TPA Miami Slides 2022

TPA Miami Slides 2022

The Principals Academy

Day One

JUNE 2022

About Zweig Group

• Established 1988, sold in 2004, bought back in 2012 • Re-branded from Zweig White in 2015 • Focused solely on the architecture, engineering, planning, environmental consulting and construction industry. • We come from your industry! • Three times named to the Inc. 500/5000 list of the fastest growing privately held companies. • We are here to make you more successful – as individuals and companies.

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THE PRINCIPALS ACADEMY 2022

About Zweig Group

elevate the industry

celebrate promote diversify educate change

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THE PRINCIPALS ACADEMY 2022

Jamie Claire Kiser Managing Principal and Director of Advisory Services Zweig Group

Phil Keil Principal and Director of Strategy Zweig Group

Will Swearingen Principal and Director of Ownership Transition Zweig Group

Meet your Instructors In order of appearance

Dawson Fercho Partner & Founder Corporate Tax Advisors

Director of Research & E-Commerce Zweig Group Christy Zweig Niehues

Principal, Start 2 Rise Strategic Training and Advisory Partner Zweig Group Justin Smith

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Agenda – Day One

TITLE

INSTRUCTOR

START END

WHAT IT MEANS TO BE A PRINCIPAL

KISER

8:30 9:30

9:30

STRATEGIC AND BUSINESS PLANNING KEIL

10:30 10:45

BREAK

10:30

DRIVING FINANCIAL RESULTS

SWEARINGEN

10:45

12:00

LUNCH/TAX CREDITS

FERCHO

12:00

1:00 2:30 2:45 4:30 6:30

MARKETING AND BUSINESS DEVELOPMENT NIEHUES

1:00 2:30 2:45 5:00

BREAK

RECRUITING AND RETENTION

KISER

OPTIONAL HAPPY HOUR

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Agenda – Day Two

TITLE

INSTRUCTOR

START END

PROJECT MANAGEMENT

SMITH SMITH

8:30

9:30

LEADERSHIP FOR PRINCIPALS

9:30 10:30

BREAK

10:30 10:45

OWNERSHIP TRANSITION AND M&A

SWEARINGEN

10:45 12:00

LUNCH

12:00 12:30

ZOOMING OUT: LEADING SUCCESSFUL FIRMS

KISER

12:30

1:00 2:00

PRINCIPALS ROUNDTABLE

ALL

1:00

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Let’s get to know each other

• Name • Firm • Role • What would you like to get out of this course? • If you weren’t attending this seminar, what would you do with a day in Miami?

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What It Means To Be A Principal

Principal Demographics

What percentage of principals are owners in their firms? a. 50% b. 72% c. 89% d. 95%

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Principal Profile

22%

23%

Equity concentration

11%

Non-owner 0.1%-9.9% 10%-24.9% 25%-49.9% 50%-99.9% 100%

11%

12%

19%

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Principal Profile - Demographics

Caucasian - 88% Asian - 6% African American - 1% Hispanic 5%

Female - 17% Male - 82% Unspecified - 1%

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Principal Profile - Demographics

In your opinion, how much diversity does your workplace have?

No Diversity 4%

A Lot of Diversity 33%

A Little Diversity 25%

Moderate Diversity 38%

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Principal Profile

• 82% of principals are registered professionals • 40% of principals have no college-level business education • 24% of principals do not believe they received adequate training before becoming a principal

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Principal Demographics

What percentage of principals are less than 40 years old?

a. 4% b. 8% c. 10% d. 15%

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Age of Principals

Principal Profile

41%

• The median hourly billing rate for principals is $200 • On average, principals are 32% billable • Typical work week = 50 hrs • 81% frequently or occasionally work on weekends / holidays

20%

4%

30-39 40-49 50-59 60+

35%

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Principal Profile

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Ownership in an AEC Firm

41%

Borrowed money to purchase stock.

Didn’t buy as much stock as they were offered. Principals who thought not buying all stock offered shows a lack of commitment or belief in the firm.

15%

85%

0%

25%

50%

75% 100%

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Ownership in an AEC Firm

Signed a personal guarantee for some or all of their firm’s debts.

49%

Feel that the risks and rewards of ownership are well balanced.

46%

Believe the rewards outweigh the risks.

43%

0%

25%

50%

75%

100%

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Ownership in an AEC Firm

Signed a non-compete agreement (typical 1-2 year term).

46%

Have a buy-sell agreement with their firm.

