Whether it’s growth, ownership transition, diversity and inclusion, or technology, firms shouldn’t shy away from change if they want to be successful.
Change is inevitable. The AEC companies that prepare for and encourage change not only have a much better chance of survival – they are much more likely to thrive. The key is to deflect the changes that result in negative consequences while embracing changes that create intelligent disruption and allow companies to become stronger, more robust, and more viable. More importantly, the leadership team must have the vision to anticipate and analyze changes before they materialize.
The playing field constantly changes, so it only makes sense that companies shift accordingly. Companies must proactively initiate internal changes rather than simply react to external changes because, at that point, it may already be too late.
- Mergers and acquisitions produce immediate change. The moment a merger or acquisition is finalized, both companies are forever altered. Therefore, it’s critical that the union is harmonious and advantageous for both entities. Both companies need to thoroughly evaluate one another to ensure cultural compatibility, financial soundness, and the structure of the “new” firm going forward. Remember that, to some degree, both firms will change. When companies combine, it is essential to identify professionals who want to be leaders, not just passive participants. To make mergers and acquisitions work beyond the honeymoon period, leaders at every level must stand up and take responsibility for the integration. Those who lead through the integration process end up as the future leaders of the “new” firm – ushering in change and fresh ideas that invigorate the team, and the resulting growth needed for the firm’s continued success. Through sincere communication and addressing any issues head-on, corporate acquisitions add real excitement and reignite commitment within the parent firm and its shareholders. It brings immediate, substantial change that organic growth can’t match.
- Organic growth is also essential. Yet, organic growth has its own important benefits. Many of the most successful associates are hired straight out of college, then trained on-site to ensure work is accomplished in the company’s preferred and established methods. This homegrown talent doesn’t bring bad habits or previous employers’ methodologies that may not mesh with company culture and standards. However, companies can’t rely entirely on organic growth; it is usually slow – certainly much slower than gaining talent through a merger or acquisition. Let’s say a company has 1,000 associates and through attrition, loses 15 percent of its associates each year. To maintain the talent pool, the company needs to hire 150 associates to replace those lost through attrition. In that case, to grow even 10 percent, the company would need to annually hire 250 associates. Achieving that in a strong economy is difficult when considering the small talent pool combined with constant competition, as associates move to other companies. That’s a significant amount of change, one body at a time!
- Even ownership needs to change. When a firm stops growing, profits stagnate, and leadership doesn’t change as frequently as the market requires, it’s a warning sign – especially if peer firms are thriving. Chances are, leadership is the issue and change is needed. Difficult though it may be, leaders must be selfless and exit when it’s best for the company, not for them. The same people who started the company may not be the right ones to lead it into the future. Companies should strongly consider shareholder agreements, with triggers for shareholders to sell all or part of their holdings when they reach certain ages. No wiggle room, no preferential treatment. Shareholders shouldn’t have the option of hanging on solely for their personal gain. When owners are willing to sell shares at the right time for the firm, and at fair market value, it sends a message that they want the new owners and the firm to succeed. To build and grow a legacy firm, ownership must transition, at most, annually; this consistent ownership invigoration communicates the expectation of excellence at every level. Change in your ownership profile is the sign of a healthy firm; embrace it!
- Strive for diversity and inclusion. Diversity at AEC companies should dovetail with clients’ ongoing increase in diversity, strengthening reputation and parity. A homogenous talent pool can only deliver homogenous solutions. While it is possible to reach a certain level of success without great diversity and inclusion, companies can never truly rise to their full potential without a broad cross-section of talent. The AEC profession hasn’t kept up with the broader pace of diversity, largely because our colleges also struggle to attract a diverse student population. Fortunately, that is changing. Even so, it will take time for the management-level talent pool to catch up and usher in this much-needed change. Leadership must recognize the benefits of diversity and prioritize it to attract more associates offering different perspectives. It starts with your brand, not human resources. Build a brand recognized for inclusion if you want to succeed. Of course, when you show up at a college recruiting fair, be represented by a diverse group of professionals. Diversity attracts diversity.
- Join the technology revolution. Technology is the fourth industrial revolution, and it is changing at exponential speed. AEC companies that embrace technology will thrive, especially those first adopters. Companies that are slow to adapt will flounder and, even more probably, cease to exist. New technologies have fundamentally changed how we work, live, and relate to each other. That is especially true within the AEC profession as technologies such as artificial intelligence, augmented reality, and autonomy are expanded and fine-tuned. The concept of smart cities is at the forefront, as services that include transportation, waste management, product delivery, and communications are delivered in new, more-efficient ways. There are endless opportunities for companies that aggressively leverage new technologies, while those that ignore them are left hopelessly behind. Embrace the change that technology demands!
David Wantman, P.E., is chief executive officer of WGI. Contact him at david.wantman@wginc.com.