmotivated at work because it’s all going so smoothly. You’re bored with your choice of local restaurants, agitated by the upcoming elections, and feeling that your vote or opinions are futile in the scheme of things. As a result, you are uninspired. So here are my suggestions to get you back into inspired mode:

  1. Start another small business with your spouse or one of your kids. It may get you re-enthused about business and what you’ll learn can be applied to your primary business to make it more successful.
  1. Whether at the college level or in some other capacity, teaching keeps you fresh and keeps you learning. Young people have an energy and sense of possibility that hasn’t been beaten out of them yet. This is infectious and will help you.
  1. Go on a trip with a friend. Do something you haven’t done in a long time. Motorcycle ride through the Rockies? Tour the historic Route 66 in a 1970 Chevelle SS 454 with cowl induction?
  1. Machu Picchu? Float trip on the Buffalo River? Do something you don’t normally do with someone you don’t normally do it with.
  1. Join a new group. Whether it’s the Sierra Club or the Girl Scouts or Habitat for Humanity – try something different and start getting into it. It may be inspirational for you to do something that has what you consider to be worthwhile cause.
  1. Pick up a new hobby. Model trains. Skeet shooting. Needlepoint. Pot throwing. Archery. Collecting egg beaters (yes, I had a client who was a very successful A/E firm CEO who actually did this). Oil painting (my sister-in-law picked this up in her 60s and has been able to sell her art at surprisingly high prices).
  1. Pick up a new sport. Do something physical. Distance running. Yoga. Mountain biking. Diving. Doing something like this may be what it takes to get you more centered and back to your old inspired self.
  1. Read some books. Great works of literature may be inspirational. Or true stories of those who have overcome obstacles to be successful at doing something. Get your mind out of the newspaper and Yahoo.com and Facebook and instead fill it with something useful.

The point is this – there are a lot things you can do if you need inspiration. Any of these will conceivably help you become re-energized personally and that is going to help you be more vital to your firm. Better get to it now – time’s wasting!

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

This article is from issue 1141 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.

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Assessing insurance and risk in M&A transactions

Screen Shot 2016-03-23 at 2.23.45 PMThe checklist is long, but with meticulous attention to detail, a firm can avoid unpleasant surprises after closing the deal.

Merger and acquisition activity among A/E firms continues to heat up.  When planning to buy, sell, or merge with another firm, you need to understand and evaluate various risk and insurance issues that can affect the success or terms of the transaction.

Two of the most important steps are to:

  • Start early and make sure that risk management and insurance issues are being addressed throughout the process; and
  • Gather all the necessary information to allow a complete understanding of the issues and opportunities.

With regard to gathering information, we usually suggest asking the entity being acquired to provide the following:

  • Summary of insurance policies carried for each of the last three years (often called a schedule of insurance).
  • Copies of all current insurance policies.
  • Insurer loss runs or claims history for at least the last three
  • Details of any open claims or circumstances that might give rise to a claim; and
  • Summary of risk management policies and procedures.

Be sure the information provided includes not only professional liability policies, but also all property/casualty and management liability insurance policies.

Claims information can provide valuable clues. Claim information, in particular, can be a critical indicator of future problems or management issues that you will want to factor into your acquisition terms and conditions. For larger firms, you’ll want to go back further than 3 years and obtain loss runs for five or even 10 years. The focus should be on any open professional liability, general and auto liability, property and other claims. Review all large claims and flag any circumstances that could turn into claims.

The claims-made nature of professional liability insurance policies heightens the need to understand any potential circumstances and the to-be-acquired firm’s risk management practices.  Under a claims-made insurance policy, even errors that occurred years ago are paid by the insurance policy in effect at the time the claim is filed. Making this even more of an issue is that unlike general liability policies, PLI policies have an overall aggregate limit, which includes all claims expenses (including defense costs).

Extended reporting periods can assist. One solution often utilized is for the selling firm to purchase an extended reporting period, or “tail” coverage, as an extension to its last claims-made policy. Most ERPs extend for one, two, or three years. While the insurance limit usually remains the same, it applies for the entire ERP period vs. a single year when a PLI policy is typically renewed. This restricts the monies available to pay claims and could increase the risk of uncovered claims.

To help determine an appropriate duration for tail coverage, some firms check the statutes of limitation and statutes of repose in states where they have current or completed projects. Statutes of limitation define the maximum timeframe after an event or accident that legal proceedings may be initiated. They vary by jurisdiction and may, under certain circumstances, be extended.

Statutes of repose specify the maximum time after completing an act, such as completion of a construction project, that legal proceedings can be initiated. Some state statutes provide more than 10 years of liability.

Unfortunately, most ERPs will not extend for such longer periods and buyers and sellers will have to evaluate other options including whether or not the seller’s liabilities can be rolled into the buyer’s PLI policy.

Other claims-made policies need attention too. Speaking of claims-made policies, it is important to keep in mind that there may be other claims-made policies beyond PLI that require tail coverage. These include directors and officers liability, employment practices liability, fiduciary liability, and employee benefits liability (under the commercial general liability policy).

During a merger or acquisition, EPLI coverage can be critical; eliminating staffing redundancies may require terminating employees, which can lead to employment-related claims. Be sure to understand your policy’s coverage, tail and claim reporting provisions and requirements.

Check workers’ compensation. Sellers with elevated accident or injury rates can have profoundly negative effects on an acquiring firm’s business. Workers’ compensation insurers use a rating system based on an employer’s loss history to set that entity’s insurance premiums.

Significantly, the rating, known as an experience modifier, is among criteria project owners and managers use to evaluate design and construction firms working or bidding on their projects. A poor rating can disqualify a firm from a bid or retaining a client. So, be sure to assess whether and how the seller’s workers’ compensation loss experience might affect your business.

Key considerations in other coverages. With regard to commercial general liability and other related property/casualty insurance policies, it’s common to add the acquired firm to the acquirer’s CGL and other policies as an “additional named insured.” In a merger, the combined entity should have both predecessor companies as named insureds in its CGL policy to address any current occurrences arising out of the combined operations.

For property and other insurance policies, be sure to have a process in place to identify coverages carried by each firm, ensure continuity of needed coverage, and cancel redundant policies.

Insurance and pricing. In pricing M&A transactions, many buyers employ a two-year earn-out or escrow fund to address contingencies arising post-closing. This fund should also contemplate insurance-related costs, such as those for audits related to workers’ compensation, general liability, and automobile liability policies, as well as for deductibles and self-insured retentions, which can be $25,000 to $500,000 or more per claim under some policies.

Successful mergers and acquisitions require careful due diligence, which should include risk and insurance issues. Be sure to reach out to your insurance broker and tap their experience and expertise with merger-related insurance and risk management issues.

