Monday, February 19, 2018

Is Your Firm Serious About Its Values?

Countless studies and best-selling business books repeat the same refrain—values matter! The most successful companies typically have a strong set of values that guide all corporate activity. Thus most firms in our business, recognizing this trend, have adopted a formal statement of values or guiding principles. But there is wide disparity in the degree to which these values really impact the firm.

As consultant David Maister noted in his book True Professionalism, there's a big difference between aspiring to follow a set of values and being absolutely committed to them. In fact, he argued, you cannot truly claim to have values if you don't live by them:
Something cannot be called a value or principle if you are allowed to transgress it. Your firm can be said to have values to the extent that there are clear, nonnegotiable, minimum standards of behavior that the firm will tolerate. In particular, whether or not your values are operational (i.e., actually influencing what goes on in your firm) is crucially determined by whether or not there are consequences for noncompliance.
In my experience, most firms, while claiming to embrace the high standards expressed in their values, repeatedly tolerate behavior that violates those values. For example, every value statement I've seen has something about serving clients and treating employees well. Yet there are typically a few individuals in every firm I've worked with whose actions are not consistent with those values.

Are there any consequences for these individuals not supporting the company's values? Not usually, especially if they are key performers. If they have valuable technical credentials or bring revenue to the firm, they are commonly relieved of the responsibility to conform with the firm's standards of conduct. Of course, their prominent position in the firm makes their disregard for corporate values all the more damaging.

Maister wrote of one firm that made the difficult choice of letting a star performer go because he refused to comply with their policies on collaboration and sharing—which were consistent with their values:
The point of the story is that there aren't many firms with the courage to do what this firm did, which was to incur a short-term income loss in order to bet on the long-run benefits of sustaining their values. In most firms, an economically productive professional would rarely (if ever) be confronted about softer "values" issues. As a result, very few firms actually have real, operable values. They say they do, but few of the professionals really believe that they're serious.
Interestingly, many firm leaders seem to fear that taking such a tough stance on values would be disruptive to the company's culture, which is shaped in part by the value of respecting and tolerating differences. But research and experience prove quite the opposite. Employees want to see their employer demonstrate intolerance when it comes to disregard for its values and standards. That's what reinforces the notion that the company really does stand for something.

So what about your firm? Are you serious about your espoused values? Are they lived out in every facet of your firm's operations or merely attached to the wall? Are you willing to enforce them or are they just something nice to aspire to? Do your values guide your company's decisions, motivate your actions, set the standard for behavior? 

Putting Your Values to the Test

Let me suggest that you do a "values assessment." Take an honest look at the role of your firm's stated values in the everyday life of your firm. You might consider the following questions: 
  • Are our employees familiar with our values?
  • Do our values really mean anything to the staff?
  • Do we demand compliance with our values?
  • In what areas are we not acting consistently with our values?
  • Do all our policies and directives support our values?
  • How should we measure performance in keeping with our values?
  • What changes are needed to bring everything in alignment with our values?
This kind of assessment is best conducted with broad employee participation. That way you're more likely to uncover inconsistencies with your values, plus gain widespread support for renewing your firm's commitment to them. I suspect you'll find just how much your values can imbue new vigor and focus to your firm when they're taken seriously—a glimpse of why the best companies place so much emphasis here.

Monday, January 29, 2018

Go or No Go: Keep It Simple

The quickest way to increase your proposal win rate is to do fewer of them. Most A/E firms I've worked with over the years submit too many proposals and win too few of them.

Maximizing your opportunities might seem like good strategy—what firm hasn't won a long shot along the way—but it comes at a cost. Every hour spent working on a proposal with little chance of winning is an hour that could have been spent more productively. With many firms sporting win rates below 30%, that's a lot of hours wasted.

Most firms seem to aspire to be more selective in which RFPs they pursue. They have some kind of go/no go process. But following that process is often sporadic across the firm. Some firms try to enforce it, which frequently leads to people filling out forms without doing an honest analysis.

To increase real selectivity, I think you have to cross two thresholds: (1) you need to sell people on the value of being selective and (2) you need to have a process that's not too burdensome. Let me focus on the latter in this post.

