CEO of Apex Companies, LLC (Hot Firm #41 for 2017), a 700-person environmental engineering firm based in Rockville, Maryland.
By Liisa Andreassen Correspondent
“There is nothing that drives value creation for an organization more than organic growth,” Fabianski says. “Internal growth strengthens the core business, creates new opportunities for employees, facilitates investment in new services and solutions, and organic growth comes without the culture fit challenges and turbulence of acquisitions. Organic growth is also difficult.”
A CONVERSATION WITH DAVE FABIANSKI.
The Zweig Letter: There are A/E leaders who say profit centers create corrosive internal competition for firm resources. What’s your opinion on profit centers?
Dave Fabianski: When properly structured, profit centers can serve as vital growth engines for the company and if they’re managed properly, the internal competition can be constructive versus corrosive. That said, success depends on an effective organizational design (including having the right people in the right roles), and clarity in purpose, goals, and incentives. There are challenges with profit centers, but done right they can help facilitate organic growth and margin improvement that otherwise may not be realized.
TZL: What’s your policy on sharing the firm’s financials with your staff? Weekly, monthly, quarterly, annually? And how far down into the org chart is financial information shared?
DB: It’s important for staff to know how the business is performing and what the outlook is for the future. Keep in mind, the distribution of sensitive financial information needs to be controlled. There are some key performance indicators that need to be looked at weekly or bi-weekly to make timely management decisions, while other information is best shared monthly or quarterly. I’ve been in small, mid-sized, and large public companies and what I’ve found consistent in each is that most staff members are interested in financials that are presented in the context of what it means for them (i.e., job security, growth opportunities, investments, and bonuses).
TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms?
DF: We do our best to maintain a work environment that is enjoyable, stimulating, secure, and fulfilling. I know that sounds “pie in the sky” but if these things are missing, we risk losing our best people and future leaders. We also need to ensure that high-potential employees are identified early, set on a development (growth) path, and then given the opportunity to take on bigger roles and greater challenges. They can’t be stuck in a role that has no upward mobility or they’ll be gone. Finally, if we want to keep the best and brightest then they need to be working for, and with, others who are the same. “A” players want to work with other “A” players so objective and effective performance and talent management is critical.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
DF: Qualified and capable project managers. PMs are your day-to-day face to the customer and they are in the critical path from project inception to close-out. Project execution, safety, customer satisfaction, financial performance, etc. are all greatly influenced by the PM. As we grow, we need more of these folks and they aren’t easy to find.
TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
DF: The value of your company is based on how well positioned it is to deliver sustainable performance and value creation in the years ahead. Succession planning needs to start years before transition planning.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
DF: We understand that to maintain sustainable growth we need a combination of direct “go to market” BD professionals and strong seller-doers across the business. Different opportunities require different approaches. Sometimes the last person the customer wants to talk to is a sales person. On the other hand, technical staff are often not comfortable selling. We need both to be successful.
TZL: The list of responsibilities for project managers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?
DF: You have to know your PMs and understand what motivates them and also what their capacity is. There isn’t a single recipe for managing burnout. But regardless of the individual, they need to feel recognized and rewarded for their achievements and they need the support of their reporting chain and corporate. Eliminate unnecessary reports and layers.
TZL: What is the role of entrepreneurship in your firm?
DF: We’re more focused on execution and innovation than entrepreneurship. New ideas and opportunities to pursue are welcome, as long as we don’t get out over our skis. True entrepreneurship doesn’t always come with acceptable time horizons and manageable risks. The spirit that comes with entrepreneurship is great but I’d rather see us think more in terms of innovation.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
DF: The general consensus of leaders and investors in this space is that the rise of infrastructure will create new channels of growth and expansion. We also have continued demand for water services and the rebound in energy (oil and gas) is showing no signs of weakness.
TZL: The last few years have been good for the A/E industry. Is there a downturn in the forecast, and if so, when and to what severity?
DF: I’m not big on predictions. I’ll leave that to the analysts and bankers. Our job is to be well positioned regardless of economic cycles and be ready to pivot if, where, and when necessary.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
DF: I failed to make a change in my management team back about 10 years ago (with a different company) despite my gut telling me that a change was necessary. I didn’t do it because I allowed empathy for the person to keep me from making what was a necessary (and, in hindsight, an obvious) business decision. This individual continued to fall short and it eventually led to the departure of some key talent and the loss of two large customers. My failure to make the difficult personnel decision was a huge lesson learned and one I hope to never repeat.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
DF: There is nothing that drives value creation for an organization more than organic growth. Internal growth strengthens the core business, creates new opportunities for employees, facilitates investment in new services and solutions, and organic growth comes without the culture fit challenges and turbulence of acquisitions. Organic growth is also difficult. It pushes people out of their comfort zones and it’s new territory for those who have never been asked to do it. That is why when you engage in organic growth initiatives you need to do two basic things. First, keep it simple, focus on two or three growth areas at the most. Apply your focus and energy to that and do it the best you can. If one fails, so be it – add another. Don’t start with four or five or you’ll probably fail at all of them. My focus is to simplify the journey of organic growth.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
DF: If your historical data is good, it’s one of the best sources of business intelligence you can find. That data allows you to create metrics and forecasts that are proven and time tested. Then you will continuously test and refine those metrics over time. Contract type translates into contract risks. I think the rest speaks for itself as fixed-price or lump sum work is going to be budgeted differently than a rate and hourly based contract.
TZL: What’s your prediction for 2018?
DF: There is a saying that there are two types of predictions – lucky and wrong. So I’ll pass.
Winners from Zweig Group’s Hot Firm and A/E Industry Awards Conference are highlighted in The Zweig Letter, in addition to being celebrated at the conference. Click here to learn more about Zweig Group’s awards.
Subscribe to the electronic version of The Zweig Letter for free.