AE Industry Intelligence: Issue 65

CEOs share what they’ve learned from the past year

As the pandemic fades to grey and before we enter what is likely to be a Golden Age of infrastructure development and renovation, it occurred to me that right now could be a moment in time for the A/E industry to reflect on what we’ve learned about our firms and ourselves from this past pandemic year.

• What did we learn about the A/E industry at a macro level? We’re (a) essential (yea!) in the eyes of public, private, and institutional project owners, (b) resilient—industry profits surged and revenues for the ENR Top 500 increased, (c) agile—we moved to a remote/hybrid work model overnight without skipping a beat, and (d) innovative—we found new ways to serve our clients and engage our people.
• But let’s go deeper. What did we learn about our firms and ourselves as leaders? Well, we thought the best way to capture those lessons learned is to hear directly from the CEOs who guided their design and environmental firms through this unprecedented time. So, we connected with the CEOs of over twenty clients of Morrissey Goodale from around the country to reflect on and share what this past year has taught them about their firms and themselves as leaders. We thank each of them for taking the time to share their candid thoughts and perspectives to help create this narrative of the industry’s shared experiences this past year.
• We’re sharing some of their stories in this week’s column. In some cases, we’ve edited the stories to allow for complete anonymity. But in most cases however, these are the exact words from the CEOs. We hope that these stories help you reflect on what you’ve learned about your firm and yourself over the past year. Maybe these thoughts will allow you to find a way to share with your team what you’ve learned to help them reflect and grow. Or maybe these stories might inspire or help you be a better leader in the future.
• What CEOs learned about their firms over the past year:

About purpose, shared values, and trust

“…one thing that revealed itself to me is that the company values that we had put in place just a couple years ago were beacons of light in an unsettled world. We were able to lead with our values and flex the company to focus our priority on the safety of our community, both within our company, as well as doing our part to protect and serve the communities we live in and serve by working remotely with little disruption to the way we collaborate and deliver service to our customers and each other internally. It was remarkable how adaptive our company was and how seamlessly we were able to transition.”

“From a core value perspective we never lost sight of our core values.”

“Another lesson, there are some leaders that will never ‘get it’ regarding need for compassionate leadership. And, the sooner you remove them from the company, the better. Funny, in retrospect we all recognized their shortcomings, we provided personal coaches but yet, they never really did meet expectations. We always ask ourselves now, why did it take a pandemic to make us do something that was needed all along?”

“We care about our culture, our fellow colleagues and their families, and the clients that we work with.”

“During this last year which was the most unusual and likely the most uncertain in our lifetimes, it required us to be even more vulnerable, to share our concerns, how we plan, how we think, reinforcing our values and principles…character is most tested in times of crises. I am very proud of how our leaders and team have responded, planned, invested heavily, grew substantially and positioned ourselves as a North American leader. Our company purpose and dedication is more resolved and our team is so much stronger.”

“Managing talent was another big lesson. [In the past] we managed the box versus managing talent. The box being, standard work day/week, set number of days off, being in the office, etc. The pandemic blew up the box. We moved overnight to managing talent based on a foundation of trust versus a box of policies and procedures.”

“I learned that our team and leaders have tremendous care for client success, each other and for the success of the organization.”

“Given the divide in the political landscape across the country, it opened the door to the potential for politicizing our approach to employee safety. It was rewarding to see how we stayed above the political divide with the focus on the health and wellbeing of the our people. It was never about right or left, but about us.”

About resiliency, kindness, and community

“Our teams and our people are resilient and will react to change and challenge much better than expected. Trust them, listen to their ideas about the ‘new’ ways to interact and operate. Us grey beards don’t know it all because the studio operates much differently than it did 20 years ago.”

“The challenges this past year demonstrated an entirely different dynamic to [the] meaning [of our tag line]. I am so proud of our team in how we applied our skills and creativity to serve clients, support our team members, and keep the business healthy. I learned how resilient we can be.”

