Thursday, March 26, 2009

Ready For a Change?

As we've witnessed recently in Washington, change is a popular aspiration but an elusive reality. I know this all too well. As a consultant, I'm typically hired to help a firm improve some aspect of their business. Of course, improvement requires change. I find my clients are often unprepared to tackle the imposing challenge of getting to meaningful change.

But sometimes change is imposed upon us, and we're forced to respond in ways we were unable or unwilling to do previously on our own unprompted initiative. Economic downturns can do that. Hard times can be just the catalyst we need for needed change. Rahm Emanuel's comment "never waste a crisis" was politically motivated, but that's not bad business advice.

One of the most important truths of organizational change is the following: "If the pain of change is greater than the pain of staying the same, change will not occur." There are many reasons change initiatives fail, but this is the most common. There is too much discomfort in changing, not enough in staying the course. So the status quo prevails, often despite elaborate plans and valiant improvement efforts.

The starting point for most successful change initiatives is what some call "the burning platform." In other words, we better jump (into change) or we'll probably get burned. Or maybe we're already getting burned. That's where many companies are today. They're in emergency response mode. Others see the flames advancing and realize it's time to take evasive action. The pain of staying put suddenly makes them more receptive to the difficult changes they only talked about before.

So don't waste the crisis (or the impending one). I wrote earlier on recession cost-cutting strategies and one of the takeaway points I made is to think long-term. Avoid the bunker mentality, hunkering down hoping to minimize the damage, and cutting staff and other costs in reactive fashion. The current difficulties create the compelling case for change, change that may not yield immediate results but will position your firm for long-term success once the economy recovers.

Because the time is ripe for strategic transformations, I'd like to devote the next few posts to how to effectively lead organizational change. Your firm's specific initiatives may relate to anything from business development to project delivery to reorganization to leadership development. Or whatever. The basics of leading change are the same in any case. If you'd like to ask for particular advice for your firm's change efforts, please don't hesitate to do so.

Thursday, March 19, 2009

Service Excellence in Short Supply

As many of you know, I’ve long maintained that superior client service is the best differentiation strategy in our industry. Last week I stumbled across still more evidence to support my claim. The consulting firm Morrissey Goodale recently published the A/E Industry Customer Service Report Card which summarizes their survey of project owners.

Notable in the report is the paucity of high marks for several key service areas. Following are some highlights from the report:

Only 16% of clients gave their A/E service providers an A grade for overall satisfaction. A fourth of respondents gave firms they worked with a C. Sixty percent gave their firms a grade of B.

The lowest scores were largely related to the direct interaction with the client. Only 14% of firms got an A for communications. Project managers received the highest score only 12% of the time. Project management earned the lowest score of all--7%.

Firms also fell short in the traditional basics of project delivery. Schedule compliance earned an A from only 12% of clients, work quality 14%, and budget 20%. Many technical professionals will admit some weakness in the "touchy-feely" realm of client relations. But most like to think they're competent in these bread-and-butter aspects of projects.

Architectural firms significantly trailed engineering firms. In terms of overall client satisfaction, engineering firms were given an A from 21% of clients, but architectural firms from only 10%. Architects also trailed in most other service categories in the survey. Client comments suggested a common conflict between the creative proclivity of architects and the practical demands of clients.

Granted, A/E firms got a solid B grade overall, and no less than an average of B- in any one of the service categories. That may seem good enough. But that’s precisely my point. What is good enough for most firms represents an opportunity to differentiate your firm by going above the norm. And when you talk to clients, you realize that going above the norm is hardly an unreasonable goal.

If you’d like to see the report yourself, I would encourage you to do so. Besides the survey results, the authors include representative client comments and some service improvement suggestions. You can purchase it for download from
Morrissey Goodale for $49.

Monday, March 16, 2009

Keeping Morale Up in a Down Economy

If you play sports, or just follow them, you understand the importance of the mental side of the game. Winners are confident, focused, tough-minded. Losers may be less gifted athletically, but their toughest challenge is usually overcoming doubt. When the weaker opponent is on mentally--or the stronger opponent is not--that's the recipe for an upset.

In the business world, we tend to underestimate the importance of attitude and focus. But you don't have to look far for evidence of the powerful influence of mindset on performance. Just crawl inside your own head. How much does confidence, focus, and attitude impact your work? Now multiply the effect by the number of employees in your firm.