Dan Knise is president and CEO of Ames & Gough. Contact him at dknise@amesgough.com.

Ames & Gough are sponsors of the 2016 Hot Firm and A/E Industry Awards Conference. Want to learn more? Meet us in Phoenix on September 22-23 and spend some more time in person with an Ames & Gough representative.

This article is from issue 1141 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.

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2016: New year, old ways? You decide

photo-1451653500993-04a9a6368221Here are some tips to help you make positive changes for your A/E/P or environmental consulting firm in the new year. 

The year has dawned and as many of our clients report, it has started with a bang. Lots of work that has carried over from 2015, and more opportunities for the firm with new proposals and new projects.

As financial managers and project managers embark on planning and executing the work, will you fall back on the old ways of approaching your business, or will you integrate new ways of thinking? Will you create energy, fresh ideas, and opportunities for new efficiencies that will translate into higher profit for the firm? Or will you remain stale?

How can we create more profit with the same fee? Oftentimes, as project managers, there is a set way of doing the work – firm-wide standards of care, of approaching tasks, of delivery in projects, and execution of effort. Are you open to transforming the work process in favor of potentially higher profit?

A case in point might help illuminate this. A client did drawing tasks with an extraordinary level of documentation and detail, which chewed up the fee. The financial manager asked a simple question to the project manager and team: “Do you have to commit that level of detail on the documents or can the documentation be streamlined, and can the firm save time, money, and increase profit?”

The question stimulated a pause in the action, and the PM was able to reflect on the possibility of streamlined documentation while still maintaining rigorous standards. The PM met with the contractor. They created a more efficient set of documents, reduced the schedule, and the PM was able to go back to the client with a shorter schedule. On a fixed-fee project, that was of great value to the client. When there’s a strong degree of trust in a design-build relationship, there’s plenty of opportunities to review the process and achieve the client’s goals.

Can we approach the project differently and create greater opportunities for profit? As a Managing Principal of an architectural firm, our office provided a line of business that supported real estate professionals, and we were doing “test fits” for potential tenants. The fees were highly competitive, and the project manager who had the client relationship often complained that it was very difficult to make a suitable profit for this kind of work.

From a financial perspective, we wanted to drive most project types to 20 percent profit, including this line of business. I challenged the PM to come up with a way to approach these projects. He, along with two architects-in-training, were given eight hours to devise a way to transform this line of business. Skeptically, the PM went off to brainstorm this process. Eight hours later, the two trainees had created a way to transform the older approach through technology and process to provide the “test fits” at a 20 percent profit. New ways of thinking might not always be popular because they challenge old thought processes. But by creating a new approach, we re-energized a line of business.

Create a new perspective and energy! New thoughts, new approaches, and a new perspective might be as simple as altering your view, turning your seat around, looking at the work effort from a different vantage point, and creating in a different method. Routines sometimes afford us a comfort level, but they also inhibit creativity and the flow of creative energy. So examine what you do each day, when you come into your office, how you engage with staff, how you run your meetings, and what your day-to-day routines might be doing to stifle or stagnate your thinking.

Integrating the financial management staff into the way you approach your project plans might create a new approach to the work. Just because they play with numbers all day does not mean they aren’t able to offer a bit of “non-constrained, creative thinking” that could be transformative.

Implement “Creative Tension” into your operation by asking each staff member to prepare a 10-minute presentation on a project, and to deliver the presentation in front of the entire office. After their presentation, colleagues can comment on the presentation, the work, the design, the approach, and in this safe environment, all comments are OK. During these weekly sessions, colleagues offer solutions to the problems that were found.

What do you gain in this process? The presentations can shed light on areas where someone might need help. This exercise also shows how staff responds to criticism, and how they respond to hearing solutions. In the process, your staff improves, and that’s good for the client.

So it’s a new year. What are you doing to energize your firm and increase its profitability?

Ted Majiejka is a Zweig Group financial and management consultant. Contact him at tmaziejka.com.

This article is from issue 1140 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.

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Inaugural ‘Work Travel & Reimbursement Spotlight Survey’ Released

1452648221-WTandRsurveycover_webDigital publication shows who will, and won’t prepay for employees’ personal travel.

Zweig Group has released the first of its Spotlight Surveys series, Work Travel & Reimbursement. This full-color digital product offers an in-depth look at firms’ policies related to business-travel reimbursement at a fraction of the cost of Zweig Group’s full-length survey products.

“The Spotlight Surveys series is a little more reader-friendly, I think,” said Andrea Bennett, Zweig Group’s research and publications manager. “Not only is the information more targeted, meaning that the topics covered are more succinctly linked, but also the digital format allows us to create a full-color product, which makes for a more pleasurable reading experience, in general.”

“We’ve also used this inaugural Work Travel & Reimbursement Survey to implement some new data breakdowns that readers of other surveys have requested,” she said. “For addition, readers will be able to look and see the exact percentage of respondents that offer specific engineering services, in addition to firms’ broad markets within the industry.”

Among the most interesting findings of the Spotlight Survey relates to firms’ willingness to provide front-end coverage of employees’ personal travel costs conducted in conjunction with business travel, with either the expectation of repayment or the deduction of the costs from the employees next paycheck.

“It was striking to me how many firms – about 16 percent – said that they would prepay for employees’ personal travel expenses when that travel is conducted in conjunction with business travel. To me, that says that A/E/P and environmental firms really trust their employees, especially the almost 11 percent that allow the employee to repay them at a later date, versus deducting the amount from their paychecks, which happens at about 5 percent of firms.”

Firms in the architecture/interiors (67 percent), single-discipline engineering (20 percent) and multidiscipline engineering (11 percent) are most likely to prepay for employees’ personal travel expenses with the expectation of being repaid later. They are most likely to be based in the Middle Atlantic (100 percent), North Central (7 percent), and/or South Atlantic (13 percent) regions and to have less than 50 (61 percent) employees.

“Though it’s interesting to note where these practices are taking place, it’s almost more interesting to see where they aren’t,” Bennett said.

For example, no fast-growth firms (those that have experienced an annual revenue/staff growth of 20 percent or more over the past three years) report prepaying for employees’ personal travel expenses, and only 14 percent of very high profit firms (those with an annual net pre-tax, pre-bonus profit on net service revenue of 15 percent or more over the past three years) report doing so.

“We can only report on correlation,” Bennett cautioned, “but these numbers seem to indicate that growing firms are less likely than firms overall to extend this ‘prepay option’ to their employees. But, of course, each firm must make its decision based on what’s best for it and its staff.”