Many go/no go forms break one of my basic rules: "Don't ask for more information than you actually expect to receive." I've seen some that not only ask for a competitive assessment, but require detailed calculations of costs, return on investment, staffing needs, profit potential, and effective multiplier. I understand why all this information is desired, but the problem is that in most cases compliance with such a rigorous process is low.

Do you really need that much data to make an informed decision? I don't think so. Let me propose a simple three-step process that, if followed thoughtfully, will yield the insight you need to make a good decision:

Filter #1. Have we been talking to the client? In my experience, you have a very slim chance of winning if you weren't talking to the client before the RFP was released. You would be wiser shifting the time you'd spend on that proposal to another one with better odds—or out talking to a prospective client in advance of the RFP! So I advocate a "no know, no go" policy. That doesn't mean no exceptions, but that in the vast majority of situations it's no go.

Filter #2. Can we beat the competition—really? It's not about qualifications; it's about winning. In evaluating your prospects, try to project yourself in the role of the client's selection committee. Why would they choose your firm? What advantages do you have over the competition? What shortcomings might prevent you from being selected? 

Yes, I know these are the type of questions that appear on the typical go/no go form. But they often fail to evoke honest assessment. Simplifying the process to three steps, in my experience, helps sharpen the focus on the questions that matter most.

Filter #3. Can we prepare a strong proposal? This is a question that is often overlooked but is critically important. Doing a strong proposal requires more time and attention than I usually see firms devote to the typical submittal. You have limited proposal preparation resources. Spread them too thin, and you limit your chances of success. That's why I prefer to pick my best opportunities and give them my best effort.

Being capable of submitting a strong proposal goes beyond simple resource issues. Do you have the client and project insight you need for your proposal to stand out? Can you assemble the right team? Can you get commitments from your relevant experts? Even if your analysis passes through the previous two filters, you should be wary of a go decision if you're not able or willing to do what it takes to create a winning proposal.

Does this sound helpful? Let me know what works for your firm in deciding which proposals to submit. Or give my three-step process a spin and let me know how well it works for you.

Wednesday, January 3, 2018

Why Everyone Should Be Networking

There was renewed interest in the topic of networking a few years ago as the effects of the recession lingered. And rightfully so, for networking should be the centerpiece of your business development strategy whether the economy is weak or strong.

Now that business is picking up, I expect networking to take on growing importance in recruiting talent as well. With looming shortages of technical professionals, this can no longer remain simply an HR function. Firms will increasingly need to mine the collective relationships of their employees to find adequate new hires to fuel their growth goals.

But there is value in tending your network that goes beyond merely meeting the current pressing needs of business. This came home to me, surprisingly, when I first went out on my own and was in desperate need of clients. It occurred to me at that time that attempting to jump start my networking efforts just because I needed to grow my business obscured the reason those relationships really mattered.

After over 30 years in the A/E business, I found myself pondering what my legacy was. What had I done of lasting value over all those years? That question took on added meaning when my former employer of ten years was acquired by another firm. Virtually everything I had accomplished in that period of time was rendered void in the transaction. Another decade of achievement was essentially lost when my top client was also acquired.

Many of you can point to facilities that you designed as a lasting testament of your professional achievements. I did some design work early in my career, but most of those facilities have since been replaced, improved, or abandoned. What about your designs? I later helped with a few major environmental remediation projects. But the goal of most of those was to leave as little visual reminder of our efforts as possible.

My point is not to diminish the value of our work, but to put it in context. The realization I came to after 30 years in this business was that what really mattered were (1) the relationships I had built and (2) the people I had been able to serve along the way. Whether the job entailed designing, consulting, selling, or managing, the results were best measured in how much people were helped by what I did. And those relationships had irreplaceable value beyond whatever information, referrals, or new work they might generate today.

Networking has unfortunately been miscast as primarily a sales activity. But it is better viewed as a relationship building activity with benefits far beyond selling. If relationships and serving others are the two enduring products of our careers—and I'm convinced they are for most of us—then networking shouldn't be left only to those who are business developers. Everyone should maintain their network of professional relationships.

