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Sunday, July 26, 2009

Two (new) places on the construction marketing spectrum

I've just posted a couple of worthy permalinks, representing two places on the spectrum in this blog's readership.

In the first, Chicago-based Anne Scarlett of Scarlett Consulting reports in her Scarlett Letter blog on some intriguing and high level AEC Marketing issues. Consider, for example, her recent posting where she offers some thoughts on what professional firms measure in assessing bonuses and achievements.

Earlier this year, I delivered a session to the SMPS Southern Regional Conference. I met a gentleman (Greg) in the audience that works for a large, multi-disciplined engineering firm (XYZ Engineering). I don’t have their exact revenue figures, but they have multiple offices across the U.S. and abroad. We discussed how the firm is structured from a financial accountability standpoint. Apparently–rather than individual offices serving as profit centers, and rather than one big profit center for the whole firm–this firm has opted to group their profit centers according to regions.

We all know there’s no ‘one size fits all’ magic to a firm’s financial and organizational structure. We also know that it largely depends on these factors: client type and location; design and delivery philosophy; shared resource preferences; long-term business goals; etc.

Circling back around to my conversation with Greg at XYZ Engineering. He shared that there are two layers of bonuses offered at their firm on an annual basis. OK, makes sense. I’ve seen firms with up to three layers of bonuses. But this was what surprised me: Greg told me that rather than measure actual profits, these regions consider two things to measure their success: billability and net revenue. Nope, not profit. They figure if the other things are there, the profit will be as well.

Now, I can think of all sorts of reasons why good billability factors and net revenue figures might not lead to a truly profitable business. So I found it curious that this large, highly reputable firm would measure it this way.

Months later, I’m still curious, and am taking this opportunity to reach out to you, dear readers, to hear your own perspectives on this topic. If you are willing to share (anonymous is fine; feel free to send a direct message if you prefer), then I’d love to learn more about how your organization is structured financially, and how that structure is helping–or hindering–your firm in this current economy. Any collection of data will be shared in future blogs for consideration.

I wish I had read Scarlett's blog before contributing my article on Metrics for the upcoming SMPS Marketer issue. I looks like Greg's company, in measuring "billability" and "net revenue" is seeking to establish Key Performance Indicators which may be within the capability of individual employees to influence and change. On the other hand, I 'm wary of complex, two-level bonus structures; how effective are these benefits, really, and how much do they actually influence behaviour rather than become seen as entitlements.

On a different level, Paul Lesieur of Silvertree Remodeling in Minneapolis called me about three weeks ago to tell me he had partnered with Rory Swann of Servicez Unlimited in Washington D.C. to establish a new site/forum for remodelers, The site is now in operation; it is early going, but a true grassroots community is developing. Here is Paul's explanation of how the idea developed.

I'm driving around last year thinking "What a crazy business and what a crazy remodel I'm doing for this couple".

Ding, Ding I grab a flat carpenters pencil three inches long and write down Remodel Crazy.

I get back and put the paper away and four months later I'm talking to Ridgewalker from CT (editor: CT is who I don't even know and he tells me to get an open domain name for that was available that would help promote my business.

I get my domain and remember Remodel Crazy and buy and register

Months go by and now I'm friends with some nutcase from Washington DC and we start talking and I tell him about Remodel and my dream is to build a great place for all the people in our industry. One thing leads to another and we get Len involved and here it is. It was just a little dream for a guy who feels like the best people in the world, its builders, don't get the proper credit and respect. The painters, carpenters, electricians, designers, and the solid vendors and associates who make it all click. All of us, this is for you. And I mean it.

Its new, and its gonna take some work, but nobody is more ready to tackle this than the Remodel Crazy crew.

So lets kick it!
White collar, blue collar, years of formal education, or the practical experience in the schools of hard knocks and success -- this industry creates opportunities and working relationships for everyone, and the two new hyperlinks here reflect its diversity.


Hammer Time said...

Thanks for the write up Mark. We really hope to help out the news guys in the industry that need a sense of direction in this business.

Paul I thought you were the nutcase?

Paul said...

Oh doggone it, I forgot you would be able to read the article.
But I believe credit should be given where its due.
I'm the cute one, remember?