Nothing prepares you for the challenges of managing a firm like putting your feet to the fire and learning from everyday experiences.
When I started in my career, I absolutely loved designing, and I still do. In my excitement to learn the business and see projects built in the field, I would work 60-hour weeks. I craved the opportunity to build my skills so I could work on future exciting projects. And then, after a few years down this path, something happened that changed the course of my career: Two key people left the company I was working at to start their own firm, and they offered me an opportunity to join them as their first employee, along with a chance to invest in the firm.
Since that day, 33 years ago, I have gone from an EIT with a startup civil engineering firm to the president and senior principal of a multidiscipline firm with four offices and 120 employees in two states. I was fortunate to be involved in the management and growth of our firm organically and learn the nuances of building the business along the way. I was also fortunate to work with talented principals and professionals who are driven by client service and who share a mutual respect. As our company grew, I also grew in my profession and in my ability as a leader.
Nothing prepares you for the challenges of managing a firm like putting your feet to the fire and learning from everyday experiences. However, you must also try to connect with others in your industry who share common experiences. You can do this by meeting with other firm leaders to discuss challenges and opportunities for improving your company, and our industry, or perhaps by seeking out printed resources. I have been a huge fan of Mark Zweig and his writings over the years. Reading his work, I would think to myself, “This guy really understands what we are dealing with day-to-day.” I genuinely appreciated his thoughts and wisdom, and I am grateful to have an opportunity to share some key big-picture recommendations that I have for managing a firm:
- Do good work and develop relationships with good clients. Building a reputation for quality and developing productive long-term client relationships is the most important element of success. Good clients create opportunities and build stability.
- Understand what makes a profit, and attend to your receivables. This may seem simple, but you’d be surprised how many in business do not understand their true costs. I could write an entire article on this subject alone. Spreading out indirect costs equally to the employee, and then adding direct costs to determine the appropriate rate to charge is essential in business. Generate your fees using standard rates instead of multiplier rates. Getting caught in the multiplier trap can cause you to lose money. This goes against the conventional wisdom of the multiplier that many public contracts dictate. You also have to be paid for your work. We add value in our business, so don’t hesitate to use all available means to collect from an unpaying client, and do not leave your receivables unattended.
- Diversify your client base. Build a diverse client base with an array of public and private work. Public agencies, architects, developers, and institutions make up a broad range of clients that provide consistency when sectors of the economy are experiencing a downturn.
- Trust your judgement and have thick skin. As you step into a leadership role, realize that people may perceive and treat you differently. This was honestly hard for me, but it is human nature. Making tough decisions can also make you feel a bit isolated. However, making tough decisions is your job, and even if you do it with the best overall intentions, you may open yourself to criticism or second guessing by some. Trust your judgement, because you have insight on the big picture. When you make the right decision, stay with it, and when you don’t, adjust it and move forward.
- Identify bureaucracy creep and don’t “spend a dollar trying to save a dime.” Building a platform that develops staff and serves the client is important. However, I would advise a new manager to see how they can adapt to the current situation and not make too many changes for the sake of change, until they really understand the system they are working with. Guard against bureaucracy creep and ensure that every dollar spent adds value to your business. The revenue side of the business can far outweigh spending time tracking pennies. This means keeping the billable staff billable, and limit administrative tasks that provide no value other than to be part of a system.
- Encourage and reward the unsung heroes. Look around your firm and see if your staff have advanced in their careers. Have you created opportunities and incentives for those who want it? Have you seen someone extraordinarily talented rise through the ranks, regardless of age and background, because they truly were an unsung hero? Identify those special individuals and reward them for their hard work and commitment.
- Communicate. People expect you to communicate and respond quickly. We have smart and talented people in our industry who want to know what is going on, and how they can better serve their clients and help achieve individual and company-wide goals.
- Have fun and enjoy life! With meetings, emails, texting, instant messaging, and cell phones, one can easily feel stretched thin and on the edge of burnout. Don’t forget to laugh and enjoy time with the people you work with. Have some fun! Learn to shut off the stress when you leave for the day and take vacations where you can truly get away, recharge your batteries and spend time with your loved ones. Self-care is essential for maintaining a positive attitude and serving those in the company.
Dan Houf, P.E. is senior principal and president at Harper Houf Peterson Righellis, Inc., an Oregon-owned firm that has been recognized locally and nationally as a top engineering and multidiscipline firm. Contact him at dan@hhpr.com.