That's why the issue of morale goes much deeper than how people feel. It affects how they perform. So here's the scenario facing many A/E firms these days: Morale is down due to eroding revenues, staff reductions, increased stress, and an uncertain future. But people need to step up and perform at a higher level if the firm is going to turn things around. The leadership challenge is: How can you lift morale (and thus performance) in a downward trend?

A few suggestions:

Don't embrace a victim mentality. It's easy to shift blame to the economy, portraying your firm as innocent bystanders in a malicious marketplace. But many A/E firms are doing quite well despite the recession. Are they merely fortunate or did they earn their good fortune? The problem with blaming outside forces is that it seemingly leaves people with little recourse. Those firms are "riding out the storm" hoping the "economy turns around before too long."

A strong wind can topple a sailboat headed in the wrong direction or propel one to victory in a race. It's a matter of aligning yourself with opportunities and harnessing circumstances to your favor. Victims are in a dour mood these days; victors are busy trying to get ahead of the game.

Get everybody involved. Employees are more encouraged and confident when they feel they can make a meaningful contribution in tough times. It lends them some sense of control over the outcomes. One of the worst things for morale is when firm leaders retreat into their bunkers, hiding behind closed doors, limiting communication with staff, and making decisions that leave out but ultimately effect firm members. Strong leaders effectively engage their people in tackling the company's challenges, and the more people you can enlist, the better. It clearly boosts morale, not to mention the advantage of tapping into more problem solvers.

Develop and commit to a plan of action. Most A/E firms are by nature reactive. That may get you by in good times, but in the current economy you need a plan and disciplined action. Besides the inherent benefits of planning and action, it's good for morale as well. Employees want to know that the firm has charted a course through this economic storm. As noted above, engaging them in the process is even better. As things are fast changing, don't let your plan stagnate. Revisit it often and modify your course as necessary.

Speaking of mindset, let me encourage you to plan beyond merely weathering whatever challenges your firm is currently facing. There is a vast difference between firms that have what I call a "survival mindset" and those with a "success mindset." The former may lead you to develop a short-term corrective action plan, more defensive than offensive in tone. That does little to lift spirits. Whatever short-term corrective actions are needed should be done in the context of a longer-term vision for emerging from the recession even stronger.

Balance honesty with optimism. Actually, to achieve a balance you need to go heavy on the optimism in tough times (that's why a success vision is so important). Perhaps my greatest failure as a manager was failing to realize this fact. I thought it important to be honest with staff about the difficulties we were facing. But I failed to offer enough hope and optimism to counter the bad news. My staff became discouraged and performance slumped when we could least afford it. Thankfully our downturn in business was relatively short-lived. This one isn't, and may go on much longer.

Beware of letting your staff get bogged down in the current reality; give them a hopeful vision of the future to carry them through. But don't whitewash the present situation or paint an overly optimistic view of the firm's prospects. That will undermine your credibility. Do your homework. Get the facts right. Outline a realistic plan. There are many opportunities, even in the current economy, to build competitive advantage.

Be generous with praise and appreciation. We tend to be stingy with this--not intentionally, but by distracted neglect. Now is a time to make it a priority. There is abundant research that points out how important this is, yet receiving recognition and feeling appreciation are typically among the lowest scores I see in employee surveys. Push everyone in supervisory roles to step up their praise for good work and hard effort among their staff. Establish or reinvigorate formal means for recognizing employees' accomplishments. These are simple, but powerful, steps for boosting morale and job satisfaction.

Have some fun. One of the things I did right when leading our office through tough times was to establish the Fun Committee. That group's responsibility was to create activities to inject a little more enjoyment and stress relief into our work week. We had potlucks, special speakers, contests, and other activities--mostly over lunch--that proved valuable in lightening the mood around the office. It was just the tonic we needed to emerge from the downturn stronger and closer than ever.

So what's the mood in your office? Have you taken the time to find out? Among the various strategies you might be exploring to navigate your firm's way through this recession, don't ignore staff morale. It's the mental side of the game that may ultimately determine whether you win or lose in this hyper-competitive marketplace.