“Kindness – During the pandemic a lot of reaching out to other team members about how they were doing.”

“The staff…were incredibly resilient. Fortunately we only lost a small percentage of our staff for a range of reasons…but our core stuck with it and us, and successfully worked remotely. I continue to be amazed at how well all of us worked.”

“Our employees, really almost all of them, are resilient and really banded together when the pandemic hit. They prioritized their jobs even though they had a lot of other things (health, childcare, aging relatives, cramped conditions) on their minds. We need to remember that as we bring them back and show respect for their needs and not judge them about their feelings on virus, vaccine, or work from home.”

“We are a very resilient firm and were able to quickly adapt our operations to pandemic mode.”

“I found out we had some very articulate, creative and intuitive people working at the firm; I saw teams/departments/divisions setting up video competitions with others within the company across the US with no pushing from leadership. I found others that created support groups for single parents, others to address burn-out. The common challenges faced our employees became a rally for creating an uncommon (in a good sense) sense of community.”

“Friends – the company is comprised of close friends who looked after each other during the pandemic.”

“[It]… set the stage for many to develop into compassionate leaders. Now, leadership was experiencing the same home-bound challenges as their staff; even the DINKs (dual income no kids) had to adjust. Anyone with kids going thru home-schooling could sympathize with their direct reports. The hardship was common upon all levels of the organization- no proletarian revolution was going to occur. The suffering was equal.”

“Culture- Our commitment to create a ‘culture’ of an employee centric organization really paid off.”

“Our brand/reputation, is stronger than I had realized, as I was contacted on numerous occasions for advice and feedback on how we were handling pandemic issues. Some colleague firms saw us as a barometer of sorts.”

About the importance of a cohesive leadership team

“Tight leadership team – all came together during the pandemic to make sure all employees were taken care of.”

“The question you have raised is an interesting one. The opportunity to face adversity is something that occurs only a few times throughout an entire career. The opportunity of adversity in a word is validation…is the culture, strategy, and alignment of the team in a position during a time of great adversity to come together and elevate or flounder or even fracture.”

“The pandemic provided the opportunity to validate the strength of the team.  We came together quickly, despite the high degree of uncertainty in the spring of 2020 committed to our employees in regards to continued employment, making decisions in the best interest of their health and well-being, and to base our decision making process on the best available data versus paralyzing ourselves attempting to play out what-if-scenarios. We committed to not making decisions prematurely to protect financial performance at the employees expense.”

“The firm’s leadership…the pandemic put an unusual amount of stress on all of them, and me, too. In the process, it revealed some weakness, which in the end I was thankful for, as we made a significant correction in our Board.”

“I realized that we have a resilient & entrepreneurial team.”

“Strong leadership teams are built on trust and personal relationships. Virtual meetings, no matter how frequent, are no substitute for in-person meetings when trying to get a new leadership team to build relationships and trust.”

“A pandemic or any crisis is an opportunity to assess your leadership team. We learned about the team’s ability to adapt, be agile, think strategically and see beyond  the present. It is also a chance to see people under the stress of an unprecedented situation.”

About technology

“The past year was a great reminder of the importance of making long term investments in your IT infrastructure.”

“The importance of technology in society today.”

“Our Information Technology Group is awesome. Our investments in IT staff and equipment paid off!”

“We can live in and excel in the digital economy.”

About the new A/E workplace

“We had been on a virtual path of finding and hiring the best talent, wherever they were, and working virtually, this just reinforced our flexible work environment where we measure results based on your contribution to the team success. Being highly accountable for results, working well as part of a team and lifting each other up are the values we recognize and reward. While some supervisors/managers were slower to accept the flexible schedule/work, our team is on-board realizing that we have a high performing technical team that is accountable to each other for results, and cares greatly about the organization and client success.”