The inaugural Work Travel & Reimbursement Survey is available for purchase at zweiggroup.com/survey.php for $250. Professionals who participate in a Zweig Group survey questionnaire are also eligible for a 50 or 60 percent discount on the purchase of a survey of their choosing. For more information, call 800.466.6275, email research@zweiggroup.com, or visit zweiggroup.com/survey.php.

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Handling employed job candidates

Screen Shot 2016-03-15 at 2.05.08 PMUnderstanding the nuances of a Happily Employed Job Candidate can boost your ability to hire the best people.

I recently received an email from a client who was in the middle of arranging an interview with a candidate that we presented to them about two weeks prior. The client sent us the conference call instructions and then asked for the candidate to fill out an employment application.

My colleague, who had recently started working on the search with me, asked if the client was joking.

I told her I wish they were, but they were all too serious about getting that application filled out before speaking with our candidate. They had done it for each of the previous candidates we sent to them.

Never mind the fact that we had sent a resume and our profile, which gave an in-depth review of the candidate, their background, and skill set. They wanted to see a filled out employee application.

Now I’m going to say this one-time:

Candidates who are not actively looking for a new job should not have to fill out these applications at any time before determining that a firm wants to hire them!

They are happily employed candidates for a reason. In most cases, they are taking a meeting with you, whether on the phone, via videoconference, or in person, based on our ability as a recruiter to get them to hear about another opportunity even though they may be in a great job situation.

That’s the challenge of a recruiter today. A lot of the good candidates are currently employed, and we have to cajole, convince, and sometimes coerce (only half joking) an individual to speak with our client. Unfortunately, a majority of our clients don’t understand this concept, acting as if the candidate came in off the street to apply for a job. This situation couldn’t be further from the truth. A “not actively looking for a new job” candidate shouldn’t go through the same hoops that an employed job applicant or unemployed candidate does.

While you need to treat all candidates with dignity and respect, you need to understand the motivation of a “Not actively looking for a new job” candidate before you raise the hiring bar. A good recruiter can convince even the most engaged employee to consider other options if you frame the opportunity and the client firm. As recruiters, we get cut off at the knees when we have to go back to these job candidates and ask them for a completed employee application. For some, it can be a humiliating request.

Here are some thoughts for firms that find themselves in this position. First, go into the interview with as much anecdotal evidence as you can find out about the candidate. This may or may not include a resume, and maybe some social media and online research. Remember, happily employed candidates may not have an up-to-date resume or CV. Not everyone in our industry needs to have a current resume unless they are selling work and need to keep an updated CV to attach to job proposals.

Don’t get bent out of shape when a candidate tells you that they have to “dust off” their old resume and update it. We hear that all the time, which is why we present a complete profile to our clients which includes work history, accomplishments, education, professional licenses, if any, salary and benefits info, future expectations, and some observations based on our conversations with them.

How much more information do you need to determine whether the candidate is worth a call or a meeting?

The design industry has a tight labor pool and you sometimes only get one bite at the apple. This is why you need to act as if the candidate is doing you a favor by talking to your firm even if you don’t feel that way.

Think about when you go to buy a car. Do you expect the car salesmen to treat you with contempt and act as if they are nice by showing you a car and taking you out for a test drive? No one asks you to fill out a credit application the minute you walk into the showroom. They try to show you a car and take you out for a test drive. They do everything they can to make you feel like you made the right decision by coming to visit them.

The recruitment process isn’t much different than that. Don’t worry about all the paperwork, just get the candidate on the hook by selling the features and benefits of working with your company. The other stuff will work itself out. I know some of you are probably saying, Randy, we hire people for federal projects, and there is always a certain amount of paperwork involved. I understand, but when dealing with “Not actively looking for a new job” candidates, that paperwork can wait until you’ve got them on the hook and they are totally interested in seeing where this opportunity may end up.

Lack of a cohesive recruitment process is one of the biggest hurdles we see to hiring “not actively looking for a new job” candidates. With a little practice and understanding, you can go a long way to having success hiring the right people in a challenging employment market like the design industry.

Randy Wilburn is Zweig Group’s director of executive search. Contact him at rwilburn@zweiggroup.com.  Want more recruiting advice? Check out the Becoming a Better Recruiter Seminar

This article is from issue 1139 of The Zweig Letter. Click here for to get a free trial of The Zweig Letter.

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Characteristics I look for in business development people

Screen Shot 2016-03-11 at 8.21.14 AMIf you’re hiring people without these traits you’re doing a disservice to your firm.

Business development people. In A/E firms, there’s a love/hate relationship with them. Many don’t make it (they have the life expectancy of a tire on Kyle Petty’s car running the Daytona 500 race), and if they do, they demand their pound of flesh. But either way, one thing is for certain – they aren’t going away.

Hiring BD people is not easy. Sometimes we pull them from the technical ranks. Sometimes we get them from government or regulatory agencies – or from a client. And other times we hire them away from a competitor’s firm. But no matter where they come from, or what their background is, there are certain qualities I look for:

  • Intelligence. There’s just no substitute for intelligence. Intelligent people are more resourceful. They are easier to get along with. They’re even more emotionally stable. It’s a mandate for success as a business development person.
  • Work ethic. You’ll get a lot more done – build more relationships – find more leads – and sell more if you have a good work ethic. There’s little worse than lazy business development people.
  • Self-discipline. Since we don’t typically have real sales management functions in A/E and environmental consulting firms with managers who ride herd on their sales people, we need business development professionals with a lot of self-discipline who will make the calls they need to make, and do everything else they have to do, without being reminded.
  • Self-confidence. Sales and business development people have to have confidence so they can meet and interact with people who may be older or higher status or more successful than they are themselves. A lack of confidence can be interpreted by a client as a lack of confidence in the firm and its abilities.
  • Excellent verbal and written communication skills. It’s hard to teach these skills to a BD person who doesn’t come into the job with them. You just cannot go around saying things like “we had went to the store” or “me and John had really liked the way you did that” to a client without it reflecting really poorly on the firm.
  • Looks/dress. This is another area that is touchy but has to be addressed. If you don’t know what a decent fitting sport coat looks like or think everyone should be cool with the third eye tattoo on your forehead you may not have the social awareness skills necessary to function in a BD role.
  • We used to have a guy who worked for us who would grab his fork with his entire hand and shovel in whatever he was eating like some kind of animal. It was embarrassing and really held him back from being allowed to interface with clients.
  • Ability to be a bit of a chameleon. I’m talking about being able to see both sides of any issue and being able to adapt to the culture or environment one finds themselves in. This can be a useful skill when working in business development!
  • Not pushing a particular religious or political ideology. The problem is no matter how “right” your position is you could alienate someone you don’t want to alienate.
  • Good listener and observer. If you are going to succeed in BD, you have to be both a good listener and good observer. It’s how you pick up on the signals that allows you to adapt your pitch if needed.
  • Wide ranging general knowledge base. This enables the BD person to talk about anything – staying up on current events and many other areas of interest – so as to facilitate relationship building. Without a relationship you will not make the sale.
  • Business development people need to be likable. If they aren’t, they won’t be considered trustworthy. No trust, no buy.
  • Honest/trustworthy. If you aren’t trustworthy, no client will buy services from you. So this has to be a requirement for all business development people.