Tuesday, March 10, 2009

What Client Surveys Tell Us

I'm in the midst of doing another client survey, this one for an international engineering firm and long-time client of mine. It still amazes me that so few A/E firms do this on a regular basis. I always uncover a few surprises, revealing that firms don't know their clients as well as they'd like to think. Yet there are some consistent themes I've noticed in the many surveys I've done over the years:

Relationships matter. This is an obvious conclusion. Yet firms continue to neglect the basics of managing relationships, seemingly assuming that their technical expertise will carry the day. There are many engineers, architects, and scientists in our business who tend to focus more on the project than the client. But what keeps clients coming back is the quality of the working relationship, not superior technical expertise or work products.

Not surprisingly, clients tend to judge technical performance in the context of the relationship. A client who enjoys working with your firm will be more forgiving of technical mistakes or shortcomings. But a client who finds you difficult to work with will nearly always find fault with your work.

Flexibility is important. I know; this can drive us nutty. Clients who change their mind at inopportune times, who want us to dumb down our designs, who expand the scope but not the budget, who have their own unique invoicing requirements. Indeed, our clients' demands are sometimes unreasonable. But we are also sometimes unreasonably inflexible and slow to adapt to our clients' needs.

The best way to manage these situations is to establish mutual expectations at the start of the project. Discuss with your client how changes will be managed, critical junctures in the project schedule when decisions need to be made (and adhered to), how best to maintain good communication, how performance will be evaluated, what technical and regulatory criteria will drive the project, etc. With mutual expectations, reasonable boundaries can be defined that help enable flexibility without compromising your firm's needs.

Proactive client communication is crucial. One survey found that about 67% of clients who dump their consultants do so because of perceived indifference. Poor communication is at the heart of such perceptions. When the client has to initiate most communications or is contacted only on a "need-to-know" basis, it's easy for that person to assume that he or she isn't really valued by the consultant. We sometimes overlook the fact that good communication is a critical deliverable. Clients depend on timely information and updates to meet internal deadlines, manage budgets, satisfy reporting requirements, and allocate time and resources. Simply meeting contractual deliverable schedules is not enough.

Clients also want to know our thought process—how we reached certain decisions, why we favored one solution over another, what other options were considered. Many technical consulting and design firms are prone to leave clients out of the loop. That means the client's input comes too late—after the deliverable is well developed—forcing expensive revisions and delays. It's better to engage the client early and often, starting with the project management plan, scoping documents, and preliminary concepts.

Clients see our organizational dysfunction. Clients often know more about our internal workings than we'd like. They seem to recognize when departments don't coordinate well, when the PM doesn't keep the project team adequately informed, when deliverable review procedures are not followed, and other such issues. They naturally associate these problems with the project screw-ups that happen from time to time.

When is this a particular concern? When performance deficiencies persist or mistakes recur with ongoing clients. Most clients understand that a few problems are inevitable on every project, and most consultants are responsive in trying to make things right when such problems occur. But clients grow frustrated when their consultants fail to address the root causes of lingering problems. Client surveys and interviews indicate that they know the difference between short-term corrective actions and longer-term, systematic responses to our shortcomings.

The best solution isn't always best. Imagine you're shopping for an economical compact car and the salesman persists in trying to interest you in his line of SUVs. Irritating, isn't it? Yet I'm surprised how often clients complain that their consultants keep offering them the "Cadillac solution" when they wanted a VW. Architects seem particularly prone to this. Clients are left to wonder whose needs are driving the design solution.

There may well be compelling reasons for nudging the client to a more elaborate or expensive solution—regulatory requirements, community acceptance, reduced liability, lower life cycle costs, etc. But sometimes we have to admit it's mostly our subjective preference. We like delivering the "best" solutions because we want to be among the best solution providers. Yet budget-constrained clients are increasingly asking us to deliver "good enough." Keep in mind that a good-enough technical solution is often part of providing great client service.

Bottom line: Make it easy for clients to work with you. Client surveys reinforce the research that indicates that clients value the experience as much as our expertise. Simply put, they want an experience characterized by our concern and their convenience. They want consultants who understand and care about their needs.

Most clients have too much on their plate, so they're looking for low maintenance, trouble-free working relationships. That's why they tend to stick with their current consultants, even if they're not convinced they're the best available. But clients don't like being taken for granted, and the apparent complacency (indifference) of their long-time consultants is a major reason why many eventually make a change.

One way to avoid appearing complacent? Get regular feedback on how you're doing, listen carefully, and make improvements where needed.

Friday, March 6, 2009

Letting People Go With Dignity

There is perhaps no more difficult a task for a manager than ending an employee's employment. These days, economic conditions are forcing many managers to do just that.