“I’m now realizing how difficult it will be to get everyone to return, as they like their new setup…and this in the context of a staff that is 100% vaccinated.”

“While I like being in the office, it is convenient for me, more productive, and I appreciate the energy being around others. With that that said, not being geographically restricted to the best talent, possibly lowering the total cost of delivery, improving the lives of our team members, is paramount and will help us recruit and retain the best talent. Coming to the office has to be purposeful and international…There has been a fundamental change.”

“We learned our people could work remotely BUT we desired to have them together to maintain our culture. We need that to maintain mentoring and on-boarding of staff. We can do it remotely, but to maintain individuals with the firm that didn’t just chase the higher price in their jobs, we realized they needed to engage with us in person.”

“The past 18 months has been a time of growth. While we have always been a fairly dispersed company (I have always liked to say that we hire talent, not location) having the team be 100% online and growing at the same time has been a challenge. So, we now have a higher degree of redundancy for our different functions and project work.”

“Once the new remote working conditions were accepted how seamless the change from commuting to work allowed work from home to thrive. Feedback from frequent staff surveys points to contentment with the new order and the why for going back to the office is not as definitive as I might have expected.”

“It is my opinion that only a small percentage of a firm’s employees are as productive working from home as they are in the office.”

“I learned that my firm is much less culturally monolithic than I thought with differences in values, beliefs, life patterns, resiliency, risk-taking, and commitment depending on location. It has been hard to craft a post pandemic remote work policy when some offices are back at full strength, and others are almost totally remote even in July of 2021. We have found a way through and developed a policy, but it has been a cultural struggle.”

“We demonstrated that performance is not inherently linked to working in an office with direct daily oversight. We are now looking at how to leverage the value of the workplace versus the constraint of the workplace. The workplace has tremendous value in building / strengthening a culture, creating the opportunity for innovation, mentoring / developing talent, and in providing for meaningful social interaction. We don’t need to be in the office every day to perform. How we leverage the value of the workplace will be a great opportunity coming out of the pandemic.”

“I really enjoy and appreciate the energy of being with people, but effective and trusted relationships can be nurtured virtually through video.”

“We did learn we had some bumps due to lack of communication and difficulty in communication with the team. You can only schedule so many Zoom meetings vs. just walking down the hall. We can do remote, but it’s not as efficient and not as meaningful. And being in person is educational to a younger set of employees.”

About financial performance

“From a financial perspective we had the greatest all around KPI performance the company has ever had.”

“We could operate more efficiently and profitably.”

“Best sales year and huge organic growth. Made multiple acquisitions and opened new offices during the pandemic.”

“We did a great job of managing our cash.”

“Our financial performance weakened in 2020 and still has not returned to 2019 levels.”

“Also, we were surprised by the financial success we had.”

About clients

“We have excellent clients who allowed us to keep working on their projects.”

“We didn’t know what was happening and were worried agencies would shut down work. But we found we were very, very lucky to be in our industry because it was needed and we continued to work – we work in a good profession!”

About initiative, innovation and improvements

“I have also learned that tapping into our collective creativity can often come up with unexpected and unexpectedly great ideas on how to get things done.”

“A crisis presents an opportunity to assess future leaders. I gave an emerging professional the opportunity to develop the company play book for returning to the office. He responded that she had no experience in this area. I reminded him that we had never experienced a global pandemic. He seized the opportunity, did a great job and grew personally and professionally.”

“Independent – Employees came up with ways to stay connected rather than waiting for management to come up with solutions.”

“Letting people champion different initiatives in the company has led to solutions and outcomes I would never have thought of. Because of this, I believe that we are stronger with more commitment from everyone, because they feel more in control of their work and they feel more ownership in what we are trying to achieve.”

• What CEOs learned about themselves as leaders over the past year:

About being a better leader

“…this past year was more than implementing strategic plans, engaging with our business sectors leaders and clients, growth, metrics, etc. This past year has caused me to realize that patience and empathy are natural characteristics of my leadership style, and are especially important during these times.”

