Business Q & A

August 2006 » Business
Answers to your questions about design firm and project management, finances, marketing, and related topics.
David M.Wahby

Management burden

Dear Dave,

I am one of seven equal owners of our firm. The seven of us bought in within a year or so of each other as part of an ownership transition plan by two senior engineers who owned and managed the firm before us. The two former owners, now retired, occasionally work on client projects on a contract basis but are no longer part of the day-to-day activities.

While the financial and legal aspects of the transfer of ownership are working very well, some of us are concerned about the time and amount of effort the seven of us are spending on dealing with business management issues. All seven make decisions together, and we won't make a decision on practically anything until the seven are in complete agreement about what to do. We're very busy, and it takes a huge effort just to get us all together in the same room, let alone the collective time we spend hashing out each and every decision. Can you offer some suggestions?

—C.K.,Wash.

Dear C.K.,

I'm guessing the former two owners probably made decisions and ran the company together in partnership-like fashion. The seven of you are now modeling this method. Problem is, as you are finding out, it is much easier to group-manage efficiently when denominating by two than it is when trying to reach the consensus of seven.

Key point: You need to slim-down the management process by starting to delegate responsibility for routine daily-, weekly-, and monthly-level management decisions to a sub-set of the seven of you. Begin by working out a specific list—by topic or dollar amount—of which decisions are so important that they must be reserved for the whole group to consider. Items for the entire ownership body would typically include matters of firm strategy and direction, major financial commitments, and fundamental policy making. Next, decide what the managing sub-set looks like.

There are a number of approaches. Some firms elect or appoint a managing principal to make those decisions on behalf of the group. Other firms form a management committee comprised of a reduced number of owners, operating under the principle of majority rules when it comes to decision making. When using a management committee approach, it is usually a good idea to stick to an odd number of members to prevent deadlocks. In your circumstances—seven owners—a management committee of three sounds about right. The managing principal or committee appointments are generally made for a specific term, usually a year or two at a time, and then are subject to re-appointment. Policies, procedures, and budgets are used to define and govern the powers to be delegated. Any specific limitations are clearly laid out.

If a sub-set approach of either a managing principal or management committee does not sit well with your fellow owners, you might begin in the same fashion by creating the list of items to be reserved for decision by the entire group and then spread the decision making for all other topics and activities between all seven owners. However, I don't recommend this. By splitting up the responsibility between the seven of you, the chances of something falling between the cracks, or one or more of the owners failing to conduct their responsibilities in a timely or an appropriate manner, increases greatly.

In the interest of efficiency and effectiveness, the seven of you need to talk this out and come to agreement on some system that has enough definition and controls in place to allow you to have the trust and confidence necessary to begin delegating responsibilities to arrive at a less burdensome management process.

Let's ask the staff

Dear Dave,

Having decided to review our pay and benefit practices, we established a committee comprised of a cross-section of management and staff to study the topic and report back to our board with recommendations. The committee has asked for permission to survey all employees (about 400) for input on likes and dislikes as a way to begin. A few of us are concerned that this whole initiative is getting more complicated than we originally anticipated.

The committee insists that the staff survey is a vital part of the process. Do we need it or not?

—L.K., Ill.

Dear L.K.,

Since the committee consists of a "cross-section of management and staff," perhaps you can make the case that the committee should be more than capable of getting started with their own inputs and wait until they are further along in the process to see if there is merit to engage the entire staff. You might also wish to point out that by waiting until some preliminary ideas have first been generated, the committee should be in a position to better focus the survey instrument to gain more valuable results.

Another factor to consider is whether or not surveying and asking for input is in character with the way the firm typically operates. If asking for input is foreign to you, issuing a survey can cause suspicion and anxiety among some of the rank-and-file folks who generally see any change as disquieting.

Finally, if you do survey, you create an implicit obligation eventually to offer feedback to those who participated. Don't ask if you're not willing to react and respond to what you hear.

Get answers to your questions about design firm and project management, finances, marketing, and related topics by sending them to Business Q & A c/o: CE News, One IBM Plaza, 330 N. Wabash, Suite 3201, Chicago, IL 60611, or faxing them to CE News at 1-312-628- 5878. Include your name and telephone number in all correspondence.

Your name will not be used in connection with published questions. David Wahby is president of Wahby & Associates (www.wahby.com), a management consulting firm serving A/E clients. He can be reached at 1-616-977-9756 or via e-mail at wahby@wahby.com.


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