It is not easy to be the best. It requires hard work and a boldness of action that defies normal practice. Too many architecture and engineering firms are struggling to thrive and grow in today's economy simply because they haven't given enough attention to developing best practices.
PSMJ has discovered something that is both profound and apparent—that the most successful firms, those firms with the best practices, are fundamentally different from the average performers.
Every year, at least half of the top 10 percent of firms in our surveys were also top performers in preceding years. This gives us the opportunity to study them and identify what makes them so successful, and size is not a criterion.
The following are the characteristics we see in the best firms, which we call our “benchmark firms.” While no firm does all the things we describe, our benchmark firms do many of them. These firms:
1. Have a purpose with a vengeance. The best firms have strong and visionary leadership, sometimes even dictatorial leadership. Although innovative and creative, these firms don’t place a particularly high value on design awards. They let their clients define quality. And they exceed promises made to clients. These firms have flat organizations with lean project teams and highly billable principals.
2. Use guerrilla marketing. The top firms are proactive in their marketing: They don’t wait for RFPs. They identify the clients they want to work for and develop tough strategies to capture them. Once they have clients, they don’t let them go. Principals stay very close to their clients and endeavor to know their business better than the clients themselves. Their goal is to establish such a strong relationship with clients that they get 100 percent of their clients’ work wherever in the world it occurs.
3. Build kick-butt project managers. The best firms push authority down to the lowest level. The project manager’s job is to make sure the client is ecstatic—and the firm makes at least the expected profit. These PMs stay on top of their jobs’ financials. The PMs that rise to leadership positions at benchmark firms are not just very good at managing projects—they also excel at selling all the services the firm
has to offer to the client. They know their clients and exceed promises all along the way. When problems arise, these project managers don’t hide behind their desks. They take responsibility and communicate with their clients. They do not allow for surprises later on in the project.
4. Value their people. Firms that deliver services live or die by their people. Benchmark firms recruit only the best people to work for them. And they keep these best people motivated by giving them room to grow—these firms’ leaders are most often developed from within. These firms have lower than average turnover, though not the lowest. These firms invest in their top people—they really understand that people are their most important asset, and they act like it. And they don’t tolerate non-performance.
5. Are highly profitable. Benchmark firms know that nothing else matters if the firm is not financially successful. Lump-sum contracts and incentive clauses are the way they do business. They manage cash. They keep on top of their receivables. They charge according to value provided, not cost incurred. They control costs, sacrificing neither the long term for the short, nor the short term for the long.
6. Embrace technology. Before these firms decide to implement new technology, they make sure there is buyin from all of the management and commitment to see it through. Management understands that adjusting to new technology can be a great frustration for many employees,and they make it their job to build support for the transition. These firms make sure that there is a short implementation
period to set up the technology and train users. This swift transition allows for immediate payback on the technology.
7. Have an ownership transition plan in place. Benchmark firms always think about the future and have ownership transition plans in place that reward performance over loyalty. They understand that a solid plan can take up to ten years to carry out. At the same time, all employees understand what is expected of them before, during, and after the transition. When it comes to choosing new leaders, these firms define criteria for leader selection leading to the top position. When clearly stated, the leadership selection plan lets junior employees know where they stand and what it takes to get to the next rung.
8. Consistently benchmark. The top firms constantly benchmark their performance against well established business performance measures. They don’t just look at industry data, but also dig out the benchmarks within their firm’s size, type of service, geographic location, marketplace, and type of clients served. They don’t just find themselves as part of an elite group of firms; they work at getting there. Also, these firms tie their reward systems directly to the achievement of these goals. They don’t reward their staff for “median” performance.
9. Lead others to accomplish strategic plans and business plans. The planning process in top firms includes all key people. Staff is allowed to offer input on how to reach measurable business goals, and they believe in the vision and purpose of the firm. These firms allow for flexibility in their plans, as they know that unforeseen changes naturally occur. They also return to repeat the planning process by assigning smaller goals, such as six-month strategies and action plans or one-year objectives. Finally, even when these firms find themselves at the top of their field, they don’t rest—the best firms find ways to do great things even better.
This article is an excerpt from PSMJ's complimentary ebook, Five Must-Have Skills for Future A/E Firm Leaders, a clear and concise overview, direct from PSMJ’s architecture and engineering industry experts, of the ever popular subject of developing emerging leaders. This complimentary e-book gives an overview of the skills needed to develop your firm's top-performing employees.
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