71%

Have their stock value tied to how they leave the firm.

32%

0%

25%

50%

75% 100%

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Ownership Strategies

57% of firms carry life insurance on owners

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Ownership and Leadership

Ownership should not be a seen as part of the career ladder!

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2

3

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Management Issues

• 21% of principals feel there are other principals in the firm that abuse their position and do not pull their weight. • 33% of principals would NOT choose the same partners if given the chance to do it all over again.

• 62% of firms have NEVER fired or laid-off a principal in their firm’s history.

• Only 38% of principals are subject to regular performance appraisals

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Organizational Structure

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11

8

6

3

0

1-24

25-49

50-99 100-249 250-499 500+

# of people who report to me directly

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Board of Directors

Profile of AEC firms: • 66% of firms have a board of directors • Typical # of seats: 5 • Only 26% of firms have external board members • Typically meet 4 times per year

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Board of Directors What a board should do:

• Primary responsibility is a fiduciary one - to maximize return on investments for the firm’s shareholders • Governing the organization by establishing broad policies and objectives • Selecting, appointing, supporting and reviewing the performance of the CEO • Ensuring the availability of adequate financial resources

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Top challenges for principals

1.Staff recruitment and retention 2.Ownership transition 3.Business Strategic Planning 4.Business development/marketing 5.Communication and Time Management

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What are the greatest challenges for your firm?

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Only 41% of firms establish any specific minimum eligibility criteria for becoming a principal Pathway to Principal

• Of those that do, criteria focus on the following:

– Years of experience: 35% – Marketing experience: 27% – Education minimum: 25%

– Professional registration/licensure: 65% – Business development/sales abilities: 62% – Project management experience: 58% – Staff management responsibilities: 54%

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Pathway to Principal

• Of those firms that use experience:

– 12.4 years of career experience is the average to become an owner

– 7.2 years with the firm is the average to become an owner

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Characteristics of a principal - Not just for owners!

• Role model. • Responsibility is to the firm first • Every “principal” has different responsibilities – There is no one job description for principal. • Honesty and a strong sense of ethics including a strong work ethic.

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Characteristics of a principal - Not just for owners!

• Discretion and confidentiality • A collaborative spirit • A desire to learn about and help the firm • Tolerance for cautious risk-taking

• Leadership skills • Financial Literacy

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Characteristics of a principal - Not just for owners! • Higher expectations for what you will contribute as a principal. • Creativity. • Excellent communication skills.

• Team Mentality - can lead and be a part of a team. • Influencer Ability to bring work into the firm and feed others.

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Characteristics of a principal - Not just for owners!

• Understand the importance of value creation. • Responsibility for all of the firm employees. • Understand risk vs. reward with ability to take risks. • Big-picture thinking about the company overall

vs office / department. • Long-term thinking.

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WHAT IT MEANS TO BE A PRINCIPAL

Questions?

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UP NEXT: Strategic Planning with Phil Keil

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Strategic Planning

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High performance AEC firms are…

Executing a strategic G R O W T H plan that…

Aligned around a mission and vision and embracing a shared set of values

Effectively balancing competing pressures put on them by clients, employees, and owners.

• Capitalizes on strengths • Differentiates themselves in the marketplace • Creates and maintains a sustainable competitive advantage • Is SMART – specific, measurable, attainable, realistic, and time-bound

Operating with thoughtful policies, practices and procedures – broadly communicated and understood – that can scale without breaking

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Types of Planning

There are many planning processes. The hierarchy is presented here and how they inform each other.

Strategic Plan

► Strategic plans provide purpose and direction for accomplishing the firm’s goals in the mid-long term horizon. It focuses on values and aspirations. ► Business Plans are about the details of how the strategy is executed. How will you accomplish what you set out to do in the coming year? ► The marketing/BD plan is one component of the business plan.

Business Plan

Marketing/BD Plan

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THE PRINCIPALS ACADEMY 2022

Strategic planning: An overview

Strategy is a set of goal directed actions a firm takes to gain and sustain a competitive advantage.

A competitive advantage is always relative, never absolute. It defines the best way for a firm to create value for its stakeholders, both internal and external.

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Poll

What percentage of the workforce, on average, does not understand an organization’s strategy?

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Poll

What percentage of the workforce, on average, does not understand an organization’s strategy?

95%

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Poll

What percentage of firms with a formal strategic planning process outperform their peers?