Networking is a discipline that helps us hold onto those valuable relationships. I must confess that I have done a poor job in this regard, as have many of you. I've changed jobs, changed locations, lost clients, and lost track of some of my favorite colleagues and clients over time. This despite the technological tools that make it relatively easy to stay in touch. But like many of you, I often succumb to the tyranny of the urgent at the cost of tending to the important, less urgent, matters—like relationships.

That's why I'm constantly urging young professionals to develop the habit of building and nurturing their network. Like investing in the stock market or a retirement fund, the installments you make in professional relationships accumulate value over time. And like your nest egg, you will appreciate being able to fall back on those relationships when your current source of security fails—a job loss, career change, business startup, etc.

Of course, stepping up our commitment to maintaining our network is good for us old dogs too. The bottom line is: Make friends and business associates, take care of them, stay in touch, and you'll reap the rewards, both personally and professionally, for years to come. Not a bad legacy either.

Wednesday, December 13, 2017

5 Essentials for Recruiting Success

Before the 2008 financial crisis, the biggest challenge facing A/E firm executives was finding enough qualified staff to meet growing workload demands. The resulting recession solved that problem temporarily. Now firms are hiring again, with staffing levels nearing prerecession levels and the talent shortage rearing its ugly head again.

Perhaps it's time to rethink your firm's approach to competing for top talent. Here are five steps that I think are essential to getting the edge in recruiting:

1. Define your value proposition. Why should someone consider working for your firm? The better candidates have options these days, so you should determine how to differentiate your firm from the competition. Can your firm pass the comparison test?

You need to understand your value proposition. What can your firm offer that most others cannot? Tough question? Well, in a tough talent market you can bet candidates will be asking it, at least indirectly. So you need to come up with the answer. At a minimum, you should address the following factors that today's workers value most:
  • Workplace environment. Do you offer personal attention, flexible hours, a supportive boss, effective teamwork, interesting work? Can you provide any evidence (e.g., employee surveys, workplace awards) that yours is a special place to work?
  • Career development. Does your firm have a strong training program, clear career paths, active mentoring, ongoing performance feedback, meaningful incentive compensation? Can you make a compelling case for your firm being a great place to build a career?
Yes, the standard is high. That's why the process of developing your value proposition is so important. You need to determine what your firm can realistically do to distinguish itself in the competition for talent.

2. Create recruiting-oriented marketing materials. With your value proposition in hand, you now need to communicate it effectively. There are two primary audiences for your message: (1) specific candidates you are pursuing and (2) unidentified prospective candidates out in the marketplace. Both can be served by targeted marketing assets such as your website, brochures, fact sheets, social media, and videos. 

One reason firms struggle in this area is because the HR department is handling it versus the marketing department. What's needed is a cooperative venture between the two functions—or the use of an outside consultant if necessary. Keep in mind that promoting your firm to prospective clients and to prospective employees involves much the same messaging. So it shouldn't be viewed as diverting the marketing department from its primary task.

Committing a portion of your website to recruiting or having materials on hand for job fairs are no-brainers. But here's another option to consider: Take recruiting materials to conferences and trade shows where you are exhibiting. While clients are the usual targets at these venues, many of the attendees are also potential employees. And your firm may be one of the few that are marketing for candidates as well as clients.

3. Commit to a "we find them" approach. There are two basic recruiting strategies (to borrow John Sullivan's terminology): (1) the traditional "they find us" approach that amounts to placing your ad in various places hoping to attract qualified candidates, and (2) the "we find them" approach that involves identifying and actively pursuing the people you want. Many firms in our business use the latter approach in part when they hire a headhunter. But they are often uncomfortable with doing direct recruiting themselves, especially where it involves competitors (see this post exploring the ethics of direct recruiting). 

I'm convinced that the passive "they find us" approach will become increasingly inadequate as the talent market in our business tightens. So how will you find the people you need? Much the same way that you find clients. With clients, you identify who you'd like to work for and actively pursue them through a sales process. A fundamental difference with prospective employees, of course, is that most aren't advertising their availability like clients do through solicitations for proposals.

