Wednesday, September 29, 2021

Building Your Firm's Strategic Capacity When You're at Your Limits

Imagine a man drowning in a lake when a passerby wades out part way and calls to the man, "I can teach you how to swim!" That scenario is perhaps not far from how overworked A/E professionals must feel when firm leaders implore them to commit time and attention to the latest strategic venture—be it expansion into a new market, changes in the way projects are managed, or adoption of an expansive client focus initiative—for the sake of the firm's future success.

I know. My job is to promote and support such strategic ventures. These days it's a tough sell as most A/E firms are stretched to the limits with burgeoning workloads, staffing shortages, and stressed-out employees. I was working with a group on a key sales pursuit recently when one individual confessed, "I really don't have time to do this." Then another piped in, "Even if we won the job, I don't know how we could possibly get the work done!"

The frustration is understandable. People are incredibly busy. It's hard to devote time to future outcomes when today's deadlines and crises are bearing down on them, and there's no relief in sight. Yet no responsible firm can ignore taking steps today that will pay off down the road. You have to continue to plan, to sell, to improve, to grow—or suffer the consequences later. What every firm needs, regardless of how busy they might be, is strategic capacity.

I define strategic capacity as the time and resources necessary to properly invest in the firm's sustainable success. This would include such functions as fulfilling the responsibilities of leadership, working towards strategic objectives, training and mentoring staff, developing new business, building client relationships, and making operational improvements. These are all critically important activities that often yield to the urgent pressures of project work.

How much investment is needed in these activities can be debated. But once they have been relegated to the realm of relying on leftover time to do such important tasks, it's appropriate to conclude that your firm's strategic capacity warrants attention. So what are some steps to increase strategic capacity?

Stewarding the Time

What's your firm's most valuable asset? Is it your staff, your clients, your expertise? Ultimately, it has to be your time—you can't do anything without expending it and there's not enough of it for everything you'd like to do. Remarkably, given the importance of how individual and collective time is used, few firms have a coherent strategy for optimizing its yield. So here are a few tips to consider:

Appropriately value your "investment time." Many A/E firms have such an obsessive focus on utilization, that employees begin to view nonbillable hours as something to be minimized. Consequently, these hours tend to become devalued, resulting in them being loosely managed at best. Consultant David Maister suggests reimagining nonbillable hours as "investment time" wherein you're shaping the firm's future, while complementing the income-producing hours devoted to serving clients. Proper proportions of both are essential to sustained success. It's difficult to grow your strategic capacity in a firm culture were seemingly only billable time is valued.

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Manage nonbillable activities like projects. Having properly valued your nonbillable time, the next step is to maximize the return on those hours. The simplest advice is to treat those activities like project work. Define and assign tasks, develop budgets and schedules, monitor progress, review work products, and take corrective actions when necessary to keep things on track. It's important to budget people's time for these activities, and then monitor their "utilization" of those hours. Managing nonbillable functions as project work means giving them the same level of discipline and accountability.

Pursue collective time management strategies. Over the years, I've asked hundreds of A/E professionals if they had a system for managing their time. Only a small minority indicated that they did. That's problematic, especially when faced with heavy workloads. The problem is multiplied when these individuals are working in groups where there's no structure for collectively optimizing time usage. In team settings, time management becomes a shared responsibility.

A good place to start is addressing meetings. Many professionals spend much of their day in meetings that are either of questionable value or are disorganized and inefficient. This post provides some guidance on how to have more productive meetings. For those in the office, I recommend tracking interruptions and taking steps to reduce unnecessary ones. But don't go too far in eliminating those informal, non-work-related conversations that help build staff camaraderie. Another suggestion: Explore work process changes that can improve overall efficiency.

Balancing the Load

Even in the busiest of firms, there are usually opportunities to improve how the workload is distributed among staff. Of particular concern to strategic capacity is making sure that senior leaders, seller-doers, and others involved in strategic efforts have space in their schedules to adequately perform those tasks.