“Being a good listener was critical to succeeding during these uncertain times. I gained a greater appreciation for the different perspectives employees brought to the table on a number of issues based on their individual circumstances…”

“I have become a better listener; I had a bad habit of listening but not hearing.”

“I have learned that if I delegate appropriately, the work can be done more efficiently and more quickly – leaving me to concentrate on strategy and overall management. Amazingly, I am a bit of a control freak (who knew??) and I have had to work on myself to understand that just because something is not done the way I would do it, does not mean that it is wrong.”

“I had to tone my enthusiasm down considerably and become much better at reading body language. It is w/o a doubt the imperceptible aspect of body language I studied the hardest on. It helped tremendously to get people to open up. And people needed to talk.”

“For me, I really started to think about gratitude and how blessed I have been in a time of some much difficulty. Some may call it empathy, but I think for me it’s about looking for the things that I am grateful for everyday and that helps provide a solid foundation to help others see the world differently, lead differently and act differently. These last 16 months everyone needed more joy and hope. This is not about just being all happy and blowing smoke, it’s about really carrying for people and knowing we all have ‘stuff’ to carry and finding ways to help lighten their load.”

“On a personal level, the past year reminded me of the value of setting and respecting professional/personal boundaries for yourself and your team.”

“Personally, I am grateful for all who helped push us through this difficult time…I’m also grateful for the government’s small business assistance program. In the end, I’ve learned how to be even more resourceful (reaching out to friends, colleagues and advisors)…and that will no doubt help me down the road.”

About honest communication and communicating

“It served to only reinforce for me that consistent, honest, authentic and complete communication by the CEO and the leadership team is extremely valuable. In fact, I would say it is craved, critical, and expected by the team and is more critical and expected today than ever before. They want to know about you. They want to understand your values (as they represent the company), who you are and what you are thinking. They want to understand your character, how and why you make decisions. They want to understand your positions on certain issues, and transparently see your actions and behavior.”

“Informed – Employees want to be kept informed as much as possible. Their work is a big part of their lives.”

“As a 100% ESOP, we have always been very transparent with regards to financial performance. We share everything. The pandemic introduced a unique element to transparency, it became more personal. Instituting a daily health screening and sharing national trend data in attempt to keep everyone informed as to the health and welfare of everyone in the firm was a whole different type of communication and transparency.”

“It has been very important to communicate regularly with the team and let them know how and what you are thinking and why. We had so many major events and crises to wrestle with, messaging around each was very important.”

“Although virtual, the importance of communication is very clear to me.”

“Reassure your employees to the fullest extent possible that you are looking to the future while addressing the crisis in the moment, all while understanding what truly is important to people. As an employee-owned firm, I think this message really resonates…”

“I learned that I do not need to ‘be there to lead.’ Historically it was about being front and center, present to the offices and industry, it needed a lot of flight time and hotel stays. Once I understood the power of video and nascent movement toward virtual, and made modifications to how I interact with the teams I found that we could still develop and lead organizational excellence and even some change initiatives in the firm.”

“The care in which we took to make sure we communicated (which I did more Zoom ‘all hands’ meetings, video messages, blogs, emails, etc. than I could ever imagine doing in ‘normal’ times) the actions we were taking, the precautions we were advancing, and the additional support we were offering has seemingly paid off with our colleagues around the company. The feedback about the pro-active communication was overwhelmingly positive, of which I can’t take the credit as there was a team that was supporting me in getting those messages out.”

“I guess I knew this but it was even more important…I needed to communicate with everyone, especially in the early stages, very often. People were worried…were we going to make it?, Would they have a job?, How long would this go on? I did regular Zoom or Teams videos and was as straight as I could possibly be. I told them about our PPP loan and how that helped, about how our balance sheet was strong and we were in good shape, that we’re weathering the storm alright and that I thought we would be away from each other for a long time. I let them know that things were not as bad as they seemed, and, later, that they were actually pretty good. I realized again how much employees look to the CEO as a signal of what is really going on.”