In fact, most potential employees aren't even looking. One recent study found that only 30% of workers are actively looking for another job. That means only a small percentage of potential candidates are going to see your ad no matter how widely you broadcast it. If they're not looking for you, you need to go look for them. The best place to start is to leverage existing relationships.

4. Leverage relationships for recruiting purposes. Your greatest recruiting asset is your employees who know people. They all have former colleagues and classmates, friends, neighbors, and family members among whom some could become a valuable addition to your firm—or a valuable resource in identifying candidates. The secret is getting employees actively engaged in the recruiting process. I know, most firms offer a referral bonus for this purpose. But most lack a true "recruiting culture" where everyone is constantly looking for candidates to join the firm.

This gets back to having a genuine value proposition. Are your employees passionate about your firm? That naturally spills over into their active engagement in recruiting (with a little direction). At my last place of employment, I was among the many who felt we were working for the best firm in the business. So without prompting, we pursued friends and former colleagues who we thought not only would be great hires, but would be grateful for the opportunity to join our firm. We were successful in hiring many of them, without having to resort to casting the net for unknown candidates. How many does your firm hire through such relationships?

An important point is this: Begin transitioning from activity-driven recruiting to relationship-driven recruiting. Sure, there's a lot of things you should be doing. But a critical goal of your recruiting activity, as it should be in business development, is to develop strategic relationships. 

5. Offer a competitive compensation package. This one's pretty obvious. I only mention it because many firms, for various reasons, struggle to keep pace on salaries and benefits. Small firms often find it difficult to compete. Same for firms that provide mostly cost-sensitive commodity services. Other firms are constrained by high overhead. The problem of salary compression will continue as the competition for talent intensifies, driving up the cost of labor and throwing existing pay scales out of whack. Plus A/E firms will increasingly be competing with other industries—where average salaries are higher than what we pay.

Solutions to these problems are elusive and beyond the scope of this post. But you'll have to deal with the challenge nonetheless. Here are some suggestions:
  • Pay for high value. In other words, be willing to invest above the norm for special talent. This is particularly true for those who have demonstrated ability as practice builders, seller-doers, market insiders, or dynamic leaders. Focus on ROI, not just qualifications and pay scales.
  • Deal with underperforming employees. What does this have to do with recruiting? Paying for underperforming employees limits your ability to pay for better performers. Plus they occupy positions that could be more capably filled by others. Of course, one of the reasons we don't let poor performers go is we're afraid we won't be able to find suitable replacements. That's another reason to be continually recruiting, regardless of openings. Keep the pipeline full and you'll have more options.
  • Consider alternative staffing options. I've explored some of these in previous posts. For example, build your capabilities in part with independent affiliates, self-employed professionals or college professors who can add credentials and capacity without the risk of hiring full-time employees. Teach administrative staff to handle more project tasks. Develop a role for paraprofessionals, similar to what law firms have done with paralegals, to perform work that doesn't require degreed engineers or architects. Perhaps you can expand the capacity of your current project managers—good ones are hard to find—by delegating much of their work to others.
  • Close the gap with incentive compensation. This involves offering a lower base salary with the opportunity to earn above-average compensation through performance-based incentives. Generally, this option appeals only to a small segment of prospective employees, but they tend to be top performers who are confident of their ability to maximize their pay. For this option to gain traction, you usually need to meet the following criteria: (1) the base salary is within the median range of the industry, (2) the earning potential through incentives is substantially above the norm, and (3) the performance metrics are clear, objective, and reasonable.
While compensation is not the most important factor in hiring and retaining talent, it is still important. If you simply cannot compete on salary, you'll have to compensate with a compelling value proposition. In that case, you want to have the candidate "hooked" on the advantages of joining your firm before the subject of compensation even comes up.

So how many of these recruiting essentials does your firm have in place? Yeah, several of them aren't very easy to implement. Welcome to the escalating talent war. It's not going to get any easier for the foreseeable future—which you can turn to your advantage with the right strategies!