I’m sure this list could be longer – but these are “MUST HAVES” in my book for all BD people. Time for me to go sell another job!

Want to find out more about this topic? Check out Becoming a Better Seller Seminar.

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

This article is from issue 1139 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.

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To lead: Plan for the long-term

Screen Shot 2016-03-09 at 3.13.09 PMAnnual resolutions are short-term planning at best.

Now that another new year is in full throttle mode, are you checking off your list of resolutions, or are you envisioning your firm’s future? Annual resolutions are short-term planning at best. For the long-term, your business strategies must be more decisive and focused. Here are a few suggestions to help stir up your thinking for the long-term.

1) Push the envelope. Think outside the box.

These business phrases speak to the importance of doing more than the status quo. Steve Jobs was the epitome of thinking outside the mainstream. He had the unique ability to discern what his customers craved, and he brought passion to the process of inventing new ways to utilize technology. His drive for excellence and merging beauty into the engineering process forever changed the technology landscape.

It’s easy to become complacent and set in our ways. However, as repetitive behavior breeds repetitive results, you need to ask yourself if you are satisfied with the status quo. Also, think about when you were most invigorated by your work. It was probably when you were expanding into a new market, implementing new technology or advancing staff to new duties. I have yet to talk to a successful leader who was not working to change or improve their business. When was the last time you did something different and challenging? If you cannot remember, then it is definitely time for a change.

2) Take risks.

Be bold. Dare to fail. Create opportunity. These are business strategies that often ignite change. If you are a leader who wants to grow both professionally and as a firm, taking business risks is a necessary part of the path to growth. But what risks should you take?

As an engineer I was trained to be risk averse, but as a business leader I embrace calculated risk as I know that it can lead to advancement of our firm. This also means that I accept that there will be failures, but history tells me that all great innovations were preceded by failures. I am not advocating that you risk the existence of your firm. However, absent some acceptance of risk and willingness to venture into the unknown you will not be able to implement change. In planning for the long-term, the decisions you make to move forward will either hold you back or free you to grow beyond your greatest expectations.

3) Act for the future.

In addition to thinking about your firm’s future, you must also set aside time to think about yours, both personal and professional. A basic part of a leader’s vision is determining your exit strategy. Most of us postpone this discussion as we don’t want to think about the end of our careers, but this is a fundamental piece of any strategic planning. Aligning your interests with your firm’s capacity to support those interests is important as your decisions also impact those around you.

You also need to know the future desires of others in your firm as they should be mutually supportive.  While you want to act towards the future, it cannot be an individual act. It must be a group or corporate act if you want the leadership and visioning transition to be smooth and sustainable.

4) Climb out of the weeds.

How many times do you look back at the end of the day and try to determine if you accomplished anything of importance? We become bogged down by the minutiae of our work instead of focusing on our firm’s vision. We are like a snake crawling through the grass, sticking our head up now and then, until a lawnmower finally rolls over it.

While taking care of the day-to-day is important, aren’t you supposed to be the strategic thinker for your firm? Is the task you are doing the best and highest use of your time or should it be handled by someone else? I continually hear the excuse: “My clients expect me.” That’s not really true. Your clients expect a service and a certain quality of performance. And what better way to enhance that service than focusing on what is strategically relevant for the success of your firm. Empower and support your staff in the fulfillment of their duties and you can create your firm’s future path.

5) How do you want to be remembered?

Finally, there’s the big legacy question: How will I be remembered? Personally, I want to be remembered for what our team accomplishes because their accomplishments are reflected on me. For that to be successful, I have to be the facilitator of our vision of the future. Set your sights on creating opportunities for others, and their success becomes team successes. You don’t need to hover and take credit for everything that happens at your firm. Take credit for being a jobs creator, an industry advocate, a leader whose vision is for the long-term success and viability of others.

There are multiple examples of individuals and firms who have distinguished themselves by creating opportunities for others. Walter P. Moore Jr. took the firm started by his father and created an entrepreneurial environment built around technical excellence and highlighted by generational leadership change. Freese & Nichols Inc. won the Malcolm Baldridge National Quality Award – one of only seven U.S. firms to be so recognized the year they received it – highlighting that after over 100 years of existence they are still innovating and improving. And Charles Thornton has lead the creation and expansion of ACE Mentoring in recognition of our industry’s need to attract future generations into the workforce.

There are many different ways to build a legacy. How will you build yours for the long-term?

TAKE THE LONG-TERM VIEW. In the study “Why Good Strategies Fail: Lessons for the C-Suite,” sponsored by The Economist and the Project Management Institute (PMI), 61 percent of respondents said that their firms struggle to bridge the gap between strategy formulation and day-to-day implementation. Only a fraction of those who responded to PMI’s study said that their business model was extremely well-aligned with their long-term strategies.

I’m guessing that everyone just gets too busy when business is good, and too mired in the status quo when business slows. Isn’t it time to usher out the old and welcome in the new way of thinking about your long-term resolutions?

Stephen Lucy is CEO of JQ with offices in Austin, Dallas, Fort Worth, Houston, and Lubbock, Texas. Contact him at slucy@jqeng.com

This article is from issue 1139 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.

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Long-term relationships and reputation

Screen Shot 2016-03-07 at 9.07.20 AMYou may have long-term “relationships” because of your company’s reputation with people you don’t even know.

I’ve always been a long-term relationship kind of guy. I still have friends that I went to grade school with. I try to be loyal to long-term vendors and sub-consultants and service providers. And I have had some of the same clients for nearly 28 years.

Sometimes you (or your organization) may have long-term relationships that you aren’t aware of and these can either positively or negatively impact your image and reputation. I had one of those cases recently where things worked out well. My other business, Mark Zweig, Inc., is a design-build-development company that does primarily residential but also does some commercial projects.

We recently sold a completely redone and expanded 1919 house in downtown Fayetteville to a couple whose primary residence is in Little Rock but who have had a second home here for several years. They both went to school here at the University of Arkansas back in the day, and they also have children and grandchildren living in the area as well.