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Poll

What percentage of firms with a formal strategic planning process outperform their peers?

70%

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Poll

How much more profitable are firms using strategic plans?

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Poll

How much more profitable are firms using strategic plans?

12%

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Strategic planning - Just the stats

PROFITABILITY

EXECUTION

UNDERSTANDING

TIME SPENT

95%

70%

12%

86%

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Cynical? We get it.

“It’s been 5 or 6 years since we developed our plan and I’m not sure where we are on those action items”

“I have seen our strategic plan but it is 75 pages of text and I have too much to do to try and decipher it”

“We have a strategic plan, but nobody follows it”

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Why have a plan?

We need roadmaps if we are to build a legacy or purpose driven organization.

Builds a common sense of direction aligning your entire team with your firm’s vision, mission, values, goals, and culture. Guides your future helping make the firm more sustainable, able to withstand market fluctuations and other “threats.” Reduces the stress of owning and operating a business enabling the firm to maximize resources and avoid wasting time, effort, and money on activities that are not profitable, or are holding the firm back.

Builds confidence with lenders, creditors, investors, and employees. Trains employees in how your business operates and makes money.

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Strategic & Business Planning development

• Definition of markets being pursued. • Client research.

• Competitive research. • Employee research. • Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis. • Financial modeling (pro formas, balance sheets, cash flow, stock value). • Org charts. • Realistic budgets for everything from recruiting to training. • Other back up materials and exhibits.

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5 Strategic Planning Frameworks

• The balanced scorecard – great for larger organizations who want to ensure their goals cover the main aspects of a successful business. • The Ansoff Matrix – great for organizations who are about to embark on an aggressive growth strategy and need help defining their plan of attack. • McKinsey’s Strategic Horizons – Great for organizations who have decided that innovation is a crucial part of their strategy. • Value Disciplines – Great for organizations who are looking to fundamentally reposition themselves in their marketplace. • The Stakeholder model – great for organizations where stakeholders are the core of what they do, such as non-profits.

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Strategic planning framework

Vision – Why do we exist? Mission - Our core purpose. What are we doing to achieve our vision?

Values - How do we do things? Unwavering principal’s that through action define our culture. Objectives - statements that indicate what is critical or important in your organizational strategy. Strategies - What are the basic philosophies that guide us in critical business areas? Initiatives - What are we going to do? Specific programs, procedures, or programs. Goals – How will we measure performance? Actions - Who, what, when, where, why, and how?

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The framework in action

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The framework in action

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Zweig Group’s MVV

To be the leaders in driving performance and purpose for the AEC industry MISSION

VISION

CORE VALUES Remastering is our mantra : Lead with curiosity, choose to be gutsy, make a difference Hustle is our method : Forge your own way, step up and own your actions, figure shit out Grace is our way : Celebrate often, remain open, be politely persistent

Elevate the industry

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Vision

Definition: An aspirational description of what an organization would like to achieve or accomplish in the mid-term or long- term future. It is intended to serve as a clear guide for choosing current and future courses of action. In other words, A vision statement is an articulation of a view of the world that your company and your people are working towards (A just cause/purpose), not what they are expected to do now. It is a vivid picture of where you are headed to motivate others to take that journey with you.

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Vision

“Dominate the day to create tomorrow”

“We will be a highly respected national design firm consistently providing leadership, expertise, innovation, and entrepreneurial thinking.”

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness. That to secure these rights, governments are instituted among Men, deriving their just powers from the consent of the governed…”

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Mission

Definition: A written declaration of an organization's core purpose and focus that normally remains unchanged over time. Properly crafted mission statements (1) serve as filters to separate what is important from what is not, (2) communicate a sense of intended direction to the entire organization. In other words, this statement is intended to describe what we are doing to achieve our vision. The difference in the two being that the vision is a description of an end state and the mission is what we are doing to get there.

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Mission

“Make the world a better, safer place.” -Miyamoto International

“Provide a culture that inspires people to deliver exceptional results.”

“Building and connecting our communities.”

“We the People of the Unites States, in Order to form a more perfect Union, establish justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

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Values

Unwavering principles that infuse culture with purpose or fundamental beliefs that guide a person's decisions.