“As soon as you make a decision or have information to share, do it. Be transparent. In today’s world communication flows very quickly and it was essential for employees to have one source of information as often as possible…”

“Honesty and transparency were key, and we focused on what we could control. I gave regular presentations to staff in March-July 2020 about our financials and steps we were taking to weather the pandemic ‘storm’. We were honest about our situation, including the potential of reducing our workforce, eliminating bonuses and shareholders dividends, and implementing other cost-cutting measures. We never panicked, though, and instead focused on serving our clients and executing our business plans. Our staff appreciated the honesty and were able to manage through the uncertainty.”

“I have also learned that communications is an artform that I am learning, and I have started taking classes to improve my abilities in this arena.”

“Our team is really craving the communication, reinforcement of values, transparency to character, values, decision-making, mergers, how we make decisions and understanding what I am thinking about, what I am excited about, what I am concerned about and what the future holds.”

About business travel

“I have enjoyed not travelling as much and have more of a routine.”

“Have a better balance of life ( travel) – Probably won’t travel as much as pre-pandemic. Travel takes time which can be used for other things.”

“Having flown somewhere three out of four weeks every month for the last 20 years, I learned to like not traveling and the hassles that come with it.”

On leading during times of uncertainty with no playbook

“I will note there were a number of pretty isolated times as the CEO where decisions needed to be made not only for the safety of the employees, but also about the overall health and future of the company. There wasn’t a historical benchmark to assess against, we had to make decisions based on the best information we had at the time, and at times it seemed that these decisions had the potential for lingering impacts down the road in the future, unknown or unintentional impacts.”

“I learned to be more comfortable with not having the answer. As a CEO, people naturally come to me with questions, and I’m expected to have the answer. I draw upon my experiences, training, and instincts to make decisions. However, during the pandemic, I literally had no similar experience to draw upon and did not have the answer to questions like: how long will this last, how will our business be impacted, when will the economy recover, or should we get rid of office space and go 100% remote? I had no more insider knowledge or wisdom than anyone else. My response was to simply be honest, admit that I don’t have the answer, and concede that we’ll figure it out together along the way.”

“I have learned that I have more value to my firm than I thought. When things are good and the economy is humming and work is plentiful, running and engineering firm is easy. But we earn our money when the crap is hitting the fan, people feel vulnerable, and need to be reassured, the future is uncertain, and people are mis-aligned. That is when leadership matters. That is when we earn our money.”

“I’m not invincible – Already knew that but it was reinforced. I had periods of struggles during the pandemic.”

“No problems, just challenges that need to be overcome.”

On the importance of projecting leadership

“This past year really highlighted for me the notion that employees are closely watching the behaviors and actions of the leadership team. With so many difficult decisions to make, there often times was a never a perfect solution, so actions needed to be taken in the context of what was best for the entire organization and in alignment with your core values…”

“…one thing I did observe is how much people looked to and for leadership in times of uncertainty.”

“At any event ( internet based or not) you had to show the utmost confidence in the company, the people and the vision/strategy of the firm. My behavior and expressions set the tone for whole meetings. The slightest wince or indication of uncertainty set the tone of any meeting or call and you could never recover.”

“I could motivate and inspire our staff by showing resilient leadership, staying in good health, communicating with them and being there when they needed to communicate with me.”

“If I stay calm and keep a cheerful outlook, it does rub off on others.”

“Each appearance had to show confidence.”

About being genuine and connected

“On a personal level, although I enjoy connecting with people it was not a natural part of my personality or skill set. The past year has really brought home the importance and value of personal connection. Certainly traveled a lot and had many interactions, but I questioned the quality of those interactions. There is real energy and impact from a quality connection. I may have taken it for granted up until last year.”

