Five questions A/E CEOs are asking themselves
Morrissey Goodale is providing A/E leaders with news and perspective on COVID-19 and its impact on the industry. This week, they discuss what is worrying A/E CEOs this fall and how they're trying to overcome their anxieties.
Morrissey Goodale is providing A/E leaders with news and perspective on COVID-19 and its impact on the industry. This week, they discuss what is worrying A/E CEOs this fall and how they’re trying to overcome their anxieties.
Challenges and solutions for A/E CEOs
A/E CEOs had a lot on their minds in January. 2019 had been another record year for their firm. Backlog headed into 2020 was at an all-time high – as was their firm’s internal stock valuation. Sure, there some worries about whether the longest economic expansion in modern history was going to come to an end in 2020 (Spoiler alert: it did.) But by and large CEOs were navigating “the usual” set of challenges – how to meet their 2020 goals while building a sustainable firm. By and large, CEO sleep patterns were regular.
Then March happened. And through the spring and summer industry CEOs faced— and for the most part overcame – a set of unprecedented challenges for their firms. From construction shutdowns in some states to closing offices and directing entire firms to work from home in most others, A/E industry leaders navigated the fast-moving crisis successfully. All the while they made sure their firms delivered on their – in many cases – increased commitments to clients. Sure, they may have lost a couple of hours of sleep a night in the early days of the crisis figuring out PPP loans, etc., but who needs a full eight hours anyway, they thought. And they figured that their new commitment to 15 minutes of meditation and deep-breathing exercises before dawn more than made up for any loss of sleep.
Five questions A/E CEOs are asking
Now as the Fall approaches and the pandemic persists, sleep-deprived CEOs are finding a new set of worries is keeping them up at night. Serious responsibilities weigh heavily on their shoulders. For many A/E CEOs, 2020 has revealed the meaning of “it’s lonely at the top” like never before. Five questions that weigh particularly heavy are:
1. How will I continue to keep my employees safe? Employee safety has taken on a grim new dimension in 2020. COVID-19 has taken the lives of industry employees, managers, and presidents and it has sickened many others. But now more and more employees – for a variety of reasons – are looking to return to their offices. At the same time, clients are placing increased demands on firms in the field. Combined, these factors have the potential to expose more employees to the virus. CEOs are acutely aware of the risks and worry how to keep their employees safe while balancing the demands of the business – especially as the winter flu season approaches.
2. How will I develop my team and employees? In addition to keeping their employees safe, CEOs are struggling to help them keep on track with their professional development and professional growth. In-person (internal or external) learning is on hold (who thought we would miss brown bag lunch and learns so much?) Many certification and registration exams are delayed or up in the air. Rightly or wrongly, employees are prioritizing the tsunami of work that they are facing over taking on-line training courses. The social capital developed during team-building Zoom calls is different than what’s developed in person. Ironically, with expenses dramatically down this year, CEOs have more money than ever to spend on training and development. They’re worried about a lost year – or more – of development for their team.
3. How do I guide my firm to success in 2021? Business planning for the past decade had been pretty standard for most CEOs. Assume an overall growing economy, expand where the firm was strong, make strategic investments (in other words take limited risks) to develop new markets and develop complementary or adjacent services. Business planning for next year will be way Overall, the market for A/E services will contract, it will be more competitive and there will be downward pressure on fees. But there will be growth markets and there will be new markets created by the pandemic. CEOs need to ask tough questions to figure out the lifecycles, entry points, and success factors of these markets and then position or repurpose current resources to be successful. The Great Recession playbook provides some of the economy-driven tactics for 2021— but it doesn’t provide the pandemic-driven strategies. CEOs are worried about finding the right moves to be successful next year.
4. How do I position my firm to sustainably grow post-vaccine and post-pandemic? There is no shortage of thought pieces about how facilities and infrastructure will be remade in the New Reality. Nor is there a dearth of articles about a reimagined socio-economic future. While CEOs are preparing to lead their firms through the unknown of 2021 (which will be no small feat in and of itself), they have one eye on what the longer-term future holds for their firm and this industry. However, the “long-term” timeframe is being compressed like never before. To quote Lenin, “There are decades where nothing happens; and there are weeks where decades happen.” CEOs are leading at a time when decades are happening in weeks.
5. How do I make sure I’m getting this right? Ralph Christie, the former chairman & CEO of iconic industry firm Merrick & Company kicked off a strategic planning meeting during the Great Recession with a line that has stuck with me ever since: “If anyone tells you that they’ve seen anything like this before (meaning the economic implosion at the time), they’re lying.” (Note: Merrick went on to be super successful through the Great Recession and beyond, AND successfully transitioned leadership successfully.) Today’s CEOs have navigated an unprecedented set of challenges over the past 6 months, and the next 18 months will likely be even more challenging. CEOs don’t have even close to all of the answers. (“If anyone tells you they’ve seen this before…”) They need to dig deep to provide the leadership and direction that their people need from them and that only they themselves can provide. In the dead of night, many CEOs worry about the future and their ability to lead through this crisis.
The common characteristic of industry CEOs is that they put their employees and firms first – before themselves and their own needs. For many, their firm is an extension of their family. CEOs have spent the last six months worrying about how to take care of their firms and their families during the crisis. And they know that they will need to continue to be vigilant to ensure the safety of both over the next 18 months. CEOs need to stay healthy – emotionally and physically – for the sakes of their firms and their families. There is an unrelenting wave of challenges ahead. Self-care is important and CEOs should make sure they prioritize their health headed into 2021. (That includes getting enough sleep – five hours doesn’t cut it.)
Meanwhile, industry M&A continues to rebound. Driven by record deal-making activity in August and September, the pace of U.S. industry consolidation is now down just 8% over last year’s record-setting pace. Sellers are looking to close their deals before the end of the year in case taxes go up next year under a new administration.