For those on the receiving end, the way one is let go is often more hurtful than the layoff itself. I know this firsthand. I lost my job four times over my career. Only once did I feel I was treated with dignity and respect. The other three times, the manner in which I was terminated stung far worse than the job loss.

So if you have to let people go in this economic downturn, here are some things to keep in mind to make it a bit easier to endure--both for the employee and yourself:

Be compassionate. The people you let go in a downturn are often not among your better performers. In some cases, you might actually be glad to see them go. But they still deserve your respect. Care for them as people, even if you haven't been enamored with them as employees.

A layoff can be a terribly disruptive event. One senior engineer I had to let go was forced to relocate from his home of ten years. He bounced around from job to job for a few years trying to find the right fit. The fact that he didn't meet performance expectations provided little solace for me compared with the setback he and his family would suffer as a result of my decision.

I think managers sometimes try to hide their emotions to minimize their own discomfort. They use numbers to rationalize and depersonalize the decision. That's fine to explain the action but not to excuse an apparent lack of compassion. Sharing the pain can go a long way toward lessening it for the employee. I'm proud to say the aforementioned senior engineer is still my friend in part because I didn't hold back expressing how much it hurt me to let him go.

Be honest. I lost my job once on the day I returned from vacation. My boss called me into his office with another employee where we listened to the HR manager on the speaker phone tell us that we were being let go due to "adverse business conditions." The next week I saw a large display ad in the local newspaper advertising my former position.

What the real reasons were for my termination, I'll never know. Unfortunately, mine is not an isolated situation. Managers often use a downturn as cover to let employees go for performance or other reasons without telling them. That's not fair. When an employee is laid off, the first question that often comes to mind is, "Why me?" You may not be able to share the whole truth, but tell the employee what you can. If performance was a factor, say so.

A loss of employment can be a turning point for the laid-off worker. Don't miss the opportunity to provide feedback that may help that person do better at their next job. Sometimes it's a matter of job fit. Suggest what kind of work you think the individual is best suited for. Point out areas for growth. And, of course, show appreciation for the contributions the employee made to the firm.

Don't be too quick to show them the door. At one firm, by the time I returned to my office after receiving the bad news, I could no longer access the network. Someone sat and watched as I packed my things. Caution may be appropriate if you have some reason to believe the terminated employee might behave badly. But to treat everyone that way is bad policy, in my opinion.

I'm not naive. A recent survey, for example, found that 59% of ex-employees admitted to stealing confidential company information. What's not clear is whether that happened on the way out the door or before they were terminated. I also don't know what they included in that category. For example, would one's Outlook contact database be considered company property? Does the firm really own one's relationships? I've even heard of firms taking departing employees' business card files.

If I'm weighing relative risks, I'll opt for avoiding the risk of becoming known for treating laid-off employees like criminals. I'd prefer to give them time to "put their house in order," to set reasonable limits on what information they can take with them, and to allow them the privilege of saying goodbye to former colleagues. As a general rule, the best strategy for minimizing risks to your business is to maintain good relationships.

Help where you can and follow up. Offer whatever assistance you can to soften the blow of unemployment and help the worker find another job. A generous severance package can be a sound investment if the employee leaves with positive feelings about your firm. Point the individual to helpful resources, provide any leads you might have, and offer to serve as a reference (assuming you can provide a positive one).

One simple step that goes a long way: Contact the person a few weeks later to see how things are going, and offer any encouragement and advice you can. Very few former employers take that step. But it can mean a great deal to the former employee.

Besides just being the right thing to do, treating laid off workers well can pay dividends down the road. This is still a relatively small industry, and we often find ourselves reconnecting with former colleagues and associates years later. I've even heard of one former employee who was laid off with dignity later becoming that firm's client. Business conditions may force you to part ways with some current employees, but that shouldn't mean that you have to terminate the relationship.

Monday, March 2, 2009

Finding New Work Is Not Enough

In recent months, I've facilitated several meetings devoted to discussing potential new business opportunities. That, of course, is what you would expect in a severe recession. Nearly all A/E firms are revisiting backlog, unused contract capacity, active leads, and prospective new clients and markets. They're overturning every stone in search of additional work.