So a month or so after these folks moved in, word came to me through my head of operations that the couple really wanted to meet me in person as well as show me the house after they had moved all their stuff in. So we set it up for a Friday afternoon several weeks down the road when they would next be in town.

I knew the buyer’s name – Jim McClelland. He is the founder of a prominent local civil engineering and surveying company that bears his name today. When the time arrived for me to stop by the house to meet him and his wife, I was surprised to learn he had been an early and loyal reader of The Zweig Letter for many years – from way back when we first started writing it‎ in the late 80s/early 90s. He and his wife were ecstatic about their new house – they really appreciated all the details and quality we tried to put into it. That he felt he knew me from reading my writings all those years really made it even better.

Sometimes, in business, you have long-term “relationships” with people you don’t even know. They may not know your name or face, yet have an affinity for your company because of your reputation or interactions they have had with your firm. Everything you and your people do either enhances that image or detracts from it. You cannot underestimate the importance of having others think positively about you. Anything other than that is going to cause problems for you at some point down the road. Every single relationship has to be nurtured. Every problem with quality or client service or client satisfaction has to be confronted. Anything other than that and you run the risk of bad things being said about you or losing a project you may not even know about.

You never know how what you do and how you treat people will come back to you. ‎It may be a strange and circuitous path but it probably will in some way.

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

This article is from issue 1139 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.

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For sale by owner: determining the listing price

Screen Shot 2016-03-03 at 2.24.50 PMIf you are thinking about selling your firm, a front-end valuation is essential before heading to market.

When we begin working with an M&A client on the selling side, one of the very first questions we’re asked is, “What are we worth?” I can answer the question. It might not be the answer that my new client likes, but I can answer it accurately every time. What are you worth? You’re worth what the market will bear.

While the prospective sellers out there are rolling their eyes, hear me out. There are hundreds, if not thousands, of factors that determine what your firm is worth. It is not as simple as putting a “for sale” sign in the front of your office and starting a bidding war. In addition, it’s not just determining what your firm is worth – it’s also determining what the buyer is buying – something that we truly cannot know until we start reviewing offers.

The firms that are fully prepared for an external ownership transition usually start the process a few years before they engage a consultant and are ready to be sold. These companies have often had a formal valuation done to establish a baseline, and they have spent a few years engaging in activities that were identified with a higher appraised value. They’ve spent time doing things that have driven the value of their firm upward. Once you have a rough idea of a value – determined by an expert business appraiser with experience in our industry – and you’ve worked to increase the value proactively, it’s time to approach buyers that we think will have a strategic reason to be interested in your firm.

Strategic buyers are ones that believe that the products and services your firm offers can be synergistically integrated into their existing lines of business to create incremental long-term value to their own firm. Once we know who the strategic buyer is, and what lines of business they offer, we can make adjustments to the seller’s financial statements to show “the future” and more accurately reflect the value of the acquisition to the buyer.

Knowing your own financial statements and understanding the drivers of value are two ways that someone considering an external ownership transition can help garner a higher purchase price. As an example, take a seller that is an architecture firm, and the prospective buyer is an A/E firm. The seller would have to sub out engineering work, and net service revenue is reduced for engineering fees billed on projects. The amount that will no longer have to be subcontracted out can be added back to the seller’s net service revenue.

The same logic applies to many other aspects of the deal. The question of what is being acquired should not be overlooked. Understanding what happens to assets like cash, receivables, fixed assets, and prepaid expenses is important, as well as any liabilities outstanding – these things can add up to major adjustments in book value. Other common adjustments on the income statement side include changes in salaries going forward, changing overhead rates, discretionary expenses like charitable contributions or that big, lavish holiday party you’ve always thrown, and one-time costs that distort profit.

Once we understand the value that the seller could add to the buyer – in terms of new clients, cost synergies, revenue streams, lines of business, leadership gaps, and more – we can start to talk numbers and begin to make adjustments. If you are considering selling your firm in the future, obtaining a formal valuation and identifying areas that can be improved internally to increase your value is a great starting point, especially if you have several years to address these issues and clean up your financial statements. I know it’s hard to hear as a seller, but we really cannot know what your firm is worth until we start talking to buyers and hearing their vision of the future.

JAMIE CLAIRE KISER  is director of M&A services at Zweig Group. Contact her at jkiser@zweiggroup.com.

This article is from issue 1141 of The Zweig Letter. Click here for to get a free trial.

For more information about valuation consulting, email jkiser@zweiggroup.com or check out an excerpt from the 2016 Valuation Survey.

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What’s your firm really worth?

Screen Shot 2016-03-01 at 1.43.23 PMLeaders in the A/E/P and environmental consulting industry need to know their firm’s value.

Many architecture, engineering, planning, and environmental consulting firm leaders don’t have a solid grasp on their firm’s value. But, if you’re a firm owner, you can’t risk not knowing this information, because the firm’s value factors into several situations, including:

  • Establishing a price for transactions under shareholder or buy/sell agreements
  • Establishing a price for a merger, acquisition, or sale
  • Developing a plan for ownership transition and/or management buyouts
  • Establishing share prices for employee stock ownership plans
  • Determining the fair-market value for gift and estate tax issues
  • Preparing for an initial public offering
  • Supporting litigation efforts, such as partnership dissolutions, disputes, and marital divorce
  • Other corporate purposes, such as division spin-offs or divestitures

Enter Zweig Group’s 2016 Valuation Survey of A/E/P & Environmental Consulting Firms. Though not a substitute for a formal valuation or a consultation with a business appraiser, the Valuation Survey is a must-have resource for any firm owner interested in determining the worth of his/her company.

The Valuation Survey is broken down into three parts: Business Valuation Considerations,
2016 Survey Results, and Case Studies. That’s right, in addition to presenting readers with
the overall survey data – broken down by firm type, size, region, growth rate, and more – Zweig Group provides actual valuation information for each of the 141 firms (43 percent of which are multidiscipline engineering firms) that have participated in the survey since 2013. That’s real- world information on real-world firms that you can’t access anywhere else.

Zweig Group also provides the actual formulas that survey respondents’ firms use – if they opt against employing an external appraiser – in addition to its own Z-values, which measure total invested capital and equity values.

Among the statistics that readers will find most interesting are comparisons of the TIC value per employee. Because A/E/P and environmental consulting firms sell staffers’ time, it is generally accepted that people are firms’ most valuable assets. Just as some firms generate more revenue per employee than others, some are more valuable than others in proportion to their staff sizes.

The median TIC value per employee for firms overall has steadily increased since 2006 to an all-time high of $65,498 in 2016. But the Valuation Survey goes even farther, breaking this statistic – and all of the statistics it presents – out by firms’ types; staff sizes; years founded; headquarters’ region; growth rates; reasons for valuation; who conducted the valuation, when, and by what
means; net service revenue, profit, EBITDA, and backlog projections; and minority versus controlling interests.

