Four ungrounded assumptions in the AE industry
The AE industry sometimes operates on ideas that are based more on emotion than reality. Four of the biggest misconceptions are highlighted.
We like to think that the decisions we make as leaders of AE and environmental firms are made based on facts and data. But more often than not, they are based on emotion, gut feelings, personal biases, and ungrounded assumptions.
Here are four of those ungrounded assumptions that are at play in the industry right now:
1. Things will never get better than this: With profits and backlogs at all-time highs, many leadership teams figure this is as good as it gets. Even if there was not a recession lurking around the corner, a prevailing assumption among many teams is that their firms are at optimal performance. But that’s far from reality. There always lies within reach a higher level of financial performance and organizational health. However, leadership teams need to think differently about their businesses and their own behaviors to achieve them. Whether it’s discarding a legacy practice, changing out a stalled principal, or making better tech available to staff, there are always changes that can be made to improve the firm. The first step on the journey is recognizing it’s not as good as it gets. (Hard to believe that movie came out in 1997.)
2. We all share the same vision for our firm: A leadership team works hard to establish a “shared vision” for the future of the firm to provide context for investments and changes. Check in with that leadership team 90 days later and it’s as if collective amnesia has set in. Team executives either cannot remember the vision at all or—more likely—each have different recollections of it and are carrying different messages into their interactions with managers and employees, creating confusion and sub-optimal decision-making. It’s no longer a powerful shared vision, but rather an individually reinterpreted siren call. While this myth has always existed in the industry to some degree, it’s more prevalent now given (a) the increased pace of market and industry volatility combined with (b) the social media-fueled shortened attention spans of many leaders and managers. To keep everyone rowing in the right direction with the proper cadence, leaders need to revisit and recommunicate the firm’s vision constantly.
3. Our firmwide culture is…: The more I work with AE and environmental firms, the more I see that “culture” is subjectively interpreted and exists at a micro-level, not a macro one. Most firms have a set of stated values (either created by the firm’s current leadership team or inherited from a prior generation of leaders or the founders), which are ostensibly the foundation of their culture. However, the effective communication of those values—and the assumed universal culture that will follow—is in most cases, at best inconsistent and at worst non-existent. So instead of a unified firm-wide culture, you find “pockets” of distinct cultures that are primarily influenced by location, discipline (of work), personal values of a manager, or collective social norms and preferences of specific teams. This balkanization of cultures is now the norm in many multi-office, multi-discipline AE and environmental firms, particularly in this post-pandemic world. It’s not unusual to find firms in which most architects are working remotely and engineers are in the office. Or where offices in the South are seeing elevated levels of in-office participation while those in the Northeast or Pacific Northwest are still ghost towns. Believing you know your firm’s culture is likely self-delusional and makes for flawed decisions. Assuming you know the culture of an M&A target based on a single meeting with their leadership team is downright malpractice.
4. We’re all 100% committed to employee ownership: The CEO champions employee ownership and talks it up constantly as a differentiator. And why not? It’s been a great capitalization model that has allowed the firm to thrive for 60 years. It’s the model that she inherited. She believes passionately in the concept. She inherited it from the prior leadership team. She believes her managers and employees are as invested in the concept as she is. However, she looks 10 years down the road and cannot see a successful transition of the firm’s ESOP. She’s worried that if she opens up the discussion about a different model that she’ll be seen as a traitor to the firm’s legacy. Meanwhile, her direct reports keep hearing from their peers about the big checks they deposited and the even bigger plans they now have for the future when their firm recapitalized last month with RiverLakeMountainMoraine Capital Partners. But they’re uncomfortable suggesting a recapitalization because they don’t want to be seen as greedy. The firms’ employees go about their work, each with a different degree of engagement and skill and each with a different understanding of—or awareness of—the pros and cons of their firm’s employee ownership model. For many it’s the last thing on their minds. Everyone assumes that everyone else is committed to employee ownership. However, in many firms that assumption is incorrect and may be leading to sub-optimal outcomes.
Original content can be found at Morrissey Goodale.