CEO and founder of Sam Schwartz Consulting, LLC (Hot Firm #67 and Best Firm #49 Multidiscipline for 2018), a 130-person transportation planning firm based in New York City.
By Liisa Andreassen
“Ownership transitions, especially from founders to the next generation, are quite personal,” Schwartz says. “It’s never too early or too late to start thinking of the future company leaders as the founders’ investment and influence wanes.”
A CONVERSATION WITH SAM SCHWARTZ.
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?
Sam Schwartz: There’s always the possibility of profit center structures resulting in unhealthy competition and undermining teamwork affecting the health of an organization. We struggle with this, but find by making the overall company performance the number one goal and fully sharing credit when offices assist each other, even to the detriment of their bottom line. We need not sacrifice teamwork or company achievements. We use the basketball metaphor – we don’t just count shots made, but how many assists each player makes.
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?
SS: We share general company financials with all staff monthly. We also have monthly executive meetings where we do a deeper dive into the financials. Quarterly, we meet with a wider group of company leaders to give them the full picture.
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?
SS: In the 23-year history of the company we haven’t seen much turnover with our top personnel. That said, this year has brought some turnover. Fortunately, we have a strong “bench” (again the basketball metaphor), so that we haven’t lost a beat going forward. We’ve found that this movement works both ways. As we post top positions, higher quality people are applying.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
SS: We’re always looking for people who can do it all: bring in work, be billable themselves, and manage others. We will always find a place for these people. At the moment, we’re looking to fill several senior level positions for rail, NYC, and special projects. At all times, it seems, we need transportation planners and engineers at entry level to five to 10 years’ experience.
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?
SS: We are in the midst of an ownership transition. As the company’s founder I have, for several years now, been selling stock to employees at a reduced cost while allowing for an investor to purchase shares, too. Ownership transitions, especially from founders to the next generation, are quite personal. It’s never too early or too late to start thinking of the future company leaders as the founders’ investment and influence wanes.
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?
SS: Mostly, we are doer/sellers, but we have several individuals who have brought us into new arenas. We are encouraging them by letting them do what they do best – sell and do. When it comes to successful sellers we go by the doctor’s oath, “Do no harm.” We don’t fix what isn’t broken. Our sellers are backed by a solid proposal group.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
SS: Diversity is our theme for the year and it’s a double-entendre. We’re working hard at being more inclusive in our hiring and promotion strategies for minorities and women. We’re also adding services to our portfolio and widening our geographic reach.
TZL: What are your thoughts on M&A versus organic growth? What’s been the model at your firm? Why?
SS: We’ve had success and problems with both models. We’ve acquired a couple of firms and it took a while, but it’s paying off. We started a few one-person offices in new cities with mixed results, having had to close a couple. Our bread and butter work, transportation planning and engineering, has grown terrifically and organically.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
SS: The world-wide excitement and massive investments from 30 years ago was about moving money around. Twenty years ago it switched to moving information around. Today, and for the next two to three decades, it will be about moving people around. The amount of investment in autonomous vehicles will trip the trillion-dollar mark in a few years. By mid-century (just 30 years away), the AV industry will be worth $7 trillion to $10 trillion. We are taking a leadership role in this revolution and are offering consulting services to the public and private sector. My next book, No One at the Wheel: Driverless Cars and the Road of the Future, to be released in the fall, will spell this out.
TZL: What’s your prediction for 2018?
SS: A good year, but with a high degree of uncertainty due to the political climate.