For example, the 2016 Valuation Survey shows the highest average TIC values per employee for:

    • Single-discipline engineering firms
    • Firms with less than 25 employees
    • Firms founded in the past 16 years
    • Firms based in the South Central United States
    • Firms with moderate growth rates
    • Firms that performed the valuation for the purposes of a sale/merger
    • Firms that employed a consultant or accountant to perform the valuation, which was conducted via an appraisal in 2014
    • Firms that project at net service revenues; profits; and expenses before interest, taxes, depreciation, and amortization for the next fiscal year
    • Firms that project a growing backlog in the next fiscal year
  • Firms with a controlling interest

Does your firm fit any – or all – of these categories? If so, chances are its total invested capital per employee is pretty high. But, you can’t know for sure until you conduct a valuation, or at least apply the formulas in the Valuation Survey to your firm to obtain a general idea.

If you have any questions about the 2016 Valuation Survey or any of Zweig Group’s research publications, visit zweiggroup.com/surveys.php or email me at abennett@ zweiggroup.com.

ANDREA BENNETT is Zweig Group’s research and publications manager. Contact her at abennett@zweiggroup.com.

This article is from issue 1139 of The Zweig Letter. Click here for to get a free trial.

For more information about valuation consulting, email jkiser@zweiggroup.com or check out an excerpt from the 2016 Valuation Survey.

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Decisions made easy

C8063AC75FHow we approach the decision process is as important as the decision itself.

We all make dozens of decisions each day. Some are relatively simple, such as which shirt to wear in the morning. Others are complex, such as deciding whether or not to go public with your company.

Some decisions points are self-generated, while others are pushed upon you. For example, I forced you to make a decision about reading this article. Would it be relevant? Would I learn from it? Would it be worth my time or just another time moocher?

I know a former CEO who was so overwhelmed by the dozens of decisions he had to make each day.  Some were literally life-or-death decisions. “Frankie” made some very logical, rational, and tough decisions during his tenure, but his home life was another story. When he had to make simple decisions at home, he absolutely locked up.

Frankie’s low point came after a particularly stressful week at work. When he and his wife, “Lola,” went out for dinner at a local restaurant, he froze at the sight of his menu. Beef, chicken, pork, seafood, vegetarian, salad, or pasta. His eyes glazed. Each menu category had sub-options, giving him dozens of combinations from which to choose. It was overwhelming.

How many decisions are you faced with each day and how do you approach them? Here are several approaches you could take.

  • Cut the clutter. I’ve seen a lot of enterprising project managers build elaborate PowerPoint presentations for their clients describing in excruciating detail the logic behind their recommendations. It was not uncommon to have over 150 slides of graphs, pictures, quotations, and caveats. How does one respond when presented with a mountain of details before making a decision? I cut out the clutter.  Eliminate the information that doesn’t directly contribute to a decision.
  • I’ve worked for a C-suite executive who set a limit on the number of slides he would view on a given project. If you couldn’t persuade him in three slides, then your logic was faulty. I was allowed as many back-up slides as needed to support my analysis and recommendation, but he did not want to see more than three slides. That approach made it easier for him to digest the information and ask the questions that were important to him. He trusted me to look at every angle of a project, but he wanted it presented in a format tailored to the way he processed information.
  • Break decisions into bite-sized chunks. Back to my CEO friend, Frankie. Years earlier, he had made a brilliant decision and married a wonderful woman who understood how he made decisions. Sensing Frankie’s dinner meltdown, Lola took over and broke the menu into bite-sized chunks for him. She offered him a simple yes/no choice. “Frankie, would you like a Caesar salad? No? I know you enjoy a good steak.  Would you like a ribeye cooked medium-rare?” Her approach allowed Frankie to continue processing the more complex decisions, while she guided him through the simple ones.
  • Keep it simple. Is anyone in today’s connected environment is anyone really going to read your 60-page white paper on the pros and cons of granite versus marble? Oftentimes, a one- or two-page paper is all that’s needed to convince someone about the benefits of one over the other. A one-page paper is much harder to write than a 60-page paper, but they’re usually more powerful.
  • How long are your proposals to your potential clients? Cover the critical information, but keep your proposals brief, to the point, and without the extra buzzwords. That will help them make a decision without having to wade through extraneous blabber.
  • Sleep on it. Studies have shown the old adage “sleep on it” has merit. For simple decisions, such as chicken or beef, either answer is correct, so don’t waste time making a decision that won’t really matter tomorrow. For the complex problems, I make better decision when I take a break from the issue.  I’ve found that running clears my head and allows me the space to think, while playing solitaire on my iPad, with its linear structure of columns and suits, helps me organize my thoughts. Find an activity that helps you think clearly.
  • Set a deadline. I recently led an exercise for an MBA class where I gave them an hour to develop a marketing plan for a given product. Nearly every student told me they wished they had more time, yet they all finished within the allotted time.  How much more time would have been enough to decide on a better plan? If I had allotted three hours, it would have taken them three hours to make a decision.
  • Write it down. One of my mentors confided in me that he could not remember the details of many of the decisions he made while he was in charge of a $400 million organization. That’s a little frightening!  Fortunately, he had a great executive assistant who kept track of those things for him.
  • Keep track of the major decisions you make along with a short explanation of your rationale for that decision. That will come in handy if your decision is later questioned or your firm is revisiting the same issue.

Decision making can be stressful if you allow it to take over your life. With a few simple techniques, you can minimize the stress involved in a range of decisions. Simplify the issue, spend some time away from it, set a deadline for your decision, make the decision, and move on! Indecision is a decision and it can be very painful for those who are depending on you.

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

This article is from issue 1139 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.

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CMTA Inc. merges with TMR Engineering

cmta_logoCMTA Inc. is increasing its presence in the Washington, D.C. Metro area via a merger with TMR Engineering (Arlington, Virginia). The transaction was facilitated by Zweig Group and closed on January 1, 2016.

Zweig Group helped identify potential matches in the D.C. Metro area to find a merger candidate to help establish a physical presence, expand capabilities, add to existing capabilities, and bring in an existing regional client base. ZG facilitated contact between CMTA and TMR leadership leading to the agreement execution.

“CMTA’s practice in the D.C. area has been expanding in the past three years, and we felt that a D.C. presence was necessary to serve our D.C., Virginia and Maryland clients. CMTA and TMR share similar cultures and we were impressed the quality of their engineering staff. Their CHP expertise aligns well with our Net Zero Energy expertise,” said Kenneth L. Seibert, PE, CMTA president.