What I'm not seeing so much are firms rethinking their business development approach, much less revising it. Is just finding more work enough to survive this economy? Or do you need to focus more attention on how to win more of it? Just doing more of what worked in good times is not likely to gain you a greater share of a shrinking market. Everybody is stepping up the effort. You need to work smarter, not just harder.

If you've followed this blog, you know I've suggested a number of out-of-the-mainstream strategies for boosting your business development success. Check out the archives if you've just recently tuned in. Today I'd like to focus on some business development fundamentals that too often are neglected in our industry. These should be an integral part of your discussions about new sales opportunities:

Focus on improving your relationship-building skills. I commonly hear that "this is a relationship business," but typically get befuddled looks when I ask, "So what is your firm's strategy for strengthening its critical business relationships?" Too many firms seem to take client relationships for granted, even when it's evident that their relationship skills are somewhat lacking.

According to a recent survey by RainToday.com, over half of A/E firm clients are open to switching from their current providers. That statistic cuts both ways, of course. In today's business climate, your existing clients are probably getting more overtures from competitors than ever before. What are the chances of one of them showing more interest and attention to your client than your firm does? Have you taken steps to better serve your current clients?

On the other hand, you may well have better odds at displacing a competitor than you thought. The recession is pushing many clients to challenge the status quo, to make big changes, to look for better value. Your firm could be part of the solution. But don't make the common mistake of trying to position your firm with new clients based primarily on your technical qualifications and capabilities.

It's a relationship business, remember?

Anchor relationships in trust. Building trust is the foremost objective in selling professional services. Why? Because you're not selling products; you're selling people. So from the client's perspective, it's not just "What can you do for me?" but also "Can I really depend on you?" "Do you have my interests at heart?" "How well will we get along?"

Research indicates that there are three primary components of trust: (1) concern, (2) competence, and (3) candor. If your firm is like most, you tend to place the greatest emphasis in the sales process on demonstrating your competence. That's important, of course, but it's not the differentiator that the other two are. Candor refers to your honesty and trustworthiness. Technical professionals typically get high marks for candor.

It's showing concern where we really come up short. According to one survey of clients, only 35% of professional service sellers demonstrated genuine concern for the client. This is a clear opportunity for your firm. How can you do a better job showing that you care about the clients you're talking to? Make this a key part of your business development strategy.

Have a process for converting leads to sales. Technical professionals often recoil at the thought of adding still another process to their work life. I can empathize. But firms that have a consistent and effective way of managing their sales opportunities have a clear advantage. One study found that 70% of sales leads are either neglected or mishandled. What's the rate in your firm? With fewer leads to be found these days, how many can you afford to fumble away?

A word of warning: I've seen several firms go overboard in their zeal to create a comprehensive business development process. Don't loose sight of both the (1) purpose and (2) practicality of any approach you might try to codify. The primary purpose should be to enable, not enforce. Focus on the few activities that will yield the greatest results. Keep it as simple as possible. Don't ask for more information than is needed, nor more than you can reasonably expect to get.

The most important part of your process should be a concentrated and orchestrated effort to win your key sales opportunities. Don't treat all qualified leads equally; give your most important ones special attention. This will involve assigning an "account manager" and "account team" that are responsible for planning and executing your win strategy. You might find the article "Plan to Win Key Sales Opportunities" helpful in this regard.

Show persistent interest in the client. Selling in our industry is often more about chasing projects than building relationships. When the client has an imminent contract opportunity, we're suddenly interested in engaging the client. Otherwise we're likely to limit our contact to the occasional "touching base sales call," if any contact at all. Think clients don't notice?

Be selective; give more attention to fewer leads. That's what it takes to consistently out-sell your competition. Then commit to regular interaction with the client, always bringing something of value to every conversation. Make helping the client, not making the sale, your primary motive for calling on the client. I'm convinced that's the main reason we're not more consistent; it doesn't always serve our short-term self interest.

Building relationships, however, takes time (as reflected in the normal sales cycle in our industry). But it's well worth the effort. Think about it: Where does your most profitable work come from? Probably from those clients you have the best relationship with. Relationships are the foundation of a sustainable A/E business. Sales create backlog which your firm burns every day. But relationships continue to fuel your firm's success over the long term.

So in tough times, don't just focus on finding more work. Take steps to win more than your fair share of what you find. The quality of the relationships you build will take you farther than even the strongest resume or the most persuasive sales pitch. That's one constant in this fast-changing economy.