President and CEO of Wade Trim (Hot Firm #76 for 2017), a 500-person multidisciplinary engineering and consulting firm based in Detroit.
By Liisa Andreassen Correspondent
“Organic growth is going to become more difficult as recruiting staff is getting more difficult,” McCune says. “Firms are going to have to determine whether a reduced organic growth rate will allow them to achieve their strategic goals. If not, they should be prepared to pay a premium for acquisitions that will allow them to add the skill sets necessary to meet their strategic goals.”
A CONVERSATION WITH ANDREW MCCUNE.
The Zweig Letter: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
Andrew McCune: I see very little interest or ability in the next generation taking loans to purchase ownership in companies. Current owners are going to assist the next generation in purchasing ownership and buying them out. They are going to need to do this with company profits. They need to develop a plan and implement it at least five, and likely 10 years, before they want to exit.
TZL: Monthly happy hours and dog friendly offices. What do today’s CEOs need to know about today’s workforce?
AM: I think employees see through superficial attempts to engage them such as happy hours and dog-friendly offices. Today’s CEOs need to make a genuine effort to engage staff, communicate with them, and challenge them. People want to know what’s going on in the company, how they fit in, what they can do to better position themselves for the future, and they want to feel challenged. Don’t sit them at a desk, give them an assignment, and walk away. They’ll get bored, disengage, and leave the firm.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
AM: We’ve never used marketing staff for BD. We have subject matter experts within the firm who have the title “practice lead.” They are responsible for working with project managers to do BD work.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
AM: We are growing in all market segments and geographies. We need to hire positions ranging from entry-level to senior. Hiring at the top levels is likely going to be the most challenging.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
AM: We are adding service lines within existing markets, practices, and geographies. We are sticking to what we know and do well, but expanding the breadth of services and doing it in new geographies.
TZL: The list of responsibilities for project managers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?
AM: We aren’t seeing this, but this may be because we limit the number of projects they have and provide them strong task leads to help manage the project.
TZL: What is the role of entrepreneurship in your firm?
AM: We expect our staff to be entrepreneurial. We bring added value to our clients through the identification of their needs and how we can address those needs. To support the development of value-added ideas, we provide “grants” for staff to pursue ideas that might bring value to our clients.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
AM: Energy work is heating up, particularly pipeline design and electrical grid improvements. This industry is budgeting for their infrastructure improvements. Public infrastructure will continue at its current pace without any public support for infrastructure funding.
TZL: Measuring the effectiveness of marketing is difficult to do using hard metrics for ROI. How do you evaluate the success/failure of your firm’s marketing efforts when results could take months, or even years, to materialize? Do you track any metrics to guide your marketing plan?
AM: We track the number of RFPs that we are invited to submit and our hit rate on all proposals submitted.
TZL: The last few years have been good for the A/E industry. Is there a downturn in the forecast, and if so, when and to what severity?
AM: I thought there would be a downturn in 2018, however I now believe that downturn won’t happen until 2019 or even 2020. I’m not expecting it to be too severe.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
AM: It depends on why a firm wants to grow and how big they want to be. Organic growth is going to become more difficult as recruiting staff is getting more difficult. Firms are going to have to determine whether a reduced organic growth rate will allow them to achieve their strategic goals. If not, they should be prepared to pay a premium for acquisitions that will allow them to add the skill sets necessary to meet their strategic goals.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
AM: We only use historical data as a check when establishing budgets. We develop a zero-based estimate for each project when establishing the budget. Every project and every client is different and should be treated individually. If we can control the scope and schedule, we prefer to use a lump-sum contract as it allows us to establish a fee that best represents the value we bring to the project.
TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms?
AM: We’ve created a staff development office that focuses on the training needs of our staff – both assisting in identifying the training needed/desired and finding the training resources. We also have three levels of leadership development: a young professionals group to assist in the leadership development of interested younger staff, a senior leadership development program for staff in the prime of their career, and we use outside programs such as the ACEC Senior Executives Institute for those advancing into top levels of firm leadership.
TZL: What’s your prediction for 2018?
AM: 2018 will be better than 2017 as our backlog has grown significantly and we don’t see any slowdown in opportunities.
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