“Throughout the years, TMR has been focused on providing great service to our clients. CMTA shares our values and is just as passionate about the built environment as we are. This alignment means we can offer additional services like performance contracting, security/technology design, fire protection engineering and commissioning,” said Thomas Rohrbaugh, PE, CMTA D.C. principal.

With the addition of TMR, CMTA now has six offices in four states: Kentucky, Texas, Indiana, Ohio, and the D.C. Metro area. The firm employs 160 people including 70 licensed professional engineers.

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PICK UP THE DAMN PHONE!!!

1928e537Get your project managers to pick up the phone and call clients to improve relationships.

In the A/E business, we hate confrontation. As a result, we tend to communicate via email instead of talking on the phone. The older I get the more aware I am of the problems associated with people not picking up the phone and actually talking to each other! While I pride myself on being super quick to respond to texts and emails, and there are some calls I would rather NOT have to make, I know one thing for sure: People need to talk more and email less.

When relationships with clients go sour – and in spite of your best intentions they sometimes do – you can usually trace the problem back to someone in the client organization who didn’t want you to be successful in helping them. How can that be, you may ask? You know you have good intentions. They have a problem and you are just trying to help them. The reason they don’t want you to succeed is simple. That person did not have a relationship with someone in your company. And when there’s no relationship do you know what happens? People get paranoid. They start thinking you don’t like them. You are out to get them. There’s no trust. And you know why there’s no relationship? Because this person doesn’t really KNOW your person. They don’t know each other because they never talk.

Of course, most of the time when things go bad the relationship can’t be fixed. The problem has already been known for a long time, and when the client brings you, the principal, into the situation, it’s probably already too late. No amount of promises or salesmanship is going to resurrect it. So the best insurance is this – TALK. Tell your PMs to call their client every day just to talk. Ask a question. Talk about kids. Discuss the details of the project. LOOK for a reason to call. Start a program of calling daily and I guarantee you that your performance, team morale, and client relationships will all improve immensely.

Ignore my advice at your peril. Keep going down that path of letting your people email everything to your clients in the name of convenience and liability reduction. Allow your people to opt out of making a 10-minute phone call every three weeks and I guarantee you that you will lose precious clients you shouldn’t be losing. Being willing to call and get off the email is something us old people tend to do better than the younger ones. You’d think since everyone has a cell phone they would use it to talk, but nope, it is for Faceooking and texting and listening to Pandora and responding to work emails. But talk? Why would you do that?

Try it out. Have your PMs call their clients every day for two weeks. Tell me what happens. My guess is you’ll have smoother projects and find some new ones, to boot. But two weeks really isn’t enough. Six months of doing this would be a much better trial.

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

This article is from issue 1138 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.

 

 

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Running your firm during the good times

photo-1446540830250-e2076f9e6917The A/E/P industry is doing well right now, but you shouldn’t get too comfortable.

Right now, we’re having some really good times. A/E/P firms are doing well – some of them are doing incredibly well. We’ve never seen higher growth rates and profit.

Our own firm had a fantastic year. Zweig Group grew by 31 percent in 2015. Our growth projections are 48 percent for 2016. While this is what everyone wants‎, my experience is the seeds of your future problems are being sown right now. You need to be careful instead of careless. Here’s some of what I’m talking about:

  1. Watch out for indiscriminate hiring. When everyone is busy and overloaded, it’s hard to find people who are really qualified for individual roles. So what happens is unqualified people get added because someone is better than no one, and you never know, they “might work out.” This can be disastrous for the firm and the individuals hired for roles they shouldn’t be in, and cause all kinds of problems down the road.
  1. Keep salaries under control. When everyone is working like mad, and the dollars are rolling in, the tendency for many A/E firms is to start throwing money at people. This can be terrible when things slow down! Rather than letting salaries get so high that you have to be knocking the cover off the ball every single month without fail, let your bonus plan do the work of rewarding people for their high performance. Sure, higher salaries are a measure of protection to keep good people from defecting to competitors, but you have to keep an eye on them during the good times and not let them get out of control.
  1. Beware of increasing benefits too quickly and too much. Benefits are “sticky downward”‎ as my old boss, Irving Weiss of The Pickering Firm in Memphis, Tennessee, used to say. That means they go up easily but don’t go down easily. So you have to be careful not to be too generous in the good times and create a cost structure you cannot support during the less prosperous times.
  1. Client service is crucial – don’t take any of them for granted!‎ It is during these good times – when it’s easy to replace any client – that A/E firms start taking clients for granted. This is terrible, horrible, and cancerous in every way. Don’t use your best old clients as a training ground for new people. Don’t ignore client complaints, even when they don’t seem serious. There are always warning signals and when you’re busy it is easy to ignore them or rationalize why they can be ignored.

Yep – good times are always followed by tough times. Enjoy the good times but don’t get carried away!

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

This article is from issue 1137 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.

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Is it time you got employee input?

Screen Shot 2016-02-16 at 11.05.35 AMYou may have an “open door” policy as a CEO or manager, but you could still be seeing your firm through rose-tinted glasses. 

If you want to grow, are having a hard time recruiting or retaining employees, feel like your employees aren’t quite as productive as they could be, or just want to find a way to make your firm more profitable, the opinions and ideas of the people sitting in your office and interacting with your clients, are by far your most valuable resource.

Even if your firm has open meetings, does exit interviews, or you feel that as a leader you are available for employees to voice their grievances at any time, you still may not be getting an accurate picture.  Fear of speaking up, workload and lack of time may be huge deterrents for people working at your firm to offer suggestions or communicate issues. Giving employees an anonymous, third-party method to voice their opinions, ideas, and concerns across a variety of areas is the only way to get a full picture.

In my experience working as a marketing consultant conducting employee surveys and with the Best Firms To Work For program, it’s true that nearly every set of employee survey responses has at least one person who thinks the only thing that will improve their performance is an all-expense paid retreat to Aruba, a 10,000 square-foot ping-pong room, or something equally ridiculous. But for every person who wants fresh bacon available 24/7, there’s usually two with really good and often easy to implement suggestions.

Here are just a few reasons why:

Power in numbers. A single comment, especially if it comes from a known complainer or whistle-blower is much more easily discarded than a written collection of 10-plus comments all presenting similar views on the same subject. Likewise, when small comments get made at different times to different people, they are much more easily discarded.

Metrics. Open responses are invaluable, but having numerical rankings across certain areas allows firms to easily see areas where they need to improve, and also chart improvement over time.

