A/E CEO Interview Series
A/E firm leaders could never have anticipated the challenges 2020 would bring when they put together their business plans for the year. As 2020 draws to a close, Morrissey Goodale’s A/E CEO Interview Series continues as leaders of four of the industry’s top firms look back at an unprecedented year that forced them to adapt on the fly.
This week’s edition features excerpts from conversations with:
Don Manhard, president of Manhard Consulting, (ENR #356), headquartered in Lincolnshire, Illinois, that provides civil engineering, surveying, water resources management, land planning, construction management, and other services.
Kevin Fitzpatrick, president and CEO of Alfred Benesch & Company, (ENR #119), headquartered in Chicago that provides a broad range of infrastructure-related engineering services as well as civil/site engineering and landscape architecture.
Michael Olson, president of Kirkham Michael, a multi-disciplined civil engineering firm headquartered in Omaha that provides engineering, planning, design, and construction services.
Michael Scipione, CEO of Weston & Sampson, (ENR #131), headquartered in Reading, Massachusetts, that provides interdisciplinary design, engineering, and environmental services.
Morrissey Goodale: How has the pandemic forced your business to adapt in 2020?
Don Manhard: We shut down our offices back in March. We were very fortunate in that for 20 years we’ve been working nationwide and remotely, so we had a big step up on most companies. Our IT department did a stellar job. We had a lot of practice, so within two weeks of shutting down everyone was working remotely and efficiently. As we’ve gotten back in the office, we put in place all the restrictions of wearing masks and social distancing. We have strict rules even if particular states don’t have those specific requirements, and we’ve done a good job keeping COVID out. Some offices are up to 100% back in. Others are 10%, so we vary across the country due largely to differing state restrictions. Some people miss the collaboration, energy, and camaraderie and want to be in the office. Others feel safer at home or like working at home without the commute.
Kevin Fitzpatrick: We had to shift abruptly back in March from 15% remote work to 80% remote work within about a two-week period. We were relatively prepared for that and had the infrastructure in place to do it. We had to upgrade our technology somewhat and become a little more cloud oriented, but we had the base from which to do it. We adapted quite well, but we did have some efficiency challenges—not major ones but on more complex projects where you have to go through several iterations of alternatives, it’s not the same over a Zoom call as sitting together in a conference room. We saw some budgetary challenges on a handful of projects, but for the most part we were able to overcome those on most of our work. We saw some revenue decline with motor fuel taxes, and as a result we saw a few projects pulled back, but for the most part, our clients were able to stick with their programs.
Michael Olson: For us, it just really has become more about being able to adapt. We’ve had a good year. We’ve been able to still achieve our goals in our strategic plan, but we certainly had to be flexible and open-minded to keep moving forward.
Michael Scipione: Like many firms, everything pretty much went on hold for us in mid-March 2020. Luckily, we had pretty good systems in place, and we had actually planned for it a little beforehand when we started hearing about how things were going in China. We checked our IT systems and spent some money to upgrade right before we had to send people home. By the end of March, we started seeing our people much more comfortable with the technology. People adapted very quickly to working online. We were all plugged into Microsoft Teams. Since most of our employees were classified as essential workers, we left every office open, and we did not completely close down. Most of our offices hold between 25 and 100 people, and there would only be a handful of people in the office at any given time, so social distancing, etc., was not a problem.
Clients have also adapted well to online meetings. Obviously, there are cost savings on travel, but the biggest thing we have found is the improved collaboration among project teams working closely with the clients. We work up and down the East Coast and, as an example, may have a wastewater project in Maine but have some specialized talent in Florida that would add to the design. Since everyone is remote anyway, it does not really matter where they are located, and clients appreciate the addition to the project team and accept that the person is not local to the project.
MG: How did the results of 2020 compare to what you thought might happen back in March?
DM: Back in January, I was anticipating 2020 to be perhaps our best year ever, and then the pandemic hit. By April I was worried that we might be returning to 2008 and 2009, and we took steps to cut costs and reduce our vulnerability. We did get the PPP loan, so we were fortunate that when the pandemic really hit that we could keep everyone on. March, April, and May were a bad three months with projects put on hold or cancelled. In May we looked at all the market sectors we cater to, and we identified a number that would probably do well in this environment—industrial, multi-family, and single-family residential. They have been really thriving for us over the last seven to eight months so by marketing hard to those industries, we’ve had a great comeback.
