The Zweig Letter: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours?
Lisa Kay: This is a great question. As an industry we need to really work on raising the bar here. We all have stories of the client calling to complain about the $30,000 invoice when they are spending $300,000 in legal advice every month. One of our challenges as engineers, scientists, and architects is that we are not always great at holding tight to explaining the value of our work. We need to get better at that. I have learned that sometimes the client isn’t really looking for a discount or a reduced fee, they just need the justification to explain it to management. Many times when a client calls to question or negotiate the rates we fall right back into negotiating against ourselves rather than working harder on the justification. Over all the firms I’ve worked with, this has been a common issue for principals and PMs alike. Let’s all get trained in master negotiating and learn how to describe our values in terms that resonate with the client’s business.
TZL: Do you tie compensation to performance for your top leaders?
LK: We have created an incentive compensation program that is directly linked to exceeding our financial goals. The program is not only for our top leadership but there are incentives for staff consultants who beat personal invoiced hour/dollar revenue targets each month which allow them to earn up to $1,000 in incentive on a monthly basis. We also incentivize sales successes that are directly tied to our goals. This incentive program was designed to anchor a high-performance and goal-oriented culture.
TZL: Do you share base salary or bonus amounts with your entire staff?
LK: Let’s be honest. It is difficult to keep salaries under wraps when you are proposing on public jobs. Project managers need to build budgets from the ground up and many public clients require the raw rates plus build up. For these reasons, we must have a rate range for each position that we track and update annually for the public proposals. We don’t openly discuss individual salaries but it would be silly of me to imagine the team isn’t aware of their colleagues’ base salaries. We also share the bonus information regularly. I believe in transparent management. People perform better when they understand what they need to do to be successful.
TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your professional life?
LK: The most fun is when the firm is winning interesting and innovative project work and the younger talent gets a rapid path to advancement by learning fast. Providing opportunities for scientists and engineers to learn and rapidly grow their careers, becoming recognized as technical experts by colleagues and clients, really energizes me. Leading a team of people is about creating opportunities for them to be able to grow, learn, thrive, and create great solutions for our clients.
TZL: There is no substitute for experience, but there is pressure to give responsibility to younger staff. What are you doing to address the risk while pursuing the opportunity to develop your team?
LK: This is the most attractive feature of working at Alta. As a young engineer or scientist, Alta is the place to be for rapid growth in a nurturing and safe environment. We give responsibility and allow younger staff to lead their own projects, manage their client relationships, manage budgets, create and execute marketing campaigns, learn and become experts in a specific area, and grow fast. I’ve never believed in some set formula for how long it should take someone to get to a specific level. We manage risk through mentorship, regular check-ins, our structured process, weekly meetings, and scopes/plans for each activity.
TZL: Engineers love being engineers, but what are you doing to instill a business culture in your firm?
LK: We focus on key performance indicators that matter and set goals around those. Accountability is critical in a business and holding folks to meeting our business metrics is fundamental. This means we review our financials together every single month and everyone in the firm knows how we are performing versus plan. We talk about the business and what it takes to be successful. We also talk about why profitability is so important to allow us to do the things we want to do, such as acquire new equipment, experiment with new ideas, and spend money on training and continuing education, among other things.
TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program?
LK: We still ascribe to the seller/doer model, but we also have one full-time business development director who is in the market positioning for the strategic longer term wins and relationships. Since we have gone this direction our number of new client IDIQs and MSAs has increased dramatically.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
LK: People often use the terms diversity and inclusion in the same context but those are two very different things in execution. Inclusion is a way of being, or behaviors. Diversity is easier to solve for in many cases, in my opinion. Ensuring you have created an inclusive culture is a little more like wrangling fog. You may think you have one but it’s important to find out from the inside if everyone feels its inclusive. Are they heard? Do they feel comfortable speaking up even with the contrary opinion or idea? I purposefully stop myself and ask for others’ insights, regardless of if they are different from mine. I am a strong personality and it takes time for people to realize I am listening and considering their perspective, that I value the differences. It requires trust and openness. Instilling inclusiveness as a “way we be” starts at the top by modeling the behavior and expecting it of others.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
LK: I believe people will stick around if they are given opportunities to grow a career and evolve within the firm. Also, most important is having a great team of people who truly enjoy working together. It’s said that people typically don’t leave companies, they leave bosses. Making sure we cultivate great bosses who create great opportunities for employees to grow and evolve is key.
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