As the ball dropped in Times Square on New Year’s Eve and 2009 mercifully receded into history, the collective sentiment from the A/E industry was “don’t let the door hit you on the way out.” But will 2010 be any better?

The short answer is that it will be a mixed bag, but one that will probably contain more tricks than treats. Sure, there will be success stories in 2010, just like there were in 2009. A/E firms that pre-positioned themselves in the power and energy sectors are building momentum going into 2010, as are others that focus on infrastructure. But firms that primarily serve private sector clients have a tougher road ahead.

“I’m glad 2009 is over,” says Sam McCachern, Sr. Vice President and CFO of 175-person civil engineering firm, Thomas & Hutton (Savannah, GA). “Even if revenue stays flat or dips a little, 2010 will be a better year for us. We made difficult but critical adjustments in 2009 and now we can expend our energy on what we do for a living instead of trying to figure out what adjustments need to be made.” McCachern says 2009 was an emotional year, but the firm is beyond that now and its leaders, managers, and staff are focused on getting back to the things they enjoy. “We’ve aligned roles and responsibilities with the strengths of our people, and it’s starting to pay off.” McCachern has adjusted his view of success in this economy. “It will be lean, but we have made adjustments to live in that environment. We have a conservative view of the future, so any surprise that comes from the economy this year will seem like a positive to us. Supposedly the downturn officially ended in August, but you could have fooled me.”

Reg Christopher, Sr. Principal with 2,700-person geotechnical,
environmental and construction materials engineering services firm, Terracon (Olathe, KS), says he would have liked 2009 to last a little longer. “I’m not happy I’m headed out of it,” he says. “We were reasonably profitable and it was a better year than 2008. I’m not sad to see it go, but if 2010 ends up being similar, I’d be ok with that.” Christopher has his doubts, however. “Overall, 2010 at best will be equal to 2009, but probably worse. There’s not enough equity to refinance a lot of the commercial real estate, so there will be major banking issues. There’s still no lending going on in the commercial sector. On the public side, we have a tremendous backlog of projects that were awarded in 2009 that we’ll just be getting into this year. We will continue to have opportunities in the public sector, but those might not come to us until 2011, so the first two quarters we’ll be eating through our backlog. The Highway Trust Fund has got no money and there hasn’t been any big push to finance transportation projects. DOTs will be affected by state budget cuts as well. In South Carolina at least $120 million is being cut out of the budget, and that will affect schools, highways, and on and on. The pace of public money will slow in 2010.”

Mike Burns, Vice President of Transportation for 250-person, full-service A/E firm, Crafton Tull Sparks (Rogers, AR) shares Christopher’s concerns about 2010. “2009 was a very hard year,” he says. “And everything tells us that 2010 will be hard, too. We are tightening our belts and grinding through it. But we don’t even have a highway bill yet—it’s not even being talked about. Once it does get resolved, it will still take six months for the states to figure out what they have for money and projects. They’ll probably pass some extensions, but it will be a while before we have a bill in place, and that’s not going to help the situation.”

Regardless of what 2010 brings, it’s clear that A/E firm leaders are bracing themselves for another bumpy ride this year.

- MARK GOODALE

We have seen the economic downturn produce dramatically different effects on leadership teams throughout the A/E industry. In fact, it appears to be bringing out the best and worst in firms. Those teams that are built on trust are rising to the occasion while those driven by fear are stumbling.

Some teams are dominated by leaders who are either driven by fear, drive others through fear, or both. In good times, it might be a tolerable situation, although even then, top performers who are not appreciated or respected will always have one foot out the door. If the firm is not performing, the results of a dysfunctional leadership team can be devastating. Whether it’s demanding unrealistic results, ignoring good advice because it didn’t come from them, or simply being unable to trust anyone, leaders who allow themselves to be ruled, and/or rule, by fear can do irreparable damage to their firms and themselves.

On the other hand, leadership teams that are able to cope in any kind of weather seem to have one thing in common—relationships that are built on a strong foundation of trust. Team members are willing to listen to each other, accept opinions other than their own, and build on ideas together. While there may be stress from time to time within these teams, each member shows a genuine, mutual respect for their partners. They rarely go long periods without communicating with one another and they don’t hold grudges. Leadership teams that have this foundation of trust hit issues head on and move quickly and eagerly to the next challenge. They realize that putting their weapons down rather than pointing them at one another ultimately propels their firms to greater success, regardless of the business landscape.

If your leadership team is fraying at the edges, pull them together, say what needs to be said, encourage others to do the same, then work through the issues. It’s that simple and it’s that hard. If you don’t want to do that, ask yourself why until you get to the root cause. Is it because you just want to keep the peace? Is it because you are too close to your partners and you think you can’t confront them on their performance? (Many leadership teams fear that current owners are going to leave the firm if confronted about poor performance, resulting in potentially unattractive financial consequences.) Is it because you can’t get past some slight you think was aimed at you? Or is it that you have no need for their input in the first place? (In this case, why are they or you still in the firm?) If you really want to build trust, try sharing one of those root concerns with your team. Showing that kind of vulnerability, sincerity, and courage will garner the respect of those partners worth their salt, and they, in turn, will open up to you.

What kind of leader are you? What kind do you want to be? Maybe it’s time to trade in fear for trust.

- MARK GOODALE