MS: On our construction side, we saw construction stop in Boston and other locations, so we had some jobs put on hold, but on our operations and engineering side, things stayed pretty steady except for that little blip when people were figuring out how to work remotely. When work picked back up, our office staff was actually more productive. Some of our expenses were down and production was up, so we ended up with some strong financial months starting in May. The field work was a bit more challenging, but it wasn’t long before our folks found different ways of doing their work to remain safe. I’ve been very impressed with how innovative our people are. We kept waiting for the other shoe to drop, but the work just kept going on. We are starting to see some slowdown now—not in the amount of work, but in the speed of getting contracts signed and getting projects up and running. The end of the year tends to get slow anyway with our municipal clients. However, it’s feeling a little slower. With production up for the year, we’ve been able to spend some of the money we’ve saved on additional technology.
Finishing up the year we’ll be just a little ahead of budget, and we are going forward with our normal bonus programs and discretionary spending. There has been talk in our industry about whether to retain more earnings this year, and I know some firms are, but we realize that our people have worked really hard and deserve to be rewarded for putting up with the craziness of 2020 and adapting to the challenges.
MG: How are you using technology differently?
KF: To stay connected, we’ve always used Skype for Business, and for the last several years we’ve used BlueJeans for video conferencing in all of our offices. We had been doing that for five to six years, so it’s not completely foreign for our employees to look at screens when meeting. We transfer work between offices quite a bit, so it wasn’t an unfamiliar situation. We have heard recommendations from many experts that there’s no way to overcommunicate in these situations, so we asked office managers to keep in touch as much as possible. Some employees may not reach out as quickly as others when they have questions on a project, so we’ve emphasized that there’s no fault in overcommunicating. We are switching to a Microsoft Teams environment soon and adding Zoom as a backup because we know that a remote work environment isn’t going away anytime soon, and we need to ramp up our audio and video technical communications.
MO: We had to embrace the technology on a more rapid scale than we had planned. We already had people working remotely whenever they had to, but for a period of time early in the year, it dramatically accelerated. Our IT people and everyone took it in stride, and we were prepped and ready to go.
MS: We are doing a lot more signing remotely. Everyone has become more comfortable with working with multiple screens and getting online and sharing screens to work through projects and problems. For the connection to the office, we have changed the remote connection methods twice now, so it’s more seamless and people are able to get into all the files a lot better than in the past. We have one more upgrade that will help with speed, and we are going to get rid of our phone system and use VoIP.
MG: How are you staying connected and maintaining company culture?
KF: This was a concern of ours right from the start of the pandemic. You do lose the camaraderie you have in an office, and you can only do so many virtual social events and happy hours. We just had a virtual ugly sweater contest this past week, and many employees shared pictures of their decorated homes, and even their pets. Things like that help keep us connected. For a firm of our size, a big part of our success is our culture, and we were focused on trying to sustain that culture as we worked remotely. We are introducing more video opportunities to share company news, whether it is through our company intranet or through video town hall meetings, just in an effort to keep everyone in the loop and still feel that they are a part of a big team.
DM: That is a huge challenge. One more I’ll add on top of that is the training of new employees and instilling the culture in them. We are figuring out ways to keep the culture up. Obviously, there’s nothing better than being face-to-face. Short of that, we try to get people together virtually, and I have done videos to the company to keep everyone connected. The fact that we haven’t been completely out of the office except for a short period of time has helped a lot. Part of the reason we want to get people in the office is to keep the culture going. I believe that we as humans work better together when we have personal, face-to-face relationships and not just communicating by email or text.
MS: The concern we have is whether we are losing the personal connections. In the beginning there were a lot more virtual happy hours, but that’s slowing down because people are getting tired of being on video all day. We are working hard to hold owners’ meetings on a monthly basis, and we communicate with our folks about what’s going on in the organization as often and as best as we can. We are making sure our groups are talking and communicating.
In the next edition of the Word on the Street, we’ll look ahead to 2021 and whether 2020 will have permanent ramifications on how A/E firms do business in the future.
If you have questions about this week’s “Word on the Street,” or need help planning for or navigating the New Reality, call Mark Goodale @ 508.254.3914 or email him at [email protected].