10 Actions to Take with an Under-Performing Business Unit

Posted on: 12/07/16

Written by: Charles Nelson, AIA, LFRAIA

Topics: Business Development, Financial Management

“Business units” are a way of segmenting your architecture/ engineering practice; typically by discipline and/or by project type. Commonly, business units are also “profit centers”—that is, they have KPIs—Key Performance Indicators—and performance responsibility sits with the business unit (BU) manager, whatever title he or she might have. BUs are common in large practices and often found in mid-size practices, particularly in multi-disciplinary engineering practices.

If you suspect that one of your BUs is under performing, here is a checklist of actions you should take:

First, ensure that your suspicion is correct. Perception and fact don’t always align.
Look at the “commoditization” profile of the BU, compared to other BUs. If a significant share of the BU’s work is highly commoditized in the market, the BU will have difficulty in raising its profitability. BUs with different levels of commoditization may require different KPIs.
Look at the clients the BU is serving. Does the under-performing BU have one or more aggressive/difficult clients? If so, consider whether the firm / BU needs these clients. If they are strategic clients, consider whether the BU leader has the right skills to effectively manage them.
Ensure that the BU leader really “owns” the BU’s projects. This means that the BU leader must be involved in scoping, fee-setting, proposal writing and fee negotiation for projects. Without the authority that goes with those activities, achieving “buy-in” is nearly impossible.
Look at the BU leader’s interpersonal and managerial skills. Is he the right person in the right place? If the attitude is right, but the skills are inadequate, provide PM training (PSMJ can help).
Talk with (and carefully listen to) the BU leader. Get his/her view of the situation. You might learn something that wasn’t obvious, that you can help fix.
Talk with key team members in the BU, and get their views about how to improve performance. Tell the BU leader beforehand that you are going to do this. They are in the best position to advise you on the BU leader’s skill levels.
After you’ve done all that, meet (face-to-face) with key BU clients, and get their view on your firm, and the BU in particular. You’ll get yet another perspective.
Take a long, close look in the mirror, and – as best you can – ask yourself if possibly you are part of the problem. For example, maybe your expectations have been unreasonable in terms of one or more of the above points. That maybe you haven’t provided your BU leader with sufficient training; maybe that your coaching & mentoring support was not as good as it should have been.
Put all of that together, and take appropriate action. But don’t leave people in the dark as to what is happening, or why. If possible, call all of the BU team together, and outline the problem, the results of your investigation, and the actions you are taking. Leave communication channels open; let all concerned know that you are happy to discuss any aspect of the changes at any time.

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