Dear Reader;
The biggest problems in an AEC firm rarely announce themselves as big problems. They show up in subtle ways... in a strategic plan nobody really believes in, an office that has slowly fallen into disarray, or an emerging leader who never gets into the room. Strong leaders learn to recognize the trouble signals early. Here are five tips that may seem unrelated on the surface, but each reveals something important about how well your firm is being led.
Do you have any questions about any of these tips? Perhaps you wish to share some feedback? Maybe you need some guidance or support on a challenge that your firm is facing? Let me know in the comments.
If your strategic plan isn’t delivering results, optimism might be the missing ingredient.
We often talk about execution as the critical ingredient to strategic plan success. Of course, that is one critical ingredient, but there is a more nuanced one that really makes or breaks success. It is optimism. Put simply, optimism is the belief that desired outcomes can be realized with the right inputs. If a leadership team doesn’t firmly believe in the vision for the plan (and put that belief proudly on display via their actions in the firm), cynicism and negativity take over. We live in uncertain times, but good leaders don’t get overly focused on what could go wrong. They see the upside, the prize, and the pathway forward for the firm. That mindset is contagious and that is where the magic happens.
A messy office is often a sign of a messy firm.
I’ve walked into a lot of AEC firm offices over the years and one thing has become consistently clear to me. A messy office often translates into a firm with volatile financial performance, not enough institutionalized processes or investments in infrastructure, and a not very scalable business model. To be clear, this has nothing to do with office location, size, or even design. Even firms with modest offices in the most unassuming neighborhoods can be amazingly well-run organizations. The “messy” firms are the ones with a reception area that hasn’t had a receptionist in five years and that has become a dumping ground for mail, files, etc. The “messy” firms are the ones with offices filled with scratched up walls and drawings and files from projects that were completed 20 years ago. A clean and organized office can go a long way to creating a clean and organized culture.
Stock redemption liability bubbles should never be a surprise.
A stock redemption liability bubble occurs when a large amount of company stock is likely to be redeemed in a relatively short period (usually because a group of senior shareholders is approaching retirement at roughly the same time). You know the ages of your shareholders, how many shares they own, your stock valuation, your redemption terms, and the likely timing of retirements. Put those together regularly and maintain a 10-year forecast of the cash obligations well before they arrive. The forecast should include retirements, shares likely to be redeemed, projected stock-price appreciation, required cash payments, and the capacity of the next generation to purchase shares. This forecast also lets leadership stress-test the system (e.g. what happens if the stock price appreciates 10% annually? what if three major shareholders retire two years earlier than expected? What if profitability drops just as redemptions peak?) and install protections to smooth out bubbles in the firm’s buy/sell agreement, such as giving the firm the right but not the obligation to begin redeeming stock when a shareholder reaches the age of 55.
Client meetings are one of the most effective (and underused) leadership development tools.
Formal leadership training and coaching should definitely be a part of the mix, but real-world client meetings are an unmatched opportunity to put emerging leaders into situations where judgment, communication, and relationship skills all matter at once. Even just riding along as a notetaker, one learns to listen effectively, to translate conversation into action, and build business (not just technical) acumen. Beyond this, they demonstrate executive presence as potential future leaders can see how senior leaders establish credibility, handle disagreement or ambiguity, deliver bad news, push back on unreasonable requests, and navigate uncomfortable conversations. Ready to take it even further? Don't just bring emerging leaders to client meetings to observe. Give them a role. Have them present one section, ask a particular question, explain a recommendation, or lead part of the discussion. Over time, increase their responsibility until the senior leader becomes the observer. If you want to develop your next generation of leaders, stop protecting them from your most important client conversations. Bring them into the room.
Most M&A transaction announcements are terrible because they are missing this.
They are terrible because they explain what is happening but never explain why it is happening or how this is beneficial for a client. Why are these two firms better together than they were apart? Most announcements just provide long-winded bland word salad about aligned cultures, complementary capabilities, and a shared mission. That all means absolutely nothing to a typical client. In fact, it is more likely to stoke fear of higher fees and slower service. Instead of saying “The acquisition strengthens our ability to provide best-in-class services to our clients.”, put yourself in the mind of the reader and explain specifically how this merger or acquisition will help them with specific capabilities, geographic reach, or improved project delivery.
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