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Strategic planning framework

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Strategic Objective

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Goals – SMART and DUMB

▶ SMART - Specific, Measurable, Achievable, Relevant, and Time Bound. ► “Win ‘Best Firm to Work For’ each year.”Values - How do we do things? Unwavering principal’s that through action define our culture. ► “40% of revenue from non-land/site development in 5 years.” ► “Client feedback study shows ‘responsiveness’ score of 4.5/5.0 each year.” ► “Develop a firm-wide training program tied to career progression with a budget in 2019 to implement by Q2 2020.” ► “Win two national design awards annually.”

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Actions

► The single most important thing you can do to affect change and to advance your firm is execution. That’s where the actions come in. ► As a leader, you must play a role in this and aid the CEO in the execution of your strategic plan (so you better know what it is). ► This is the weakest part of the strategic planning process.

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Strategic plans should be growth campaigns

Marketing supports and promotes the plan

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Implementation Science

Prism, EPIS, CFIR, Behavioral Theories, Diffusion of Innovation, Organizational Readiness for Change… the list goes on.

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Change Management Models

MODEL

DESCRIPTION

BENEFITS

LIMITATIONS

PURPOSE

Steps to encourage new behaviors for successful organizational change

Kotter’s Change Management Model

Provides an eight step, actionable checklist

Lack of measurement processes and time consuming

Organizational change management model

Strategies for managing the emotional transitions of change

Includes a step by step guide to foster emotional acceptance

Not a framework for operational change

Organizational change management model

Bridges Transition Model

Model to define the change adoption timeframe

Defines a timeline for workforce change acceptance

Not a framework for operational change

Organizational change management model

Rogers’ Tech Adoption Curve

Model based on the emotional journey - five stages of grief

Most change frameworks address these stages

No clear guidance on operational change

Individual change management model

Kubler-Ross Model

Five step process: Awareness, Desire, Knowledge, Ability, and Reinforcement

Rewards individual change in organizational change process

Cumbersome process for large organizations

Individual change management model

Prosci ADKAR Model

Seven structural model that focuses on holistic approach to change

Provides guidance and focuses on the whole organization

Organizational change management model

McKinsey Model

Very complex

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Change Management Models

MODEL

DESCRIPTION

BENEFITS

LIMITATIONS

PURPOSE

Method advocating the benefits of behavior modification

Positive reinforcement method to drive individual change

Depends on a custom response to each change circumstance

Individual change management model

Nudge Theory

Individual leadership development through adopting better habits

More leadership within rank and file to drive organizational change

No framework for operational change

Individual change management model

Stephen Covey’s Model

Model for improving family relationships

Focus on the family as a unit rather than individuals

No framework for operational change

Individual change management model

Virginia Satir

Techniques and examples on three interconnected elements of change Six steps - Envision, Activate, Support, Implement, Ensure, and Recognize

Good overview/stories for modeling change

No framework for operational change

Individual change management model

Switch Framework

Checklist on operation and emotional elements to organizational change

Relies on leadership effectiveness and response

Organizational change management model

EASIER Model

An ongoing process advocating “plan, do, study, act”

Structured framework for organizational change

No process to factor emotional resistance or opposition forces

Organizational change management model

Deming Cycle

Simple steps to combat emotional resistance and opposition

Three steps - unfreeze, change, and refreeze process of change

No mechanism for ongoing change

Organizational change management model

Lewin’s Model

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Executing your plans effectively

► Be open to change – Unless firm leaders are sufficiently open and willing to consider all options, nothing will get done. ► Think and act holistically – Always have the big picture in sharp focus and have it lead your daily actions. ► Be nimble – Be willing to adjust along the way when new environmental conditions (political, market, competitive, etc.) or >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122 Page 123 Page 124 Page 125 Page 126 Page 127 Page 128 Page 129 Page 130 Page 131 Page 132 Page 133 Page 134 Page 135 Page 136 Page 137 Page 138 Page 139 Page 140 Page 141 Page 142 Page 143 Page 144 Page 145 Page 146 Page 147 Page 148 Page 149 Page 150 Page 151 Page 152 Page 153 Page 154 Page 155 Page 156 Page 157 Page 158 Page 159 Page 160 Page 161 Page 162 Page 163 Page 164 Page 165 Page 166 Page 167 Page 168 Page 169 Page 170 Page 171 Page 172 Page 173 Page 174 Page 175 Page 176 Page 177 Page 178 Page 179 Page 180 Page 181 Page 182 Page 183 Page 184 Page 185 Page 186 Page 187 Page 188 Page 189 Page 190 Page 191 Page 192 Page 193 Page 194 Page 195 Page 196 Page 197 Page 198 Page 199 Page 200

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