“Calls/written notes with family members outweighed any other method of saying thanks.”

“I need that face to face connection with people – Did not realize how much that gives me energy. My energy feeds off others.”

• So, what DID we learn about our firms and ourselves? There are common themes and trends that emerge from our shared experiences this past year. They speak to the power of a shared sense of purpose and a culture that values responsible autonomy, trust, and a cohesive leadership team. They highlight the need for honest communication and the need to continuously dig deep to help others.
• What did YOU learn from this past year? If you’d like to share your thoughts on this past year about what you’ve learned about your firm and yourself as a leader, then post your comments anonymously here. We will curate and edit your comments to ensure confidentiality and anonymity and may share them in a later edition of Word on the Street.

Quote of the week: “The unexamined life is not worth living”  – Socrates

M&A Update – Industry M&A hits “200 deals” milestone in record time: The pace of design and environmental firms continues to break records. This year will see an unprecedented 400 mergers or acquisitions.

Results: To see the 12 transactions we have helped our clients with this year and the over 120 deals that we have helped bring together since 2006, click here.

Texas is the place to be! Specifically, Houston this Oct. 21 and 22 for the 7^th Texas M&A Symposium. Join over 100 industry CEOs, M&A decision makers, and investors from Texas and around the nation. Learn about the latest M&A trends, deal prices, and best practices. We’re proud to once again partner with our friends at ACEC Texas on this premier industry event. Here’s how the attendee list is shaping up:

CEOs/Presidents              45%
From Texas                       46%
From ENR 500 firms         75%
Dealmakers                     100%

What we’re tweeting about this week: Congrats to Lorraine Green who has been named CEO of Pond & Company. Great leader for a super firm!

Questions? Insights? What have you learned about your firm or yourself as a leader over the past year? Email Mick Morrissey @ [email protected] or call him @ 508.380.1868.

Four Factors to Watch

1. Infrastructure Bill   

The $1 trillion bipartisan infrastructure deal got bogged down late last week over disputes about expanding the Internal Revenue Service ahead of an initial vote next week to determine the level of support the measure will receive. At issue is an effort to raise revenue through enhanced enforcement by the IRS, a move that concerns some Republicans.

Should the IRS idea be abandoned, the bipartisan group would need to find other ways to pay for the plan, about $600 billion of which is above projected future federal spending targeted for roads, bridges, and water projects. Senate Majority Leader Chuck Schumer (D., N.Y.) intends to hold a procedural vote on the infrastructure agreement on Wednesday.

2. COVID-19 Case Numbers  

Here we go again. In the last week, the seven-day average of daily COVID cases in the U.S. has increased from 16,208 to over 28,300. July 15 saw over 35,500 cases. COVID-19 cases are rising in all 50 states, and according to health officials, unvaccinated people are both driving the surge and are most at risk. Seven-day averages of COVID cases increased in California and Texas:

• California: from 1,675 to 2,992
• Texas: from 1,219 to 2,528

3. Employment  

First-time jobless claims dropped from last week’s upwardly revised 386,000 to 360,000. The Dow Jones projection was at approximately the same number. The level of continuing claims dropped 126,000 to 3.24 million. The total number of people currently receiving benefits dropped to just above 14 million, which is less than half of where it was compared to this time last year.

4. Inflation   

The consumer price index for June jumped 0.9%, the largest one-month jump since June 2008. Prices were up 5.4% over the past year—also the largest jump in 13 years—while economists had predicted core prices would have risen 4% in the last 12 months. Gas prices are driving the surge, up 45% compared to the same period last year. Post-pandemic premiums on items like cars and houses are also contributing to inflationary pressures.

5. COVID Vaccine Update   

Approximately 160 million Americans (about 49% of the U.S. population) have been vaccinated against COVID-19. The pace of daily doses has dropped from almost 3 million in the first half of April to just under 520,000 this last week.