Friday, February 9, 2018

AEC Management Solutions publishes "Ten Reasons Many A/E Firms Are Underachieving"

AEC Management Solutions, a firm based in Matawan, NJ that helps engineering firms and architects maximize profits, has published its list of reasons firms underachieve:

10. Lack of Accountability
Lack of accountability can and does occur at levels of an underachieving company.  Whether it is partner to partner, partner to project manager or project manager to staff -- seldom are people held accountable for missing deadlines, sloppy work or over budget projects.

9. Accepting Mediocrity

If mediocrity is your goal you will probably succeed.  This goes hand in hand with number 10.  Expectations of employee performance are often set far too low -- and employees do their best to barely achieve it.

8. Lack of Employee Recognition and Employee Rewards
When hard working overachieving employees are not recognized by their supervisors for their hard work it can be demoralizing.  Instead of their performance raising the performance expectations for all employees, it has the opposite effect.  The overachievers become demoralized and they sink to the level of the underachievers.  Public recognition of their hard work and meaningful financial incentives will go a long way in keeping their performance at a high level and inspiring many of the others to do the same.

7. Majoring in Minor Things
Far too many employees fall into the trap of spending too much time in a reactive state of busy work.  They read and respond to unimportant e-mails, returning non-urgent phone calls, attending far too many unproductive meetings, spending time with uninvited drop-in visitors and so on.  This leaves little time to work on the most important items such as producing the work product or closing the deal on a new project

6. Making the Loss-Leader a Way of Life
All too often in my career I have seen severely under-priced projects justified as a loss-leader.  The theory behind the loss-leader is that once the client sees how wonderful we are at producing high quality work and servicing their needs, they will then become a long term client at full pricing.  There are so many things wrong with this theory that one hardly knows where to start (I will go in to more detail in a future article).  The reality is that once you set the price expectation they will expect it all the time.  Another problem is that you won the project on price.  Won't they also be willing to leave you in the future if one of your competitors offers them a lower price?

5. A Lack of Planning
The strategic plan for many firms can be described as follows:
a. Bring in as much work as we can
b. Do our best to create a great design and satisfy the client
c. Hope that we make some money

This strategy may keep a company afloat during prosperous times, but when the tide goes out you are left there without a plan for weathering the tough times.  With the help of an outside facilitator, the most successful firms take time every year to develop or update a strategic plan that:
a. Assesses their strengths, weaknesses, opportunities and threats
b. Outlines what the company will look like in 3 to 5 years, including markets served, services offered, revenues and profits
c. Prepares an action plan where key members of the firm commit to follow-up on the plan

4. Not Communicating with the Staff
All too often I work with firms where the partners are not communicating with the staff on the plan for transforming the firm into something more than exists today.  Given this vacuum of communication, the staff is left to assume there is no plan at all.  The most successful firms articulate their plans to the staff, so every employee can be a pro-active participant in helping to achieve the company's goals.

3. Locked into Long-Term Commitments
When times are good, many firms open branch offices, expanded their existing offices, lease new equipment and so on. When time get tough and employees have been laid off and other overhead has been cut to a workable minimum, theyare left with too much office space and equipment.  Unfortunately there is no easy solution to this once the long term commitment has been made. When signing long term leases, most firms would be better off hedging their bets on expansion. A strategy that I have employed in the past is to negotiate an early exit from office leases without penalty in exchange for paying a higher monthly rent.

2. They are not Recognized as an Expert in a Project Type
Despite all of their fine work theri firm is not recognized as the expert.  This allows firms that have created a better reputation to reach down and win projects that should be theirs.  It is unlikely the better reputation firm will best serve the client's needs.  However they have created the perception in the clients mind that they will do a better job.

The fact that your competition is recognized as the expert did not happen by accident.  Most clients cannot tell the difference between good design and great design.  Your competition created the perception of expertise through a well thought out plan that includes a compelling marketing message, interesting website, professional marketing materials and a well executed campaign. There is no reason they cannot do the same.  But they should remember that this is no time to be humble.

1. Not Reinvesting in the Company
When times were good, many firms did not have a plan to reinvest the profits into the company.  Most, if not all, of the profits were taken out of the company for the benefit of the owners, or to avoid double taxation.  This is fime when the economy is humming along but when things turn south, the company is left starved for cash and unable to invest in the needed technology, training and marketing. When are good, be sure to allocate 1/3 of your profits for reinvestment in the company.

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