It’s not all bad! You can have a great organization with a lot of happy employees, but unless specifically prompted, people will not often volunteer suggestions for improvement or expansion. Just one person’s idea for a new program or technology that could improve his or her efficiency or a person’s expressed desire to work on a specific kind of project may be all it takes to give a firm awesome new opportunities (and revenues). Positive feedback from employees can be used to help recruit key hires and will even help you win more work!

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

This article is from issue 1137 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.

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The value of irrelevance

Screen Shot 2016-02-12 at 10.31.22 AMMake your firm more valuable by making yourself irrelevant and surrounding yourself with leaders.

Firms that command high market premiums are ones in which the owners are, in many ways, always seeking to become less and less relevant. If you’re the owner of a firm and you’re reading this, you’ve got to be wondering what I mean. What I mean is that valuable firms are those with a wide base of individuals who can step up and lead.

Ask yourself if you could leave your business for 30 or 60 days and have it run the same way that it would if you were there. The less valuable firms are the ones in which the owner is, or a small group of owners are, “the business” – meaning that if you aren’t there, you know that clients won’t receive the same attention, invoices will be paid late, receivables will trickle in, and employees won’t put forth the same effort.

If you have to be there to make sure that the business runs properly, you’ve reduced your market value. If your second in command is paralyzed at the thought of making any decision without scheduling a meeting and obtaining your advance approval, you’ve reduced your market value. If the owner is the business, the next question is what, exactly, does the owner think he or she can offer to a prospective buyer? What do you have to sell?

This is not a theoretical discourse on organizational management. There are multiples and dollar signs attached to the answers to this question. Every buyer that we work with is more interested in the folks behind the top leadership than they are in the guy who wants to cash out and retire.

The firms in which owners delegate operational tasks and client relationships to a motivated next generation of leadership always will be more valuable. When buyers know that your business is able to run without you managing every detail of the company, you’ve just made yourself a much more attractive prospect.

Granted, this is much easier said than done. Entrepreneurs who start their own businesses especially have a hard time delegating. Plus, it’s counterintuitive. How could anyone be as invested in the business as the person who founded the business, devoted decades of time and resources to its development, and whose name is synonymous with the firm’s reputation?

Creating a highly valuable firm requires a great deal of balance. An entrepreneurial leader will foster an entrepreneurial culture. The leader’s passion and drive can become tangible assets if these characteristics are cultivated in leaders across the company. Finding the individuals within the firm who embrace constant evolution and innovative thinking is the first step. The next step is to develop these highly desirable traits within employees and provide opportunities for them to step up and make decisions. Every leader of every firm – from CEOs down to junior managers – should identify their successor and should nurture that individual’s development while at the same time finding ways to hand off more and more responsibilities to their successor. The return on the investment in your own irrelevance will be realized in a more valuable enterprise that is readily marketable.

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

This article is from issue 1137 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.

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Getting value from your strategic plan

1e4331ee10804924bb7174390e870350Here are some tips to get the most out of your strategic plan and realize your firm’s aspirational goals.

How much does a strategic plan cost? If you hire a consultant, pull your senior-leadership away from business and team leadership for a couple of days, conduct the session offsite, and pay for hotel rooms, meals, and transportation, it can be an expensive proposition.

With that kind of investment of time, talent, and resources, it can be painful to realize that so many carefully written, beautifully bound plans end
 up on a shelf, rarely referenced. Maybe it’s time to take this time-worn process apart and focus on practical ways to achieve meaningful change in your enterprise in support of that valuable planning exercise.

Having trodden this path many times over the years with my own firm and with clients since I retired, I’d like to share my observations and advice.

A well facilitated and carefully thought-through strategic planning process can yield a treasure trove of ideas about what you want your firm to be. It can guide you and your team on how you want people to act and collaborate, what markets you want to serve, and what talent “holes” you have that need to be filled. It can specify desired relationships with the stakeholders you rely on to accomplish client work. But a document sitting on a shelf won’t make any of this happen.

From experience, I can tell you your strategic 
plan only gains value when its objectives are understood and acted upon. That will only happen if you’re able to instill your objectives deeply into your firm’s culture such that it changes the actions and attitudes of your people.

Here are a couple of ideas about how to put your plan in motion:

  • Client Service. A dominant indicator of your success appears when your clients are deliriously happy about the way they’re being treated. Is “delirious” too grand a word to use? Not at all. When your teams are listening to your clients, responsive to their needs and wants, consistently checking with them to ensure they feel cared for, they will ask you to do more work for them and recommend you to their friends and colleagues. You can track client satisfaction through all sorts of metrics. Certainly, you can keep a log of repeat and referral business, but nothing is more valuable than a culture in which everyone is expected to have a cup of coffee with a client to find out if all is going well. And this is not just at the principal level, but with all of your team members who have a relationship with a member of the client team.
  • Innovation. Innovation is a common goal of most strategic plans. Nice idea, but how does innovation come about? The best creativity occurs when people with different points of view and areas of expertise collaborate and come at a problem from different directions. Sparks fly, and an idea for something never tried before appears. So, how do you keep people from building walls and hesitating to share knowledge, expertise, and ideas? Encouraging people to reach out to someone with a different point of view can be intimidating. Encouraging people to reach out to someone with a different point of view can be intimidating: “What if they don’t want to talk to me?” “What if they look at what I’m doing and say, ‘That’s really dumb’?”
  • Collaboration. Collaboration requires an open
and trusting culture, one in which everyone feels they “own” every project in the office. Anyone that feels anything less than innovative and thoughtful reflects negatively on the firm and you personally. Employees should be willing, at all times, to pitch in and brainstorm a problem with a colleague.

Instilling that attitude and culture is not a result of writing about it in a strategic plan. It happens when the firm expects it and team leaders model the behavior as they watch work progressing. It happens when leaders lean over a desk or computer terminal to look for ways to think more creatively about the problem being solved, suggesting the team involved reach out to other individuals in the firm who might offer a unique and inspirational point of view. Who knows better than the leadership team where those specific areas of expertise reside? It is leadership’s responsibility to probe, connect and then follow up to see what happened. That’s how a culture of creative connectivity evolves, not because it is written in a strategic plan. It becomes a way of life.

Take a look at each element of your strategic plan and ask: “What specific action, and by whom, will move us toward our plan goals?” Imbed these actions and behaviors into the way things are done on a daily basis. Avoid the trap of assigning committees only to have those committees meet once or twice to debate tasks and actions and then revert to old ways of doing things and get lost in the urgency of the work at hand.

These are just a couple of ideas on how you can make the most of that valuable strategic plan, turning it into daily actions that actualize your plan’s aspirational goals. It’s up to you to develop a new way of life in your firm to make each part of your strategic plan come true.

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 was taken from issue 1136 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? Get a free trial of The Zweig Letter by clicking here.

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