Apply leverage in making staff assignments. The term leverage is commonly known in many sectors of professional services, but is little used in our industry. It refers to the ratio of senior to mid-level to junior staff in proportion to the requirements of the work the firm does. In general, you want to delegate work tasks down the lowest staff level at which they can be competently performed. Positive leverage is usually associated with higher profits because the work involves lower costs to complete and labor multipliers for lower-level staff are typically higher. What you don't want to see in most cases is managers running high utilization rates while those under them are being underutilized on project work. Besides better financial performance and enhanced staff development, positive leverage helps preserve strategic capacity.

Urge leaders to invest time in developing and enabling those they lead. Saying that leadership requires spending time on it is stating the obvious, but how often do you see firm leaders who spend too little time fulfilling that role? When they are too busy with project work, business development, and administrative tasks to engage their team to any meaningful level, the team (and the firm) suffers. I have long advocated the Time Investment Principle as a critical leadership commitment, meaning that leaders multiply their impact by investing appropriate time enabling others to be more productive. That's strategic capacity in action.

Getting Staffing Right

Saying that leaders must lead and senior professionals must maintain some strategic capacity is all well and good, but many are finding this exceedingly difficult because of inadequate staffing. They have no choice but to step in and perform tasks that ideally should be done by more junior staff. The pervasive talent shortage is not likely to abate anytime soon, so your firm would do well to determine how you're going to deal with it. A few suggestions:

Determine what your staffing mix should be. Most firms recruit and hire as the need arises, without any meaningful long-term plan. At the same time, it's common for firms to have a less than ideal staffing mix should they even try to achieve favorable leverage. The norm in our industry is to be a bit top-heavy, as depicted below.

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Hiring only on an as-needed basis often perpetuates the problem of having a poor staffing mix. The better choice is to have a long-term (say three-year) staffing plan that projects the ideal mix in light of the types and volume of work you expect to be performing. You'll want to factor in any planned changes in markets or services during that period, of course.

Explore alternative staffing options in response to the talent shortage. The consensus of experts is that the shortage of engineers and other technical professionals will continue for the foreseeable future. So what is your firm doing about it? Simply stepping up the recruiting effort won't likely suffice. Other technical industries are looking at staffing alternatives and technology-driven automation. What steps might our industry take? Let me suggest four alternative staffing strategies, the first three of which I have a good deal of experience with:

  • Dividing the project management role into two roles. The limited availability of PMs is commonly a bottleneck in staffing projects, plus PMs often have strategic non-project roles within the firm as well. By dividing the PM role, you can substantially increase their availability for both project and internal investment work. This works because 60-70% of project management is typically administration and coordination that can be performed by a more junior professional. I've used this approach with great success with both my last employer and some of my clients.
  • Training administrative staff to do more project work. They can be part of the solution in relieving the PM of project administrative duties. But don't stop there. They can also be trained to conduct technical project tasks. When the risk assessment group under my watch as operations manager became overloaded with work, I met with them to identify ways to address the problem. Part of the solution, we concluded, was to train admin staff to conduct risk calculations. This unloaded substantial hours for senior members of the risk group, and enabled us to charge out admin staff at a much higher billing rate. I also delegated several aspects of my job as operations manager to admin staff, which they performed capably, enabling me to focus on more important matters.
  • Supplementing your staff with independent affiliates. Most A/E firms at least occasionally hire subconsultants to build their capabilities or provide bench strength. My recommendation focuses on free agent professionals (sole proprietors) who can serve as an extension of your staff when needed, usually more seamlessly than working with other firms. I advocate building a cadre of what I call independent affiliates, getting them under contract, collaborating on sales pursuits, and bringing them in on projects as appropriate. Besides expanding your firm's resume, using independent affiliates can help free some of your senior professionals' time for strategic work.
  • Developing a paraprofessional level within the firm. The law profession did this years ago, to great success. Why hasn't our industry given it serious consideration? Perhaps the time is right to do so when technical professionals are in such short supply. AIA chief economist Kermit Baker floated the idea years ago, but I've not seen evidence the proposal gained much traction. Many firms have default paraprofessionals in their ranks—non-degreed but talented technical practitioners—but very few seem to be intentionally pursuing such individuals. Perhaps your firm can be the exception, helping you create the optimum staffing mix that carves out more strategic capacity without compromising the bottom line.


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